TaxTMI 
TaxTMI 
2022 (8) TMI 669
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....ed through accommodation entries?" 2. "Whether on points of law and on facts and circumstances of the case, the Ld. CIT(A) was justified in giving a finding that the books of account of the assessee as reliable, as against the rejection of the books of account of the assessee by the AO by applying the due provision of law u/s 145(3) of the I.T. Act?" 3. "Whether on points of law and on facts and circumstances of the case, the Ld. CIT(A) was justified in ignoring the findings of the Commercial Tax Department Chhattisgarh, and whose findings regarding the bogus purchases through accommodation entries have been relied upon by the A.O. in his assessment order?." 4. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in ignoring the affirmation on oath in statements recorded u/s 131 of the I.T. Act by the proprietors of the concerns, during investigation by the Income Tax Department, thereby admitting and confessing on oath that these concerns are bogus entities indulging in accommodation entries and money laundering?" 5. "Whether on points of law and on facts & circumstances of the case, the Hon'ble IT....
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....Ld. CIT(A) is erroneous both in law and on facts. 13. Any other ground that may be adduced at the time of hearing." 2. Succinctly stated, the assessee which is the engaged in the business of trading in rice under the name and style of M/s. Digi Trader, Raipur, a proprietary concern had filed his return of income for the assessment year 2014-15 on 04.11.2014, declaring an income of Rs.15,07,690/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was gathered by the A.O on the basis of information received from the Commercial Tax Department, Chhattisgarh that the assessee was one of the beneficiaries who had procured bogus purchase bills from certain accommodation entry providers. Apart from that, it was observed by the A.O that survey proceedings conducted by the Income-Tax Department on certain rice millers and traders of rice and Kanki from 15.03.2016 to 18.03.2016 revealed that various concerns by availing the services of brokers/entry providers had provided bogus bills to rice millers and rice traders. Also, it was observed by the A.O that pursuant to a survey ....
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.... in question was not only supported by the description of the suppliers in the respective invoices, but also the details as regards the weight, quantity and quality of rice, transportation vehicle nos., names of drivers, bank statement of the assessee showing payments made, confirmations of the brokers and delivery of the goods at the container depot of M/s. Container Corporation of India (CCI), a Government of India undertaking having its address at Inland Container Depot, Near Railway Store Depot, Kapa, Raipur a/w. loading of the goods in the railway wagons for which bills were issued by the railways and thereafter had been cleared by the assessee, the CIT(Appeals) was of the view that the purchases in question could not be said to be bogus. Accordingly, the CIT(Appeals) on the basis of his exhaustive deliberations qua the various facets of the issue in hand, Page 24 to 29 - Para 14 to 22 of his order, vacated the view taken by the A.O that the assesee had not made any genuine purchases. Adverting to the genuineness of the sales as claimed by the assessee, it was observed by the CIT(Appeals) that sale of rice was supported by requisite documentary evidence. It was observed by the....
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.... 10,17,58,794.00 As observed by us hereinabove, the A.O on the basis of his exhaustive deliberations on the various facets of the purchase transactions in question, viz. (i) statement of the proprietors of bogus concerns recorded u/s.131 of the Act; (ii) enquiries in respect of vehicles through which transportation of rice was claimed to have been carried out; (iii) enquiries in respect of bogus concerns carried out by the Commercial Tax Department; (iv) statements recorded under Sec. 131 of the Act of the brokers through whom the assessee had claimed to have made purchases from the aforesaid tainted concerns; and (v) difference in the signatures of the owners of the concerns through whom purchases were claimed to have been made as were discernible from the purchase bills, as against that put by them in their respective statements recorded on oath, concluded, that the assessee had not made any genuine purchases and only procured accommodation bills. For the sake of clarity the observations of the A.O on the basis of which he had held the impugned purchases made by the assessee as bogus/non-genuine are culled out as under: "1. The assessee could not establish the busin....
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..... But the assessee had not discharged the same till date. During enquiry it is also proven that the payments through cheque or RTGS are made to colour the transaction as genuine. Actually, the payments made through banking channel are withdrawn in cash. The same was being return to the assessee who had made the payment to such bogus concern. 7. It is also observed that the registrations of some concerns were cancelled by the commercial tax department before the purchase made i.e. before A.Y. 2014-15. The assessee had not stated anything about the above finding. He could not provide any explanation how he had purchased the material from a cancelled concern. Thus, it is clear that the assessee had not purchased any material from such concern. The asseessee had taken the bogus bill from such concern. 8. It is also observed that the assessee had shown the purchase for M/s Samleshwari Foods, Raipur but TIN (22131103722) mentioned at the said bill was registered in name of M/s Shubh Laxmi Traders, Raipur. In the same way the assessee had shown the purchase from M/ s Sanjeevani Agro Produce, Raipur but TIN (22343605770) mentioned at bill was registered in the name of M/s....
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....at were drawn by the A.O as regards the genuineness and veracity of the purchase transactions in question, had found favour with the contentions of the assessee and observed as under: "14. I have considered grounds no 2 and 3, seen the assessment order of the AO and gone through the submissions of the appellant and perused the assessment records of the appellant for the AY 2014-2015 and the submissions made during the assessment proceedings. According to the AO information was received from the Commercial Tax Department regarding some bogus concerns who were providing bogus bills which involved no physical transfer and sale and purchase of goods. The Income Tax Department also conducted surveys wherein it was detected that many concerns were showing bogus purchases on the basis of bogus bills. The AO relied on the statements recorded by the investigation wing and also himself recorded the statements of eight suppliers, four brokers and one transporter and after gathering material came to the conclusion that the purchases shown by the appellant was bogus and accordingly disallowed the same along with the relatable quantum of sales. There was no survey conducted in the appel....
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....unt number 18340510000151 Bose Building Pension Bada Branch was brought to my notice showing the payments made to parties. The payments made to the concerned parties in the statement are as per the names appearing in the invoices. From the details of the rice purchase register my attention was drawn to their submission that the quantity of rice purchased was genuine and there were no instances of price inflation of purchases as the same were in accordance with the prevailing market rates and comparable with the other independent parties in the same line of business. It was submitted that this aspect was never questioned or disputed by the AO who only had doubts regarding the purchases from billing concerns. Letters of confirmation from the brokers indicate the names of concerns from whom rice has been procured by them and details of PAN, brokerage, names and addresses of concerns reveal the quantity and quality of rice purchased along with the truck number for unloading at the CCI. It was explained that the appellant would not be having full knowledge about these concerns which was known to the brokers in detail and any shortcoming on the part of the supplier cannot be fastened on ....
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....and no incriminating evidence had been brought on record in support of the allegations regarding bogus purchases. In their submissions during the appeal proceedings the counsels urged that the statements rendered by the proprietors of bogus billing concerns relating to search and seizure proceedings or surveys in other groups could not. be plainly relied upon by simply quoting from the excerpts from such statements and could not render an automatic application in the case of the appellant. The appellant further submitted that mere information from the Sales Tax / VAT / Commercial Tax Department. regarding concerns involved in bogus billing or registered as hawala dealers or accommodation entry providers without conduct independent enquiry by the AO could not be used against the appellant drawing a parallel with the bogus transactions with such concerns by the appellant. In this context the appellant relied on judicial pronouncements that have been reproduced in their written submissions reproduced herein above. 16. With the above material on record regarding purchases I am of the view that the purchases with their description in the invoices, along with the names ....
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....and no physical movement and transactions of material in the case of the appellant has no basis. Furthermore, the suppliers, brokers, and buyers/export houses, and transporters are identifiable along with relevant records and proof which are clear indicators that in the case of the appellant the purchases cannot be held as non-genuine. In the assessment the AO has observed that the vehicle registration numbers showing rice transported by the appellant were of tractors, scooters, motorcycles and cars and not of trucks and heavy goods transport vehicles. I observe from the assessment records that vide their letter submitted to the AO on 20/12/2016 necessary clarifications were made by the appellant and the vehicle numbers were corrected which matched with the weighment slips at the CI showing that the vehicles in which the material was transported to the container depot were trucks and goods carriers. The weighment slips and bills are enclosed with the impugned letter filed on 20.12.2016 in the assessment records. 18. The cancellation/ registration of suppliers by the Commercial Tax Department relied upon by the Ld.AO in drawing adverse inference against the appella....
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....AO in arriving at such conclusions. 19. In the assessment the AO has reproduced the statements recorded of brokers and suppliers of material to the appellant. The statements were recorded by the DDIT(Inv)-1 Raipur in the survey's conducted and also by the AO during the assessment proceedings. In almost all the statements the manner of procuring orders and material, transportation and unloading of material purchased and their procedures have been enumerated and also the modus operandi of issuing bogus bills have been stated but at no place there is direct and specific admission by the suppliers or brokers that they had provided bogus bills to the appellant and the material and the details mentioned in the commission bills or in the invoices were false and fabricated pertaining to the appellant. I have not come across an instance where the suppliers and brokers have stated that the bills and invoices in possession of the appellant provided by them are bogus and fabricated against which no transaction had taken place. One of the brokers Shri Navratan Jain in reply to question no: 27 replied that he could not confirm whether Shyam Agro one of the suppliers had issued bogus....
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....hases / bills as held by the AO against the appellant. 21. I find that no survey was conducted against the appellant u/s. 133A of the Act and the adverse views taken against him are based on material / statement of other persons during the survey conducted in those persons from 15.3.2016 to 18.3.2016 pertaining to the subsequent financial year. The AO has also mentioned in para 3.1 that survey action was carried out at Nagrik Sahakari Bank Raipur where some of these bogus bank accounts were opened. In this context it was brought to my notice that the appellant had no bank account with Nagrik Sahakari Bank Raipur at any point of time. Regarding observations of the AO the appellant did not own or operate any godowns or mills it was clarified by the counsels that the appellant had submitted all along that he never had any godowns and the material was supplied to the Container Corporation of India and hence his business did not require maintenance of godowns and ware houses. 22. I observe that the AO has not controverted the material submitted during the course of assessment proceedings pertaining to purchases of material, vehicle registration numbers which was clarif....
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....im of export cannot be considered to be genuine since the export cannot take place without clearance from Customs Authorities another arm of Government of India. Hence the claim of export has to be necessarily accepted on the basis of relevant documents." In the light of the above observations and discussions there is no merit in the disallowances made on account of purchases as the AO has not brought on record cogent material in support of the views taken by him for making the impugned disallowances accordingly the disallowance pertaining to purchases is deleted and ground no. 2 is allowed." 10. Also, as observed by us hereinabove, the CIT(Appeals) after referring to the supporting documentary evidence that was filed by the assessee to substantiate the genuineness of the sales which were held by the A.O as bogus, had vacated the said adverse inferences and deleted the consequential addition of Rs.11.29 crore by observing as under: 23. Coming to ground no. 3 pertaining to sales the AO has made proportionate disallowance of sales relating to the purchases which he had held as bogus. I find that the sales of rice by the appellant in terms of quantity and monitori....
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....he account of assessee as appearing in their books of account which clearly established the factum of their having received goods from the assessee. As observed by the CIT(Appeals), and rightly so, there could have been no sales by the assessee to the aforesaid recognized export houses without corresponding purchases on his part. Apart from that, the fact that the goods purchased by the aforesaid recognized export houses from the assessee had received custom clearances from the Custom Authority at the Inland Container Depot, Raipur, therein, dispels all doubts as regards the factum of the assessee having carried out genuine sales to the aforementioned parties. On the basis of the aforesaid facts, now when the evidence placed on record by the assessee proves to the hilt delivery of goods in question at the destination point i.e., Container Depot, CCI, a Govt. of India undertaking, therefore, we are unable to comprehend that as to on what basis the AO had concluded that the purchases claimed by the assessee were to be held as bogus. 12. At this stage, we may herein observe, that as noticed by the CIT(Appeals) the invoices issued by the seller concerns mentioned the requisite detai....
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....bts as regards the genuineness of the claim of the assessee of having purchased the goods in question and sale of the same to the aforementioned parties. Also, copies of the invoices of Railway Freight, CCI, and the necessary payments made on account of Railway containers for dispatch to the aforesaid buyers as were produced by the assessee before the CIT(Appeals) further fortifies his claim of having purchased the goods in question and delivering the same to the abovementioned parties. Also, as observed by the CIT(Appeals), and rightly so, letters of confirmations from the export houses and distilleries duly confirming the transactions in terms of both value and receipt of quantity of rice sold by the assessee a/w. Form No. 'H' relating to exports, bills of lading and reports of technical surveyors duly substantiates the assessee's claim of having sold the goods in question to the export houses and distilleries. Backed by the aforesaid facts, we concur with the view taken by the CIT(Appeals) that in absence of purchase of goods in question there could not have been any corresponding sales by the assessee to the aforementioned parties. 14. Adverting to the view taken by ....
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....'s claim of having purchased the goods in question. As regards the sustainability of the adverse inferences that were drawn by the A.O qua the authenticity of the purchase transactions, for the reason that now when the registration of the sellers in question had been cancelled, therefore, the same belied the claim of the assessee of having purchased goods from the said concerns, we are afraid is a view arrived at on the basis of half-baked facts. As observed by the CIT(Appeals), and rightly so, though the registration of some of the suppliers had been cancelled by the Commercial Tax Department prior to the impugned purchases claimed by the assessee, but then on the said standalone basis it could not have been inferred that the business of the said suppliers was completely closed down, because there was evidence that goods were supplied by the said parties to the assessee through the brokers. Apart from that, as observed by the CIT(Appeals), we find that except for in the case of 4 suppliers registrations in the case of the remaining suppliers was cancelled by the Commercial Tax Department much after the end of the relevant financial year in which the assessee had purchased rice fro....
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....served by the CIT(Appeals) the same had rightly been rebutted by the assesee by placing on record copy of weighment slips i.e, RST number 1128 of CCI, wherein, the aforesaid truck number was found mentioned on the invoice. Considering the aforesaid facts, we concur with the view taken by the CIT(Appeals) that as the A.O had not controverted the material which was submitted by the assessee during the course of the assessment proceedings, viz. vehicle numbers (which were corrected in the assessment proceeding), bank details, transportation details of trucks, custom clearance details, export sales and domestic sales documents, confirmation from exporters a/w. copies of account, but had chosen to focus more on the modus operandi adopted by the firms/brokers for providing bogus bills/accommodation entries, therefore, in absence of dislodging of the aforesaid supporting documents/materials there was no justification on his part in drawing adverse inferences as regards the authenticity of the purchases in question. 16. We, thus, in terms of our aforesaid observations, finding no infirmity in the well-reasoned view taken by the CIT(Appeals) as regards the authenticity of the purchases c....