TaxTMI 
TaxTMI 
2020 (7) TMI 836
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....23,09,639/- and also against the action of Ld. CIT(A) in sustaining the rejection of books of accounts. 4. Briefly stated facts as noted by the AO are that the assessee firm had filed the return showing total loss of Rs.1,42,57,360/-. The case was selected for scrutiny through CASS and the AO noticed that the case was also reopened u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the "Act") on the ground that the Income Tax Department received information from the Additional CIT, Customs dated 30.05.2013 and 03.06.2013 mentioning that they received an information that the Joint Commissioner of Sales Tax, West Bengal forwarding some information regarding the bogus sales bills, enclosing a list of 45 dealers, registered under the West Bengal Value Added Tax, 2003, who showed false purchases to claim Input Tax Credit (ITC) fraudulently for ramification under the Income Tax Department. The AO also refers to an information from DDIT (Inv.), Kolkata wherein it was stated that assessee was registered under West Bengal Value Added Tax Act 2003 has made bogus sales bills and showed fake purchases to claim ITC facility fraudulently and, therefore, the AO was intimated to t....
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....t the order of Sales Tax authorities, accepted its mistake (in front of Sales Tax authority, they admitted the said inadmissibility of Input Tax Credit in writing through a letter vide Sales Tax office docket No. 1514 dated 29.11.2012) and paid the tax due voluntarily. 19. The assessee was required to submit evidence in support of genuineness of these transactions; he was also requested to produce suppliers of the goods in question. In reply to the show-cause notice, the assessee mainly relied on the documents in the form of purchase bill payment claimed to have been made by cheque to those parties. The assessee did not produce the suppliers in spite of specific opportunities granted by this office. 19.1. During the Course of Scrutiny proceedings, it just tried to shift the burden on the Revenue by saying that its responsibility came to an end after receiving the goods and after handing over the cheque to the suppliers. Such submissions have been made in complete disregard of the fact that the burden clearly lies on the assessee to prove the genuineness of the transaction. And we know that Again it is also settled fact that - Burden is on Assessee to prove the gen....
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....the following addition related to relevant parties ,as mentioned below, to the tune of Rs. 19,40,92,355/- is hereby added to the income of the assessee. Sl. No. Name of the parties Fake Purchase (Rs.) 1 M/s. Apex Energy Resources Private Ltd. Om Tower, R No. 302, 32, Jawahar Lal Nehru Road, Kolkata-700 071. 1,57,20,020/- 2 M/s. Butterfly Sales Pvt. Ltd. 63, Radha Bazar Street, 3rd floor, R. No. 45, Kolkata-700 001. 10,25,00,000/- 3 Topaz Impex Inc. 19C, Harish Mukherjee Road, Kolkata-700 025. 7,56,00,000/- 4 S. K. Trading Corporation, 180, G. T. Road (South), Shibpur, Howrah-711 102 97,300/- 5 M/s. K. G. Hard Coke Manufacture, Mahuda, P.O. Rukni, dist. Purulia-723145. 1,75,035/- Total: 19,40,92,355 Thereafter, the AO has disallowed the consequent claim of expenses incurred towards freight charges on these purchases by holding as under: "Further, on verification of Tax Audit Report, it is found that the assessee claimed direct expenses of Rs.2,45,67,519/- for purchase details of which are seen in the Schedule-14 of the said report. From the details, it is seen that the assessee claimed following ....
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....M/s. Wellman Coke India Ltd. which is placed at pages 96 to 108 of PB wherein the quantity, challan no., weight and the truck no. tallies item-wise. It was argued by the ld. AR that the assessee was only an intermediary in the sale of coal, by placing order with the suppliers, for supply to the ultimate purchaser. According to the Ld. AR, the stock register for each quality of coal and coke is maintained and that each purchase is correlated with each sale and shows that the goods were directly delivered by the seller to the ultimate purchaser of coal. Stock details are available at pages 140-167 of PB. The AO had alleged that in the freight bills of M/s. K. G. Hardcoke Manufactures the name of the driver was generally mentioned as Sharma which according to AO, is impossible, considering the huge quantity of coal and coke and distance of work. The ld. AR clarified that 'Sharma' was actually the sardar of the drivers who collected the payments on behalf of the drivers and has disbursed their payments. In order to show the veracity of this submission the Ld. AR drew our attention to the details of registration of each truck recorded in the very same list, which has been downloaded fro....
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....f registration there are strict KYC norms and drew our attention to the registration details and KYC norms placed at page 293 to 301 of paper book. The Ld. AR pointed out that the total purchase during the year was to the tune of Rs.120.59 cr. (Rs.156.92 cr. including opening coal transaction from Orissa Branch) the total sales were to the tune of Rs.152.59 cr. According to Ld. AR, full details of purchase and sale and ledger copy of all the parties were filed and drew our attention to the ledger copies placed at pages 214 to 221, 222, 242, 270 and 272 to 273 of paper book. The Ld. AR drew our attention to the bills produced which is placed at page 1 to 139 of P B and drew our attention to pages 84 to 98 and especially drew our attention to page 84 of the paper book to show that the bill of Butterfly Sales Pvt. Ltd. was not computer general bill as claimed by the Assessing Officer and it is noted that the VAT no. and CST no. has been printed on it and the assessee's VAT no. is also written on it. The details of the bill was placed at page 84 i.e. dated 29.11.2011 is placed from page 85 to 95 and the assessee's tax invoice can be seen from pages 96 to 97 and the annexure to the bill....
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....itted that the assessee has been given adequate opportunity to substantiate its purchases to the tune of Rs.19,40,92,375/- from five (5) parties and whereas the assessee could not produce these parties before the Assessing Officer for verification of the genuineness of the purchases. He submitted that though the assessee contended that there are no fictitious sale and purchase and that they have submitted the original bills before the Assessing Officer and that the payments were made through cheques only, it could not reconcile the purchase and sales on one to one basis truck-wise and was also not able to clarify, the wrong mentioning of vehicle numbers in the documents. He pointed out that the inspector of Income Tax Department was deputed to serve notice on these five (5) parties i.e., M/s. Apex Energy Resources Private Ltd, M/s. Butterfly Sales Pvt. Ltd., M/s. Topaz Impex Inc., M/s. S. K. Trading Corporation, M/s. K. G. Hard Coke Manufacture, but he could not contact them as they were not available at the stated address. 6.2. He referred to para 14 of the assessment order and submitted that on the examination of the purchases invoices filed by the assessee, the Assessing Offi....
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....s and ledger copies of the parties have been filed. It is also a fact that these five (5) parties have supplied goods to the assessee in the earlier years also. The assessee has outstanding balances payable to some of them. Stock registers are maintained and the purchases are co-related with the sales. In this type of business, if the purchase is held to be bogus then as a logical consequence, the sale also has to be held as bogus. When the Assessing Officer believes all the sales and hold the same as genuine sales, we see no reason to come to a conclusion that the purchases are fake or bogus. 8.2.1. The Mumbai Bench of the Tribunal in the case of DCIT vs. M/s. Sunrise Mettalic (India) Pvt. Ltd. in ITA No. 3628/Mum/2017; Assessment Year 2009-10, order dt. 23/03/2018 held that one limb of the transaction cannot be accepted while rejecting the other limb of the same transaction. It also held that no addition can be made for alleged bogus purchases based on the enquiry of the Sales Tax Department and denial of input credit, even when the parties have made confessional statements, in cases where there is corresponding sale and the payments were made by a/c payee cheques, stock regis....