TaxTMI 
TaxTMI 
2021 (7) TMI 285
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....he assessee company has made purchases for Rs. 15 lakhs from M/s Jay Enn Infotech Pvt. Ltd., 105-A/2, Saraswati House, 27, Nehru Place, New Delhi. He observed that the assessee company is a group company of Tulip Group, and in the course of search proceedings under section 132, statement of Lt. Col. H S Bedi, CMD of the group, was recorded in which he had admitted that the group companies have been involved in making bogus purchase from some of the entities. In his statement recorded on 25th September, 2009, under section 132(4) of the Income Tax Act, 1961, Lt. Col. H.S. Bedi had made a declaration of Rs. 75 crores on account of bogus purchase made by different group companies. Declaration under section 132(4) was made in the names of M/s. Golf Technologies Pvt. Ltd., Firepro Wireless & Technologies Pvt. Ltd., & M/s. Pinewood Information System Pvt. Ltd. During the course of examining information filed on behalf of the companies in which declaration was made under section 132(4) of the Income Tax Act, 1961 it came to notice that these companies made substantial purchase from M/s. Jay Enn Infotech Pvt. Ltd., which had been admittedly declared as bogus and include in the amount of de....
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....e company. Simultaneous actions u/s 132A were also conducted by the investigation Wing on the so called suppliers of goods to the members of the Tulip Group. M/s Jay Enn Infotech Pvt. Ltd. was also one of the companies who was covered by action u/s 133A. The results of the search and survey operations indicated that the group had indulged in taking accommodation entries. After giving several opportunities (and after seeking several details which did not come through), the authorized officers had confronted the Group with the adverse evidences. Due to such adverse evidences the Chairman of the Tulip Group had admitted that they were not in a position to substantiate the purchase from some 32 suppliers/companies and had surrendered Rs. 75 Crores in the hands of three companies of the Group including the appellant company. The surrendered income has been included by the appellant in the returns filed for A.Y. 2009- 10 and 2010-11. 4.3.3 The AO has noted that during the current assessment shown purchases to the tune of Rs. 15 Lakhs from M/s Jay Enn Infotech Pvt. Ltd., which was one of the 32 companies in respect of which the surrender was made. The said supplier never appeared....
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....oration (10) Jay Inn Infotech Pvt. Ltd. (11) Kesho Industries (12) Life Time Infoways Pvt. Ltd. (13) M. S. Enterprises (14) Motto Softech Pvt. Ltd. (15) Net Communication Ltd. (16) New Horizons India Ltd. (17) Om Trading Company (18) Pearls Infosoft Pvt. Ltd. (19) Pious E.N.V. Technology Pvt. Ltd. (20) Quantum Net Technologies Pvt. Ltd. (21) RSR Networks Pvt. Ltd. (22) RX Infotech Pvt. Ltd. (23) SAT India Ltd. (24) Satya Sales Corporaiton (25) Software Technology Group International Ltd. (26) Standared lnfoways Pvt. Ltd. (27) Technet Infotech Pvt. Ltd. (28) Technosoft Infosystems Pvt. Ltd. (29) Unex Technology Corportion (30) Vaishnavi Trading Co. (31) Victor Compusoft Pvt. Ltd. (32) Wilson Electro Products We would like to submit here that it is not possible to immediately produce the above parties alongwith their books of accounts. All these are independent parties and it would take lot of time and efforts to persuade them to be present alongwith all the details. Furt....
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....for the treatment of his wife. During the course of survey proceedings certain incriminating documents in the form of blank cheque books, loose papers and electronic media was found and impounded. Smt. Nirmala Jain confronted on the basis of the material so found and impounded. Three major discrepancies were found during the course of survey: > Cash as per books ran into crores but actual cash found was in thousands. > Blank signed cheque books were found. > Major discrepancies with respect to cash was found. Smt. Nirmala Jain replied to every discrepancy that her son is looking after the business activities and only he can explain about them. Relevant portion of her statement is reproduced hereunder:- "Q8 During the course of survey, from the books of accounts available on computer, it is found that there is cash of Rs. 11,31,24,258/- in M/s Jay Enn Infotech P. Lid. And cash of Rs. 3,87,06,505/- in M/s Binary Network Solution P. Ltd as on 24/09/2009. However on physical search cash of Rs. 79,000/- only has been found. Please explain the discrepancy. Please also explain the contradiction that only M/s Binary Ne....
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....o purchases then there would not also be sales. Therefore, the disallowance of the purchases cannot be made. In this regard it is noted that the appellant has shown to have sold goods to its group concerns. Therefore, this argument is not acceptable. It is not the case of the assessee that the amounts have not been received in the form of sale proceeds. Since it is only the group concerns to whom the sales are shown to have been made, the credit entries in the P&L account cannot be ignored. Since the purchases from M/s Jay Enn Infotech Pvt. Ltd. have been admitted to be not substantiable, the disallowance made by the AO cannot be questioned. Further, the claim that all the payments have been made through banking channels is also of no relevance in view of the fact that the entry providers have returned the cash in exchange of the cheques received from the assessee. The books of accounts of the suppliers on the date of survey showed a very huge cash balance confirming that the suppliers had withdrawn cash after deposit of the cheques from the appellant and returned cash. 4.3.10 It is also seen that the invoices submitted during the appeal....
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....f the likely expenditure on the investment activity in case of mixed funds & activity, I am of the view that, disallowance of Rs. 1,00,121/- u/s 14A can be made which is 0.5% of the average investment during the year. Hence the AO's action is confirmed though for different reasoning/ground." 6. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "(A) That on the facts and circumstances of the case the learned ITO and the CIT(A) erred in 1) Addition of Rs. 15,00,000 to the total income on account of bogus purchases even though considerable sales and purchases were recorded during the relevant assessment year. 2) Upholding the Assessment & addition of Rs. l,00,121/-u/s 14Ainspite of the fact that the Assessment for the year had abated in terms of section 153A & no incriminating material was unearthed in the course of search & seizure operations. 3) Disallowing Rs. 1,00,121 u/s 14A of the Income Tax Act. 4) Disallowing u/s 14A without the Assessing Officer giving any finding in the assessment order regarding the amount of actual expenditure incurred by the assessee to ....
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.... both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in the instant case, made addition of Rs. 15 lakhs being the purchases made by the assessee company from M/s Jay Enn Infotech Pvt. Ltd., on the ground that the aforesaid seller was involved in giving bogus sale bills so as to enable the buyers to inflate their purchases and reduce their income. We find, the ld.CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the ld. Counsel that no incriminating material was found during the course of search for the impugned assessment year and, therefore, no addition could have been made on account of such bogus purchases. It is also his submission that the assessee has already declared profit on account of sale of the said alleged bogus purchases and, therefore, once the purchase is treated as bogus, the sale cannot be treated as genuine and the assessee cannot be made liable to tax twice. 10. We find some force in the above argument of the ld. Counsel fo....