2016 (10) TMI 1343

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e return of income was selected for scrutiny. The Assessing Officer (AO) while framing the assessment observed that assessee has made certain purchases from the persons who were identified as Hawala Traders by Sales Tax Department, state of Maharashtra. Those Hawala Trader used to issue bogus bills without delivery of goods. Thus the AO made the addition of Rs. 72,60,177/- u/s 69C of the Act on account of unexplained expenditure u/s. 69C of the Act. The assessee filed appeal before the CIT(A) wherein the entire addition was deleted. Thus, aggrieved by the order of CIT(A), the Revenue has filed the present appeal before us. 3. We have heard ld. the Departmental Representative (DR) for the Revenue and the ld. Authorised Representative (AR) o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....like Steel, aluminium pipes Cuni Pipes, S.S. Pipes, Brass Rods, M. S. Steel Sheets, etc. to execute these contract. As assessee deals with the Government Department like Naval Dockyard who is scrutinized in all the payments and expenses before settling the bills as per the terms and condition of the contract. The assessee has given all documentary proof to the AO which includes the purchase order, invoices, challan, copy of goods, Inward Receipts. Despite the above evidence, the AO made the addition of entire purchase treating as bogus purchases. Out of the purchased material of Rs. 25,62,560/- from Colourshop Trading Co. was on the basis of credit letter of Bank and payments were routed through Banks, hence, the Bank L.C., the copy of affi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... reply was received. The AO further observed that assessee failed to produce the parties for verification, the genuineness of the expenses were not proved and treated the entire expenditure as unexplained expenditure from these six parties. The AO not discussed in its order the contention of the assessee, the evidence of purchases, delivery of goods and the payment made through Banking transaction as well as the stock register. Before the CIT(A), the similar contention was raised by the assessee. Ld. CIT(A) reproduced the submission of assessee in its order. After considering the contentions of the assessee, the AO concluded that assessee gave valid explanation with substantiating evidence in respect of cost incurred towards the purchases d....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... and perused the material before us. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue. The FAA has given a finding of fact that part of the goods received by the assessee wa....