2018 (9) TMI 1888

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....returns for assessment year 2009-2010 declaring income of F17,00,060/-, for assessment year 2010-2011 declaring income of F25,83,966/- and for assessment year 2011-12 declaring income of F15,48,695/-. These returns were originally processed u/s.143(1) of the Income Tax Act, 1961 (in short ''the Act''). However, thereafter the assessments for the impugned assessment years were reopened citing a reason that some of the purchases claimed by the assessee were bogus. Though the assessee objected to the reopening, it seems such objections were rejected. Ld. Assessing Officer based on a report forwarded by DGIT (Investigation, Mumbai) which in turn had it's moorings on certain details obtained from Maharashtra VAT Department, required the assessee to explain why the following purchases claimed by it should not be considered bogus. Sl.No  Hawala name Hawala TIN Hawala Pan Particulars of transactions         08-09 Amount 09-10 Amount 10-11 Amount 1 Naman enterprises 27450524228V AQEPK5024G   20,24,880         2 Krish corporatio n27890606533V AWAPS3678L ....

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....ices, delivery challans and VAT payments. According to the assessee, payments for all these purchases were made though banking channels and the goods so purchased were subsequently sold. As per the assessee, the stock was properly accounted. Contention of the assessee before ld. Commissioner of Income Tax (Appeals) was that sales having not been disbelieved or questioned, purchases alone could not have been ignored. Apart from the merits of the disallowances, assessee also assailed the reopening done for these assessment years. For assessment year 2010-2011, assessee had one other ground stating that actual purchase amount from M/s.Amee enterprises was F35,50,178/- and not F3,55,01,784/-. 5. However, ld. Commissioner of Income Tax (Appeals) was not fully impressed by the above arguments. According to him, the original assessments having been done u/s.143(1) of the Act, reopening done for the impugned assessment years were in accordance with law. On the question of purchase being considered bogus, conclusion of the ld. Commissioner of Income Tax (Appeals) was that these were only accommodation entries. According to him, the fact of making payments through account payee cheques, w....

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...., considering the error in the purchase from M/s.Amee enterprises. 8. Per contra, ld. Departmental Representative strongly supporting the orders of the lower authorities submitted that assessee miserably failed to provide any records for purchase of plastic granules. According to him, there were no details about the goods purchased and mode of transportation. Notices u/s.133(6) of the Act were all returned unserved. Thus, according to him, purchases were bogus. As per the ld. Departmental Representative, assessee was bringing in his unaccounted money as sales and the disallowances were therefore justified. 9. We have considered the rival contentions and perused the orders of the authorities below. It is not disputed that assessee had produced bills for purchases. However, these purchases were disbelieved for a reason that notices issued u/s.133(6) of the Act to these parties were returned unserved. Ld. Commissioner of Income Tax (Appeals) also states that assessee had failed to bring in sufficient evidence to prove the purchases. Nevertheless what we find from the assessment orders for the impugned assessment years is that ld. Assessing Officer had not found any defects in th....

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....hat too without rejecting the books of the assessee. It is not disputed that assessee had produced the bills for all purchases and these were paid through banking channel. Just because the notices to vendors of the assessee came back unservd, the purchases could not have been disbelieved. A businessman who purchases goods in the normal course of his business is not expected to keep a track of the address of all the vendors who supplied goods to him. There is nothing on record to substantiate the inference drawn by the lower authorities that part of the sales accounted by the assessee was only to bring in his unaccounted income to the main stream. The existence of unaccounted income was not evidenced by any record. In a similar situation where a part of the purchases were disbelieved, the Mumbai Bench of the Tribunal in the case of M/s. Imperial Imp & Exp (supra) had held as under at para 5 & 6 of its orders. ''5. On the other hand, the Ld. Departmental Representative supported the orders of the authorities below by pointing out that the addition has been made on account of the enquiries conducted by the Sales Tax Department of the Government of Maharashtra and no effort ha....