9911796707
TMI Blog2017 (5) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... see. - I.T.A. No. 5171 to 5175/Mum/2014 - - - Dated:- 8-5-2017 - SHRI D.T. GARASIA, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Suman Kumar, DR For The Respondent : Shri Sanjay Kapadia, AR ORDER PER D.T. GARASIA, JUDICIAL MEMBER: All these appeals are filed by the revenue against the respective orders of CIT(Appeals) 35, Mumbai all dated 09.05.2014 for the assessment years 2007-08 to 2011-12 respectively. All these appeals relate to the same assessee, therefore they are disposed of by this common order and involve common issue. 2. In all these appeals the ground of appeal raised by the department are same except for the change in figures. i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 56,87,118/- made by the A.O. on account of bogus purchases. ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying upon judgements in the case of CIT vs. Nikunj Exim Enterprises Pvt. Ltd. Without appreciating that the facts involved in the appellant s case are different from the facts of the above case law. iii. On the facts and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts for taxation: Sr. No. Assessment Year Amount of Bogus Purchases 1. 2006-07 ₹ 38,70,429/- 2. 2007-08 ₹ 2,63,60,329/- 3. 2008-09 ₹ 1,75,02,330/- 4. 2009-10 ₹ 7,20,75,620/- 5. 2010-11 ₹ 1,42,04,474/- Therefore, the A.O. has reasons to believe that a tune of ₹ 38,70,429/- has escaped for the A.Y. 2007-08 in view of the provisions of section 147 of the Income-tax Act, 1961. During the course of survey a statement was recorded. The assessee has offered additional income on the ground that the said parties from whom the assessee has made purchases had admitted before the sales tax authorities for giving non genuine bills and they never supplied any material to the assessee and the assessee admitted that he did not have any documentary evidence and, therefore, he offered additional income. The assessee was given sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the purchases which have been recorded by him in the bogus of accounts, are found to be bogus, as corroborated by the fact that they exist in the hawala list of the Sales Tax Department, the statement of parties recorded by the Sales Tax Department of the Government of Maharashtra, wherein they have admitted that they have issued only bills and no actual transfer of goods has indeed occurred. The statement of the above parties were also provided to the assessee. The assessee was also asked to produce the above parties. The assessee had showed his inability to produce them. Therefore, assessee s argument that it has made genuine purchases from these parties is not acceptable. If indeed the assessee has made these purchases, the same have been made from out of the books and, therefore, the same is treated as bogus expenditure. v) It is worthwhile to mention that mere payment by account payee cheque is not sufficient proof for claiming any expenditure as held by the following courts: a. Assam Pesticides and Agro Chemicals vs. Commissioner of Income-tax 227 ITR 845: Mere payment by itself would not entitle an assessee for deduction of the said expenditure unless the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case is that during the course of survey conducted on 19.12.2012, the appellant was confronted with evidence available before the A.O. on the website of the Maharashtra Sales Tax Department of names of parties who were suspected to be bogus suppliers for A.Y. 2011-12, 2010-11, 2009-10, 2008-09 and 2007-08. The present appeal is vis- -vis A.Y. 2007-08. The A.O s contention while disallowing the purchases detailed on page 6 of the Assessment Order was that (i) they were listed on the website of the sales tax department and secondly because 133(6) notices were sent to these parties and the same remained uncomplied with. Only one of them which is M/s. Prakash Engineers and Construction Co. filed copy of acknowledgement for return of income filed by them for A.Y. 2007-08 and mentioned their VAT Registration No. and did not file any transactions specifically done with the appellant. With respect to other 5 parties, notices were returned unserved by the postal authorities and later on one of these 5 parties filed its confirmation letter dated 25.01.2014. It was submitted that with reference to the above subject we would like to submit that during A.Y. 2007-08, we have made no transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has not found any reason or evidence to believe that these payments were not genuine considering that the said cheques have been encashed by the abovementioned 6 parties. Also even though physical survey has been conducted at the premises of the appellant, however there is no evidence available before the A.O. that any of these cheques or any other documents have been found which has raised doubt on any of the purchases made by the appellant being treated as same, neither is there any evidence found during the course of subsequent proceedings that any cash has been received back by the appellant. The appellant has also referred to the decision of M/s. Nikunj Exim Enterprises wherein the Hon ble HC has decided the issue in favour of the appellant on similar facts. The appellant has also referred to the decision of the Hon ble Settlement Commission in respect of assessee carrying out MCGM work wherein it has been held that 8% of the main contract and 4% of the sub contract turnover to be treated as net profit as being valid. While this may not alone be a major reason to substantiate the appellant claim, however, considering that the survey enquiries as well as assessment has not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey were giving only Hawala entries without any goods or materials and the alleged sale proceeds have been withdrawn and cash remitted to the alleged purchases after deducting a nominal commission. The learned DR relied upon the decision of Assam Pesticides and Agro Chemicals vs Commissioner of Income Tax 227 ITR 845 and held that mere payment by itself would not entitle an assessee for deduction of the said expenditure unless the same are proved to be paid for commercial consideration. The expenditure must be incurred exclusively and wholly for business or profession. Mere payment itself would not entitle the assessee to deduction of expenditure unless the same was proved to be paid for commercial consideration. 7. The learned DR submitted that as per the decision of the Hon ble Gujrat High Court in case of Commissioner of Income Tax vs. M.K. Brothers 30 taxman 547. If the assessee has made purchase from the parties and made payment through cheques, the ITO found that they were not available. Therefore, in view of the case only entire profits cannot be added but only profit element can be added. 8. The learned AR submitted that the assessee is a contractor carried out the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T-25(2) vs Shri Pratap U Purohit 14-19 4. -25(3) vs Shri Rajeev G. Kalathil 20-25 5. Ramesh Kumar Co. vs The ACIT-21(1) 26-32 6. ACIT vs M/s. S.D. Industries 33-35 10. We have heard the rival contention of both the parties. We find that during the course of survey conducted on 19.12.2012, the assessee was confronted with evidence available before the A.O. on the website and who were suspected to be bogus suppliers for A.Y. 2007-08, 2008-09, 2009-10, 2010-11 and 2011-12. The A.O. disallowing the purchase has relied upon the list of website of Sales Tax Department and secondly notice under section 133(6) were sent tp 36 parties in respect of the 7 parties confirmations have been received in remaining 28 parties notices were returned unserved by the postal authorities. The assessee is a registered government contractor and the assessee identify the scope of work and accordingly estimate and tenders are prepared by them and then floated in newspaper and procedure followed by selection and te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 69C of the Act. If the A.O. doubted the genuineness of the said purchases, it was incumbent upon him to cause further inquiries in the matter in order to ascertain the genuineness or otherwise of these transactions. Without causing any further enquiries to be made in respect of the said purchases, the A.O. cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department, the statements / affidavits of third parties, without the assessee being afforded any opportunity of cross examination of those persons for nonresponse to information called for under section 133(6) of the Act. In the factual matrix of the case of hand, where the A.O. failed to cause any enquiry to be made to establish his suspicions that the said purchases are bogus, the assessee has brought on record documentary evidences to establish the genuineness of the said purchase transactions, transactions, the action of the A.O. in brushing aside these evidences cannot be accepted. Further the Hon ble Bombay High Court in the case of CIT vs Ashish International (ITA No. 4299 of 209) (Bom) has held that the genuineness of the statements relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
