TaxTMI 
TaxTMI 
2021 (3) TMI 314
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.... received information from the DGIT (Inv.,), Mumbai about the accommodation entries provided by various dealers and assessee was also one of the beneficiary from those dealers. The assessments were reopened U/s. 147 of the Act based on the information received from DGIT(Inv.), Mumbai, that the assessee has availed accommodation entries from various dealers who are said to be providing accommodation entries without there being transportation of any goods. In the reassessment proceedings, the assessee was required to prove the genuineness of the purchases made from various parties referred in Assessment Order. In response assessee submitted that the purchases made are genuine. Assessee further submitted that the payments are made through account payee cheques as such contended that all the purchases are genuine. However, parties were not produced before the Assessing Officer and no explanation was offered. 3. Not convinced with the submissions of the assessee the Assessing Officer treated the purchases as non-genuine and he was of the opinion that assessee had obtained only accommodation entries without there being any transportation of materials and the assessee might have made p....
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....lant on account of bogus purchases, hence, the additions are unsustainable. 8.3 The various issues raised by the appellant under the above ground of appeal are now discussed and decided as under: 8.4 Whether a transaction of purchase is genuine or not is always a question of fact and in making an assessment the ITO is not fettered by the technical rules of evidence, the ITO may act on material which may not, strictly speaking, be accepted as evidence in Indian Evidence Act in Court of Law as held in the case of Dhakeswari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC) and it is open to him to collect materials to facilitate assessment even by private enquiry. [C. Vasantlal & Co. Vs. CIT (1962) 45 ITR 206 (SC) & Vimal Chandra Golecha vs. Income Tax Officer &Ors. (1982) 134 ITR 119 (Raj)]. 8.5 As discussed earlier, information was received from the Sales Tax Department in respect of the bogus purchases made by the appellant company. According to illustration (e) to Section 114 of the Indian Evidence Act, the court may presume that judicial and official acts have been regularly performed. It is apparent that the presumption of the above illustration applie....
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....en made good by the supplying dealer or the appellant has been given 'input tax credit' subsequently which can prove that the stated transactions were genuine. 8.7 It is trite that onus lies on the assessee to prove the genuineness of any expenditure which is claimed as deduction in computing its taxable income. "Prima facie onus to prove genuineness of purchases is on assessee." [CIT v. Korlay Trading Co Ltd. (1998) 232 ITR 820(Cal.)(HC)]. Therefore, the onus in the present case squarely lies on the appellant to prove the genuineness of purchase. Further, when the facts lay within the special knowledge of the assessee which it failed to establish, a statutory presumption can be drawn against it in view of s. 105 of the Evidence Act. Hence considering that all the evidence and material relating to the purchase and sale of goods were within the special knowledge of the appellant, the onus to produce the same as per s. 106 the Evidence Act was upon the appellant. 8.8 On identical facts, rejecting the contention of the petitioner that if the details have been provided as sought by the Assessing Officer including the identification of the parties, the nature o....
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.... the payments are made through account payee cheques and payment transactions can be verified from copy of bank statement as submitted before the AO. In my view such an argument is fallacious. There are judicial precedents on this issue wherein it is held that the transaction cannot be held to be genuine merely because the payment is made by cheques. The Hon'ble High Court of Karnataka in the case of CIT &Ors. vs. Saravana Constructions (P.) Ltd. (2012) 72 DTR 0258, has held that "there is no presumption that merely because the payment is made by cheque, it is a genuine transaction. First it has to be found out whether the transaction in question is genuine and only thereafter, the assessee would be entitled to the benefit of disallowance". The Hon'ble jurisdictional High Court of Bombay in the case of Naresh K. Pahuja vs. Income Tax Appellate Tribunal: (2015) 375 ITR 0526 (Bom) has held that "mere routing of a gift through a banking channel would not by itself establish that the gift is genuine and the genuineness or non-genuineness of the gift would have to be established by other evidence." And the Hon'ble Supreme Court of India in the case of CIT vs. P. Mohanakala &....
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....les would not have been possible. However, the material was not received from the parties from whom it is shown to have been purchased as there is no independent third party evidence on record which can support the transaction. Thus, an inference can be drawn that such material were purchased from different sources which were exclusively within the knowledge of appellant and none else. It is well known that if purchases are made from open market without insisting from the genuine bills, the suppliers may be willing to sell those products at a much lower rate as compared to the rate at which they may charge in case the dealer has to give a genuine sale invoice in respect of that sale and supply the goods. There may be various factors due to which there is bound to be a substantial difference between the purchase price of unaccounted material and rate of purchase of accounted for goods. There may be a saving on account of sales-tax and other taxes and duties which may be leviable in respect of manufacture of sale of goods in question. The suppliers or the manufacturers make a substantial saving in the income-tax in respect of income from sale of unaccounted goods produced and sold by....