2019 (3) TMI 1130 - AT - Income Tax

Reopening of assessment u/s 147 - Disallowance of bogus purchases - addition u/s 69 - HELD THAT - since the books of accounts of the assessee are unreliable by rejecting the same and invoking the provisions of section 145 (2) AO completed the assessment in the manner provided u/s 144 - HELD THAT - Assessee could not produce any material evidence of the parties/ intermediaries from whom the purchase from M/S Arihant Exports was made which could be verifiable. Under the above facts and circumstances, we find no infirmity in the order passed by the authorities below. Thus the ground raised by the assessee stands dismissed. Addition of commission expenditure in order to obtain such accommodation entries - assessment year 2014-15 - HELD THAT - The assessee had obtained accommodation entries of ₹.75,789/- from M/s. Sun Diam, Surat for which commission was paid to the accommodation provider. Since the very nature of business of the accommodation entry provider was to earn commission income from the beneficiaries, who had obtained accommodation entries from them, we are of the considered opinion that the Assessing Officer has reasonably estimated the commission of ₹.10,000/- for two bogus bills obtained by the assessee @ ₹.5,000/- per bill, which was rightly confirmed by the ld. CIT(A). - Decided against assessee

Summary

Issues:
- Confirmation of addition under section 69 of the Income Tax Act for the assessment year 2014-15.
- Confirmation of disallowance of bogus purchases for the assessment years 2013-14 and 2014-15.

Analysis:

Confirmation of Addition under Section 69:
The appellant challenged the confirmation of addition under section 69 of the Income Tax Act for the assessment year 2014-15. The appellant contended that the authorities wrongly rejected the books of accounts and presumed the purchases as bogus without direct evidence. The Assessing Officer observed that the purchases from certain entities were unverifiable and treated them as bogus purchases. The appellant failed to produce evidence of the intermediaries involved in these transactions. The Tribunal found no infirmity in the decision of the authorities below and dismissed the appellant's grounds.

Disallowance of Bogus Purchases:
Regarding the disallowance of bogus purchases for the assessment years 2013-14 and 2014-15, the appellant challenged the decisions of the lower authorities. The Tribunal noted that during a search and seizure action, it was revealed that the appellant had made bogus purchases from specific entities. The appellant could not provide verifiable evidence of these transactions. The Tribunal upheld the decisions of the lower authorities, stating that the onus was on the appellant to prove the genuineness of the purchases, which was not done. Therefore, the grounds raised by the appellant were dismissed.

Unexplained Expenditure:
The appellant was also contesting the addition of unexplained expenditure in the assessment year 2014-15. The Assessing Officer treated certain commission payments as unexplained expenditure under section 69C of the Act. The Tribunal agreed with the lower authorities that the commission payments were related to obtaining accommodation entries and upheld the addition of unexplained expenditure. The Tribunal found the estimation of commission by the Assessing Officer to be reasonable and confirmed the decision of the ld. CIT(A).

In conclusion, the Tribunal dismissed both appeals filed by the appellant, upholding the decisions of the lower authorities regarding the confirmation of additions under section 69, disallowance of bogus purchases, and unexplained expenditure.