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2020 (3) TMI 717 - AT - Income TaxUndisclosed purchase - Unexplained expenditure allegedly by way of commission paid - HELD THAT - In the instant case, the assessee in its books of accounts, have shown purchases from the above-mentioned three parties amounting to ₹ 38.99 lakhs. In view of the information in the possession of the Assessing Officer, that the assessee has obtained only accommodation entries bills in the form of the purchases without any actual purchase of the goods, the Assessing Officer asked the assessee to substantiate the purchases. From the orders of the lower authorities, we find that the assessee not only failed in produce confirmation from those parties but also failed to substantiate transport of goods mentioned in those bills from Mumbai i.e. the place of purchase to the factory located at Gurgaon i.e. the place of consumption of goods. Even before us, the assessee has not filed any such evidence to rebut the finding of the Assessing Officer as well as the CIT(Appeals). Mere filing of copy of purchase bills, goods received notes or payment by cheque was not sufficient to establish the purchases. The assessee was required to discharge its onus of substantiating the purchases with deliveries of goods. The responsibility of the assessee to substantiate purchases was further increased in view of the statement of Shri Rakesh Kumar Gupta that he had provided accommodation entry bills without supplying the goods physically. But in view of the failure on the part of the assessee in discharging its onus, we do not find any infirmity in the order of the lower authorities on the issue in dispute and accordingly we uphold the same. The ground No. 2 and 3 of the appeal of the assessee are accordingly dismissed.
Issues Involved:
1. Initiation of proceedings under Section 147 of the Income Tax Act. 2. Addition on account of alleged undisclosed purchases. 3. Addition as unexplained expenditure allegedly by way of commission paid. Issue-wise Detailed Analysis: 1. Initiation of Proceedings under Section 147 of the Income Tax Act: The appeal for the assessment year 2002-03 arose due to the remand by the Hon'ble Delhi High Court for deciding on merit. The Tribunal had earlier quashed the reassessment due to non-supply of reasons before the expiry of the six years from the end of the relevant assessment year. However, the High Court set aside the Tribunal's order, stating that the jurisdiction of the Assessing Officer (AO) is derived from the conditions specified in Section 147, and the notice was issued within the six-year limit prescribed under Section 149. The High Court emphasized that serving of the notice is a precondition to making the assessment order under Section 148, not to confer jurisdiction. The High Court remanded the matter back to the Tribunal for deciding on merits. 2. Addition on Account of Alleged Undisclosed Purchases: The AO received information that the assessee had obtained accommodation purchase bills from three parties without actual purchase of goods. The AO added ?38,99,527/- as undisclosed purchases due to the assessee's failure to provide evidence of transportation and confirmation from the parties. The CIT(A) upheld the addition, noting the lack of independent proof supporting the purchases and the assessee's inability to correlate any expenditure with specific purchases. The Tribunal, upon review, found that the assessee failed to substantiate the purchases with delivery evidence, thereby upholding the addition made by the lower authorities. 3. Addition as Unexplained Expenditure Allegedly by Way of Commission Paid: The AO also added ?38,995/- as unexplained expenditure by way of commission paid for arranging accommodation entry bills. The CIT(A) upheld this addition, and the Tribunal found no infirmity in the lower authorities' orders, considering the assessee's failure to discharge the onus of substantiating the purchases and commission payments. Assessment Year 2003-04: The issues for the assessment year 2003-04 were identical to those of 2002-03. The Tribunal dismissed the ground related to initiation of proceedings under Section 147, following the High Court's decision. For the issues of undisclosed purchases and commission thereon, the Tribunal upheld the additions made by the AO and confirmed by the CIT(A), maintaining consistency with the decision for the assessment year 2002-03. Conclusion: Both appeals of the assessee were dismissed, with the Tribunal upholding the additions made by the AO and confirmed by the CIT(A) for both assessment years. The Tribunal emphasized the assessee's failure to substantiate the purchases and commission payments, thereby justifying the additions on account of undisclosed purchases and unexplained expenditure.
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