2017 (12) TMI 573 - AT - Income Tax

Accommodation entry/bogus purchases - Reopening of assessment - Held that - The credibility of information relating to reopening remains un-assailed. In such factual scenario, the assessing officer has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any confirmation from any of the party. Assessee has also not been able to produce any of the parties. Necessary evidence relating to transportation of the goods was also not on record. In this factual scenario, it is amply clear that the assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills is bogus and non-existent. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee s own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. Thus the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by case of Sumati Dayal vs. CIT 1995 (3) TMI 3 - SUPREME Court and CIT vs. Durga Prasad More 1971 (8) TMI 17 - SUPREME Court . In the present case, the assessee wants that the unassailable fact that the suppliers are non-existent and, thus, bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of Hon ble Apex Court decisions. - Decided against assessee.

Summary

Issues involved:
1. Disallowance of 12.5% of bogus purchase.

Detailed Analysis:
The appeal was directed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of 12.5% of bogus purchase. The assessing officer added peak purchases amounting to a specific value, disregarding detailed evidence presented and levied interest, based on information from the Sales Tax Authorities. The appellant argued that the source, not the purchase expenditure, was in dispute, citing judicial precedents. The assessing officer initiated the assessment based on information indicating involvement in bogus purchases. The appellant failed to provide evidence such as transportation bills and confirmations from the parties, leading to the addition of peak credit under section 69C of the Income Tax Act.

The Commissioner of Income Tax (Appeals) upheld the action of the assessing officer, emphasizing the appellant's failure to prove the genuineness of the purchases despite contrary statements by the sellers. Citing precedents, a 12.5% addition to the alleged purchases was deemed appropriate. The ITAT noted credible information about bogus suppliers, unserved notices to parties, and lack of evidence regarding goods transportation, concluding that the appellant obtained bogus purchase bills. The Sales Tax Department's inquiry confirmed the bogus nature of the parties, supporting the decision to disallow the purchases.

The ITAT considered the appellant's argument regarding the non-existence of suppliers and the reliance on produced documents, citing relevant Supreme Court decisions. While referring to various court decisions on bogus purchases, the ITAT confirmed the Commissioner's order based on Supreme Court and High Court decisions. Noting that it was not a Revenue appeal, the ITAT upheld the relief granted to the assessee and dismissed the appeal. The judgment highlighted that Tribunal cases referred by the assessee did not supersede the decisions of higher courts, ultimately confirming the Commissioner's order based on legal precedents.