TaxTMI 
TaxTMI 
2020 (2) TMI 464
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....e is not satisfactory and the same is to be treated as income of the assessee ? (B) Whether on the facts and in the circumstances of the case and in law, Tribunal was justified in holding that in order to prove genuineness of the said purchase transaction even though assessee did not provide any lorry receipts or delivery challans for the delivery of goods and that the same fact is established by the Assessing Officer, then is it mandatory for the Assessing Officer to limit himself to the mere submission and other documents provided by the assessee even though the purchases are non-genuine ? (C) Whether on the facts and in the circumstances of the case and in law, Tribunal was justified in holding that while applying the provisions of Section 69C of the Income Tax Act, 1961, the Assessing Officer was required to cause further enquiries in the matter to ascertain the genuineness or otherwise of the sham transaction ?" 4. From the above, it is evident that the issue before the Court for consideration is the addition made by the Assessing Officer to the income of the assessee on account of unexplained expenditure under Section 69C of the Act which was deleted by the first appella....
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....revenue preferred appeal before the Tribunal. Tribunal by the order dated 16.11.2016 upheld the order of the first appellate authority and dismissed the appeal of the revenue. 11. Hence, revenue is before us in appeal. 12. Mr. Sharma has taken us to the order passed by the Assessing Officer and submits that considering the goods involved in the purchase and sale, assessee was required to produce documents to show the movement of materials as well as stock ledger of the goods. In the absence thereof, Assessing Officer was justified in invoking the provisions of Section 69C of the Act in making the addition. This fact was overlooked by the two lower appellate authorities below, thus vitiating the impugned order. 13. We have considered the submissions made by Mr. Sharma and also perused the orders passed by the authorities below. 14. At the outset, we may advert to Section 69C of the Act which is extracted hereunder :- "69C : Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, ....
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....urther recorded that during appellate proceedings the assessee had furnished complete quantitative details of the items of goods purchased during the year under consideration and their corresponding sales. 17. We may now advert to the order passed by the Tribunal, relevant portion of which is extracted hereunder : "4.4.1 We have heard the rival contentions and perused and carefully considered the materials on record, including the judicial pronouncements cited. On an appreciation of the materials on record, it is evident from the order of assessment that it is on the basis of information obtained from Sales Tax Department that the AO issued the show cause notice to the assessee to explain the said purchases and issued notices under section 133(6) of the Act to the said two parties from whom the said purchases were made, to which there was no response. The AO primarily relying on the information obtained from the Sales Tax Department and sworn statements given before the Sales Tax Department by Sri Pradeep Vyas of M/s. Victor Intertrade P. Ltd. and Shri Ketan Shah of M/s Impex Trading Company held the said purchases to be bogus. While it may be true that the said two purchase par....
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....isputes the correctness of those statements and has not been afforded adequate opportunity to cross examine these parties even though he has asked for the same. Moreover, as correctly observed by the learned CIT(A), when the payment for the said purchases to the concerned two parties is through proper banking channels and there is no evidence brought on record by the AO to establish that the said payments were routed back to the assessee, the addition made by the AO under section 69C of the Act is unsustainable. We are fortified in this view of ours by the decisions of, inter alia, the Hon'ble Bombay High Court in the cases of Nikunj Eximp Enterprises Pvt. Ltd. (supra), Ashish International (supra), the decision of the Coordinate Benches of this Tribunal in the case of Hiralal Chunilal Jain (supra) and Imperial Imp & Exp (supra). In this factual matrix of the case, as discussed above, we find no requirement for interference in the order of the learned CIT(A) and consequently uphold the same. Therefore, Revenue's five grounds (i) to (vii) are dismissed. In the result, Revenue's appeal for A.Y. 2010-11 is dismissed. Order pronounced in the open court on 16th November, 2016." 1....