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2024 (12) TMI 701
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....31,030 2 Income as computed u/s143(1)(a) 1,31,030 3 Variation in respect of issue of bogus purchase u/s 69C 2,16,58,432 4 Total Income/Loss determined as per the above proposal 2,17,89,462 5. Income to be tax @ 60% as per provision of section 115BBE 2,16,58,432 6 Income to be Tax at normal rate 1,31,030 4. The assessee is a partnership firm engaged in the business of manufacturing and trading of oil and oil cake. On 24.09.2018, the assessee filed return of income declaring total income at Rs. 1,31,030/-. 5. Vide impugned assessment order, the Assessing Officer held that the assessee had failed to establish genuineness of the transactions of certain purchases alleged to have been done through following two entities; * M/s Sweekar Udyog (GSTIN 08ASJPD3992M1Z6 * M/s Shiv Agro Sales (GSTIN 08BBHPK0251N1Z6) As found by ld. Assessing Officer, source of payments for purchases worth Rs. 54,23,539/- through the first mentioned entity and purchases and source of payments for purchases worth Rs. 1,62,34,893/- said to have been made through 2nd mentioned entity remained unexplained. Learned Assessing Officer further obs....
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.... grounds of appeal, appellant claims that ld. CIT(A) has erred in dismissing the appeal and confirming the additions, while treating the purchases made from the above said two entities, as unexplained, and in resorting to the provisions of section 69C of the Act. 8. Arguments heard. File perused. 9. As is available from the assessment order, specific information was flagged as per Risk Management Strategy formulated by CBDT to the effect that a case of fake invoices, without supply of goods was booked vide incident report No. 12/GST/2018-19, dated 20.09.2018 against Sh. Sandeep Goyal, Shri Rajesh Arora & MS. Himani Munjal, who had created firms with fake stolen IDs, for the purpose of passing Input Tax Credit (in short "ITC") to their clients, on commission basis. The above named three persons, in their statements recorded on 20.08.2018 are stated to have accepted the role played by them and the modus operandi adopted for fake invoices under GST laws, to pass illegitimate ITC to different buyers, against commission, and without actual supply of goods. Incident Report received from GST authorities 10. As per incident report No. 21/GST/2021-22, from Directorate General....
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....reference, synopsis of the reply/submissions dated 12.01.2023 submitted by the assessee, in response to the show cause notice needs to be reproduced, and same reads as under; "Vide our e-response dt. 04.01.2023 we have requested you to please provide the sanction of competent authority for re-opening of the assessment u/s 147 and to share us all the relevant details and documents related to escapement of income and validity of section 148 notice, and to share all the outcomes of the third parties enquirers made by you, information, details, documents and evidences available with you and statements of third parties recorded by you so that we can submit our complete reply and submission at one go, but you have not provided us the same so far. Again Vide our e-response dt. 07.01.2023 we have requested you to please provide us the copy of sanction of Ld.PCIT, Jaipur- 1 dt. 29/03/2022 for re-opening of the assessment, the exact specific information (which was flagged as per Risk Management Strategy) which has been used for re-opening of the assessment, Copies of the statements of Shri Rakesh Bansal, partner of the assessee firm M/s Prem Industries recorded u/s 70 & 174 of the C....
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....s. Most of the details were already provided in the form of the order u/s 148A(d) dated 29.03.2023 before issue of notice u/s 148 and during the current proceeding in the form of attachment vide notice dated 142(1). The assessee sought copy of an approval given by the Ld.PCIT, Jaipur-1 to order u/s 148A(d) of the I. T. Act 1961. It is seen that the approval by the Pr CIT is an online approval vide Reference No. 100000028819969 dated 29/03/2022 mentioned in the order passed u/s 148A(d) of the I. T. Act 1961. Copy of the order u/s 148A(d) of the I T Act 1961 was again provided to the assessee during the course of re-assessment proceedings. The assessee asked for copy of the statement of Shri Rakesh Bansal recorded by the GST authorities. Since this particular statement is not being used against the assessee for the purpose of drawing final conclusion in the re- assessment proceedings, the question of providing the same does not arise. The explanation given by the assessee during proceeding of order u/s 148A(d) is duly considered and the contentions of the assessee were dealt with therein. 4.2.2 The assessee vide para 5 of the submission dated 10.01....
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....assessment proceedings, 4.2.5 The assessee further relied upon the decision in the case of VAMAN INTERNATIONAL PVT. LTD. (BOM- HC) 422 ITR 520. The facts of this case is entirely different than that of present case as discussed in para 4.2.4. 4.2.6 The assessee further relied upon the decision in the case of Pr. CIT v. Agson Global (P) Ltd. (Del-HC) 441 ITR 550. The facts of this case is also entirely different than that of present case as discussed in para 4.2.4. 4.2.7. Similar is the case with the other decisions relied upon by the assessee. 4.3 Conclusion drawn- From the above discussion, it is ample clear that the assessee failed to establish genuineness of the transaction of impugned purchases dorije through M/s Sweekar Udyog (GSTIN 08ASJPD3992M176) and M/s Shiv Agro Sales (GSTIN 088BHPK0251N126) Rs. 54,23,539/- & Rs. 1,62,34,893/-respectively totaling amount to Rs. 2,16,58,432/- for the following reasons:- * When the assessee was confronted by the GST authorities, the assessee paid the corresponding GST. * Needless to mention, the GST authorities are only concerned with the GST and not with the genuineness of the purchases....
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....want of reasonable opportunity to the assessee of being heard. 22. On the other hand, learned DR for the revenue has submitted that GST authorities communicated the information about availing of ITC by the assessee on invoices reportedly issued by fake parties, and thereupon the assessee deposited, by way of reversal, the ITC so wrongly availed of, but the Assessing Officer took into consideration that the assessee had failed to discharge its onus to prove genuineness of the documents relied on by it, and also the genuineness of the purchase transactions. Therefore, the contention is that non supply of copy of statement of the partner of the firm does not adversely affect the case of the Revenue. Discussion 23. A perusal of the assessment order would reveal that as per Incident Report (No. 12/GST/2018-19 dated 20-09-2018), on 17-01-2022, Shri Rakesh Bansal is stated to made statement u/s 70 & 174 of the GST Act in the capacity of partner of M/s.Prem Industries. * In para 5 of the Incident Report, (as reproduced at page 3 of the assessment order), it was specifically mentioned that Shri Rakesh Bansal has admitted that they had availed of wrong ITC on the basis of i....
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....Learned AR for the appellant has submitted that the assessee in its wisdom deemed it appropriate to deposit the excess ITC claimed by it finding that the suppliers had not deposited tax due, and as such, no adverse inference be drawn against the appellant from the said reversal. Discussion 27. We have gone through Incident Report No. 21/GST/2021-22 received from Directorate General of GST. Para 5 thereof would reveal that the assessee made payment of Rs. 10,31,354/- towards ITC availed of by it- the assessee to which said firm was actually not entitled, the invoices have been issued by the fake firms. * As is available from the assessment order, the AO relied on para 5 of the submission dated 10-01-2023 put forth by the assessee itself that said firm Ms/s. Prem Industries, Bharatpur had deposited this amount through credit ledger of excess ITC on 17-01-2020 and debited the said amount of M/s. Shiv Agro Sales, Sri Ganganagar. In view of all this, the AO was justified in observing in para 4.2.2. of the order of assessment that said admission regarding deposit of ITC by the assessee earlier availed of by it, supported the information received against the assessee tha....
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....o response to the notices u/s 133(6) of the Act issued to the 2 entities and as such, the assessee could secure presence of concerned officers or the representatives of the said two entities, for the purpose of verification of transaction of purchases, but the assessee opted not to take any step in this direction. 32. We enquired from Learned AR for the appellant as to whether any prayer to take any such step was made before Learned CIT(Appeal) to as to prove genuineness of the documents relied on by the assessee in proof of purchase transactions in question. In the course of arguments, Ld.AR for the assessee candidly admits that no prayer was made by the assessee even before Learned CIT(A). 33. Before the AO, on behalf of the assessee, reliance was placed on the decision in the case of Odeon Builders Pvt Ltd., reported in 418ITR 315 to submit that the assessee had discharged its initial burden by producing various documents including the purchase bills, transport bill, confirmed copy of accounts details of payment by cheque, factum of registration of said two entities under VAT, ITR of the sellers. The AO distinguished the said decision cited on behalf of the assessee on ....
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....o 175 of PB); copies of GSTR-2A (page 176 to 182) furnished by the assessee-appellant said purchases were reflected; and copies of GSTR-1 (page 183 to 192 of PB) filed by the suppliers. In support of his contention, learned AR for the appellant has relied on decision in PCIT v. Tejua Rohitkumar Kapadia, (2018) 256 Taxmann 213 whereby Hon'ble Apex Court upheld the decision in PCIT v. Tejua RohitKumar Kapadia, Tax Appeal No.691 of 2017, decided on 18.9.2017 by Hon'ble High Court of Gujarat at Ahmedabad. Reliance has also been placed on decision in CIT v. Nangalia Fabrics (P) Ltd., (2014) 220 Taxmann 17 (Guj)(HC) Reliance has also been placed on decision in CIT v. Century Plyboards India Ltd., (2019) 262 Taxmann 13(SC). But, it is significant to note that Full Text of the judgment has not been provided. In the written submissions, only extract of the judgment has been made available. Therefore, no reliance can be placed on said decision. 36. Learned AR has also contended that mustard seed purchased from the entities was used for production of finished goods i.e. mustard oil/cake and sale of finished goods, and further that the department having accepted the sales, there is....
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....s. (ii) On issuance of notices under section 133(6) of IT Act, none of the two entities-sellers respond thereto. (iii) When the two entities did not respond to the notices, and this fact was brought to the notice of the assessee, it did not take any step to secure presence of officers or concerned officials of the said two entities, before the Assessing Officer with the requisite record. (iv) When officers or concerned officials of said two entities were not produced before the Assessing Officer, the documents relied on by the assessee in the Paper Book, as detailed above, were not established, and the Assessing Officer rightly opined that same could not be accepted as evidences when their genuineness was not confirmed by the two entities. (v) Admittedly, no tax was paid by the two sellers- entities. (vi) No cogent and convincing material evidence was produced in proof of the stock of the 2 entities, to support the claim of the assessee regarding purchase transactions. (vii) No transporter or any officer from their office was produced or examined by the assessee before the Assessing Officer to prove claim regarding actual transp....
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....ted in the written submissions. 40. On the other hand, learned DR for the Revenue submitted that GST authorities have unearthed various suchlike cases of massive tax evasion where ITC was availed of on fake GST invoices, and that this being one of the cases investigated by GST authorities, the impugned assessment and impugned order deserve to be upheld. For the same reason, learned DR has opposed the contention raised on behalf of the appellant in the alternative that gross profit rate be applied and disallowance be made to the extent of shortfall in the gross profit rate. Discussion 41. In JMD Corporation of India Ltd.'s case (supra), Co-ordinate Bench of ITAT, at Mumbai observed that the Assessing Officer had not doubted the corresponding sales made by the assessee. It was further observed that if such purchases are treated as non-genuine then the corresponding sales should also be considered as non-genuine and that therefore, we consider that in such types of transaction only the profit margin embedded in such transaction could be taxed. It was further observed that in such type of cases, the assessee procures the material from the grey market by paying costs and as ....
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...., said firm is engaged in business of manufacturing and trading of oil and oil cake. As regards comparability, admittedly, these documents were not made available to the Assessing Officer or before CIT(A). Same have been submitted before this Appellate Tribunal for the first time. No permission has been sought by the appellant to place on record said documents on the point of determination of liability of the assessee having regard to the Gross Profit aspect. In this situation, we are not inclined to rely on said documents for being considered on this aspect. 48. This very issue came up for discussion in the case of Vijay Proteíns Ltd. v. Commissioner of Income-tax [2015] 58 taxmann.com 44 (Gujarat)(09-12-2014] IT REFERENCE NO. 139 OF 1996, TAX APPEAL NO. 243 OF 2002, wherein assessee was found to have inflated expenditure by showing higher purchase price through fictitious invoices in the names of 33 fictitious parties. Therein, Hon'ble High Court upheld that Tribunal was justified in disallowing 25 per cent of purchase price. Relevant portion of the decision reads as under::- "9. Mr. SN Soparkar learned Senior Counsel appearing for the assessee ....
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....he light of above discussion, we modify the orders of authorities below accordingly. The first common ground of both the appeals is disposed of accordingly. 5. The decision of this Court in the case of Sanjay Oil Cake Industries v. Commissioner of Income Tax, reported in (2009) 316 ITR 274 will govern the issue involved in the present appeals." ..................... ............... 11. Mr. Pranav Desai learned Standing Counsel appearing for the Revenue supported the impugned judgment of the Tribunal and submitted that the Tribunal has passed the judgment by relying upon its awn judgment rendered in the case of Hynoup Food and Oil India (P.) Ltd. v. CIT. However, the said judgment of the Tribunal was challenged in appeal before this Court and vide judgment CIT v. Hynoup food & Oil India (P.) Ltd. [2007] 290 ITR 702/[2006] 150 Taxman 194, it was held that once the business was not reflected in the regular books, payment by crossed cheque or draft would not have been practicable considering the nature of that transaction to be fallacious, when one considered the object with which the provision had been brought on the statute book. He has taken us th....
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.... being confronted by GST authorities with the allegations levelled on the basis of information received, deposited by way of reversal, the ITC availed of on the basis of the invoices portrayed to have been issued by the abovesaid 2 entities. This goes to show that as a matter of fact, the goods were not received from the said 2 entities, but, were received from different source, exclusively to the knowledge of the assessee. Ld. CIT(A) upheld the reasons recorded by the Assessing Officer. 50. In the given facts and circumstances, having regard to the sale of the goods, which was not doubted by the authorities below, it is evident that the assessee inflated the expenditure in question by showing higher amount of purchase price through fictitious invoices in the names of the 2 entities bogus suppliers. As per settled law no sale of goods can take place without purchase, and in a case an assessee is found to have indulged into bogus purchases, a percentage of the bogus purchases can be added to arrive at the net income of the assessee-appellant. In view of the above discussion and also taking into consideration aspect of inflation of purchases and saving of taxes, duties, complia....