9911796707
TMI Blog2016 (5) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In view thereof, we find no merit in the said stand of the assessee. Thus we reverse the order of CIT(A) and uphold the addition made by the Assessing Officer on account of bogus purchases - Decided against assessee. Addition made on account of commission expenses - Held that:- The said amount was added as income of the assessee on the surmise that it was due as on close of the year. The assessee has furnished before the CIT(A) and also before the Assessing Officer sufficient evidence to prove that the liability of ₹ 1,50,000/- has been discharged in the succeeding year. In the totality of the above said facts and circumstances, where the amount of commission is claimed to have been paid after realization of the amount due to the assessee by the said commission agent, we find no merit in the grounds of appeal raised by the Revenue and the same are dismissed - Decided against revenue - ITA No.991/PN/2012 - - - Dated:- 7-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri Mahesh D. Akhade For The Respondent : Shri Nikhil Pathak ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern starting from 29.10.2008 and the last purchase was dated 02.02.2009. The payment to the said party was stated to be outstanding even on the last date of hearing of the assessment proceedings i.e. 21.12.2011. The assessee claimed that there was commercial dispute with the party and therefore, payment had not been made. In order to confirm the genuineness of purchase transactions, the Assessing Officer sent a letter to M/s. R.K. Ispat on the address provided by the assessee. The said letter was received back undelivered . The assessee was asked to file confirmation from the said concern and was also requested to produce evidence with regard to delivery of articles purchased to the site, where they were put to use. The assessee on 21.12.2011 filed the copy of ledger accounts of M/s. R.K. Ispat containing the rubber stamp For R.K. Ispat . The name of person who had signed was not mentioned by the signatory. Further, the address of said party was missing. The Assessing Officer asked the representative of the assessee to explain as to why the amount in respect of purchases was not paid till date. He was also reminded that no evidence like lorry receipt, delivery challan or oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The appellant has also explained in his written submission as to how the material purchased by him has been utilized at various sites stating the date of purchase, quantity purchased, nature of goods and utilization of goods with quantity at various sites. The appellant has also pointed out the actual utilization of the goods purchased from M/s R.K. Ispat with the help of work orders and material required to execute the work as per detailed work orders specifying the quantity of material required for work to be executed at each site. On verification of the material available, the contention of the appellant is found to be correct. 6. The CIT(A) also agreed with the contention of the assessee that in case the alleged bogus purchases were not considered, then net profit percentage would substantially increase. In view thereof, the CIT(A) deleted the addition holding that the Assessing Officer was not justified in treating the purchases as bogus. In respect of second addition of ₹ 1,50,000/-, the CIT(A) allowed the claim of assessee of commission payment since the amount in respect of the same was paid in the succeeding year, in respect of which the assessee had produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as returned back undelivered . The Assessing Officer also requisitioned the assessee to produce the evidence of delivery of the said goods to different sites of the assessee. The assessee was unable to comply with the directions of Assessing Officer and claimed that the material purchased by it was delivered directly to the respective sites, where it was utilized and he was not in a position to file the requisite details of delivery / transportation. With regard to non-payment, the assessee claimed different explanations, one of the explanations that the material supplied by the said party was not up to the mark and further, the payment to the said party would be made on realization of payments from MSEDCL in April, 2012. 11. The case before us is a case of bogus purchases made by the assessee. Before the CIT(A), the assessee claims that it had utilized the said material and summary of utilization was filed which is placed at page 4 of the Paper Book. First of all, the said summary filed by the assessee of utilization of purchases at different sites is unsupported by any evidence of delivery of goods at the respective sites. Further, the assessee has not maintained any register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing bills along with related details i.e. delivery challans for the goods, receipts from octroi paid in respect of goods alleged to have been purchased from the above said parties. In reply, the assessee expressed his inability to produce the parties. He further stated that he was not in a position to produce any octroi receipts or any other corroborative evidence in support of the purchases alleged to have been made from the said parties. In view thereof, where the assessee was not in a position to produce any corroborative evidence to support the alleged purchases made from the said parties, the Assessing Officer show caused the assessee that since the parties were blacklisted by the Sales Tax Department as hawala dealers, the purchases alleged to have been made from them would be treated as bogus and not genuine purchases. The said show cause notice issued by the Assessing Officer was vide order sheet entry dated 04.03.2013 as to why the alleged purchases made from the said parties totalling ₹ 74,73,020/- should not be disallowed and added to his total income. Sufficient opportunity was given to the assessee and the learned Authorized Representative for the assessee in tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to establish the entries passed in the books of account by first proving that the transaction entered into is genuine, incurred for the purpose of business and also by establishing its case by way of corroborative evidence. In cases, where the assessee claims that it has made purchases from various parties, just because the purchases are evidenced by purchase bills are not sufficient evidence to establish the genuineness of the transaction, especially in a case, where there is evidence with the Assessing Officer that the transaction entered into by the assessee is bogus. As referred to by us in the paras hereinabove, the parties from whom the assessee had made the purchases were blacklisted by the Sales Tax Department on the fact that they had entered into accommodation entries of providing the bills without transfer of goods, on which though VAT was collected but was not deposited with the Sales Tax Department. Further, the said parties were not found at their addresses. The CESTAT has confirmed that the said parties were hawala dealers, wherein the seller had collected the tax but had not paid to the Sales Tax Department. The said fact had been brought to the notice by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompilation of data, which was headed as the charts showing details of purchases effected from so called Hawala Parties and corresponding sales turned out from such purchases also quantity wise (Party wise), as under:- 1) M/s. Phoenix Steels 2) M/s. K.G. Sales Corproation 3) M/s. Siddhivinayak Enterprises 4) M/s. James Steel Alloys P. Ltd., 5) M/s. Asian Metal Industries 6) M/s. Marda Steel Trade P. Ltd. 7) M/s. Excel Industrial Corporation 8) M/s. Virgo Valve Controls Ltd., 9) M/s. Suraj Steel India 10) M/s. Ashtavinayak Sales Agency 11) M/s. Dhiren Mercantile Pvt. Ltd. 12) M/s. Ashtavinayak Sales Agency. 15. The assessee has furnished the said information in respect of 12 parties from whom the alleged purchases have been made. Along with the said compilation of 130 pages, the assessee gave a Certificate that no new evidence has been included, which was not placed before lower authorities. It is further certified that only from the available sales and purchase bills and the charts have been prepared and produced in this Paper Book indicating the quantity and other details of material purchased and quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to-day stock register being maintained by the assessee, we find no merit in the said plea of the assessee. The CIT(A) while deciding the case of the assessee has further gone on the issue that without prejudice even where it has accepted that the corresponding purchases were entered into books of account of the assessee, but the presumption would be that the purchases were made from alternate sources. The purchases made from alternate sources corresponding to the bogus purchases were treated as unexplained expenditure under section 69C of the Act. We find that similar issue has been decided by the Hon ble Delhi High Court in CIT Vs. LAMEDICA (supra) and the Hon ble Madhya Pradesh High Court in System India Castings Vs. CIT (supra). 16. On the other hand, the learned Authorized Representative for the assessee before us has placed reliance on series of decisions for the proposition that where the sales have been accepted in the hands of assessee, then only a suitable percentage of the purchases are to be disallowed. The first such reliance was on the decision of Mumbai Bench of Tribunal in M/s. Bassein Drugs Ltd. Vs. ITO (supra). Even before the CIT(A), the learned Authorized R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of goods. The accounting principles provided that the assessee can maintain the quantity-wise or bill-wise and date-wise details of the items purchased by it. But in the absence of any such details being maintained by the assessee and in view of the various items dealt in by the assessee, we find no reliance of the data submitted before us, which in any case was not submitted before any of the authorities though before the CIT(A), the issue of matching concept was raised. The CIT(A) has given a finding that even at the appellate stage, the assessee is not in a position to discharge his onus. Further, in order to prove the sanctity of the purchases, the basic details of octroi receipts, transportation bills, delivery challans, etc. were not available with the assessee and the assessee has admitted to the same before both the authorities below. In the above said facts and circumstances, there is no alternative, but to treat the purchases made by the assessee as bogus and the expenditure incurred by the assessee, thus, merits addition in the hands of assessee. We further place reliance on the ratios laid down by the Hon ble Delhi High Court in CIT Vs. LAMEDICA (supra) and the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the same is rejected. The exercise of matching principles has no basis and is futile exercise. 19. The learned Authorized Representative for the assessee placing reliance on various decisions as referred above, pointed out that in the absence of the Assessing Officer having been rejected the books of account, no addition could be made in the hands of assessee since the sales made by the assessee were established. We find no merit in the stand of the assessee in this regard since the disallowance in the hands of assessee is made on account of specific purchases being held to be bogus. Once the specific purchases are held to be bogus, then the addition is to be made to the extent of amount of such unverifiable and unsubstantiated purchases. The learned Authorized Representative for the assessee further placed reliance on series of decisions by different Benches of Tribunal and various Hon ble High Courts in this regard, but in view of the peculiar facts of the case, where the assessee himself had admitted to the addition of bogus purchases from hawala dealers, when confronted by the Assessing Officer to furnish the corroborative evidence, the reliance placed is mis-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaken by the assessee was also considered and it was held as under:- 26. Before parting on this issue, we may also touch-upon an alternate plea raised by the assessee with regard to the quantum of addition on this count. In this context, assessee pointed out that if the entire amount of purchase debited in the Profit Loss Account with respect to the six parties is disallowed, it would mean that the corresponding consumption of steel has not taken place in quantitative terms. Before the lower authorities, assessee had furnished a working, which was confirmed by a structural engineer regarding the minimum requirement of steel in the projects undertaken by the assessee. As per the said working, if the aforesaid disputed quantity of steel purchase was excluded, it would show that the consumed quantity of steel was lower than the minimum required to undertake construction. Therefore, according to the assessee, the only presumption that can be withdrawn is that assessee had indeed effected the purchases. It was pointed out that on the failure of the assessee to substantiate the purchases, at best, the addition can be made with respect to the gross profit element corresponding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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