TaxTMI 
TaxTMI 
2024 (12) TMI 1673
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.....5% of Rs. 17,31,43,2577- being the original addition) without appreciating the facts that the appellant has produced the relevant Information required to prove the genuineness of the transactions. On the facts and in the circumstances of the case and in law the Ld, CIT(A) erred in making an addition of Rs. 2,16,42,9077- (i.e. 12.5% of Rs. 17,31,43,2577- being the original addition) wherein the Ld. CIT(A) has completely Ignored the documentary evidence submitted by the appellant before him during the appellate proceedings to prove the genuineness for the expenditure/purchase incurred and has in fact only relied upon merely on basis of that the appellant has not produced the ITR of the said expenditure/purchase parties. On the facts and in the circumstances of the case and in law the Ld. CIT{A) erred in making an addition of Rs. 2,16,42,9077- (i.e. 12.5% of Rs. 17,31,43,2577- being the original addition) merely on surmises that the purchases/expenses might have been inflated being the basis of the addition so made. The appellant craves leave of Your Honour to add, amend, modify, alter and /or delete any of the above grounds of appeal." Revenue (I.T.A No....
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....n-1) return. During the assessment proceedings, the Ld.AO asked the assessee to furnish the complete details of purchase and labour charges. In response, the assessee had filed reply and submitted documents like ledger details, bills, vouchers by vendors / service providers, GST returns of the vendor transactions through banking channels. Therefore, to verify the genuineness of the transactions of various parties, the Ld.AO issued notice under section 133(6) of the Act. Out of 28 parties none of the notices was complied with. Further, the Ld.AO had carried out physical verification through "Verification Unit" for 3 vendors. However, during the verification of the addresses mentioned in bills and vouchers were either wrong or no business activities was found at the address mention in the bills / vouchers. The registration under GST Act is in nature of business 'retailer of garments' whereas this party had supplied colour for painting. Considering the wrong address and no business activities at the address mentioned, the Ld.AO being suspicious, called for verbal hearing. The assessee appeared in virtual hearing and only relied on submitted reply. The Ld. AO inferred that the assessee....
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.... as below:- "12. In our opinion, a full addition could be made only on the bans of proper proof of bogus purchases being available indicate as the law would recognise before the AO, of a nature which would unequivocally indicate that they were wholly bogus. In the absence of such proof, by no stretch of imagination, a conclusion could be arrived, that the entire expenditure claimed by the petitioner qua such transactions need to be added, so be taxed in the hands of the assessee. 13. In a situation as this, the AO would be required to carefully consider all such materials to come to a conclusion that the transactions are found to be bogus. Such investigation or enquiry by the AO also cannot be an enquiry which would be contrary to the assessments already undertaken by the Sales Tax Authorities on the same transactions. This would create an anomalous situation on transactions. Hence, in our opinion, wherever relevant any conclusion the sale-purchase in regard to the transactions being bogus, needs to be arrived only after the A.O, consults the Sales Tax Department and a thorough enquiry in regard to such specific transactions being begun, is also the conclusion of ....
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....ness ITR or reflected a substantially lower turnover in ITR as compared to turnover shown in SGTR1 return". When the AO tried to examine the case from the above angle, the appellant failed to submit the required information/evidences. I find that the onus is on the appellant to prove the genuineness of purchases by producing the parties from whom the purchases were purportedly made or to whom labour charges were paid, which the assessee failed to produce before the AO. Mere payment through banking channels is not sacrosanct. If the seller is found to be non-existent then purchase price can be treated as income. Strict rules of evidence do not apply to the income tax proceedings and the real test with regard to genuineness of transaction is "preponderance of probabilities" and not "beyond a reasonable doubt". It is well settled law that strict rules of evidence do not apply to Income-tax proceedings and conclusive proof is also not necessary to arrive at any conclusion or to establish a fact. The AO is entitled to arrive at a conclusion on appreciation of a number of facts, the cumulative effect whereof may be considered to judge the soundness of the conclusion. It is a set....
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.... to the three parties, (i) Said Enterprises, Prop. Zahid Hussain Chaudhary, (ii) Rakeshbhai Kantibhai Makwana, Prop Nutan Enterprises and (iii) Shri Rupesh Prakash Bhoir, Prop Arihant Traders. In all the three purchasers, the Verification Unit made an adverse comment about the existence of all three parties. 8. After hearing the submissions of both parties and reviewing the documents on record, we proceed to dispose the appeal filed by the assessee. It is evident that the Ld. AO conducted a thorough inquiry, including issuing notices and utilizing the Verification Unit. However, the identity of the parties involved in the transactions was not conclusively established. The expenses recorded by the assessee in relation to purchases and labor charges were supported only by documentary evidence. The Ld. AR presented documents related to compliance with the GST Act, including GST returns, Input Tax Credit (ITC) claimed by the assessee, and evidence of Tax Deducted at Source (TDS) from the concerned parties. However, the Ld. DR highlighted specific issues regarding the creditworthiness of the parties, their non-filing of Income Tax Returns (ITRs),non-declaration of business income ....