9911796707
TMI Blog2017 (9) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in this case. 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. In this factual scenario it is amply clear that assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills are bogus and non-existent. Revenue authorities are not supposed to put on blinkers. In the present case, the assessee wants to disregard the unassailable fact that these suppliers are bogus and go by the documents shown. This proposition is totally unsustainable. It will not be appropriate to take away the relief already granted by the learned CIT(A). Accordingly uphold the order of the learned CIT(A) wherein he has sustained 12.5% as disallowance out of the bogus purchase. - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ading Co. 2009-10 50,92,201 6. Shre Ganesh Trading Co. 2009-10 53,16,274 TOTAL 1,81,65,330 4. The Assessing Officer issued notice to the said suppliers. But the same remained unresponded. The assessee had not produced any confirmation nor produced the parties. The Assessing Officer proceeded to make an addition of 12.5% of the bogus purchases as under:- "3.1. Having seen the facts of the case, it is confirmed that purchases are non-verifiable. The assessee neither furnished the confirmation letters from the alleged suppliers of material, nor produced them for examination. Thus, the assessee failed to prove the genuineness of the purchases. Under the circumstances, the purchases shown, by the assessee cannot be taken as genuine. Accordingly, the books and book result cannot be relied upon. Therefore the books of the assessee and the book result thereof is rejected under section 145(3) of the IT Act. 3.2. Having rejected the books of account, the next corollary is to arrive at the true and correct income of the assessee. While doing so, the following issues are considered. > The assessee has benefitted by buying in cash and gave a color of genuine purchases as demonstr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as under:- "4.1 The appellant firm which is in the business of trading in ferrous and non ferrous metals filed the original return of income for A.Y. 2010-11 on 7.8.2010 declaring total income of ₹ 4,25,660/- and filed a revised return of income on 16.09.2010 declaring a total income of ₹ 4,75,660/-. The AO received information from the DGIT(Inv.), Mumbai who in turn received information from the sales tax department about some accommodation entry provider for purchases. The information in possession of the AO was that the appellant has made purchases to the tune of ₹ 1,81,65,330/- from the alleged hawala dealers / entry providers as under:- Sr. No. Name of the entry provider F.Y. Amount of bill taken by the assessee. 1. Nisha Enterprises 2009-10 23,25,924 2. Dhanera Metal Corporation 2009-10 7,90,733 3. Manish Industrial Corporation 2009-10 8,52,134 4. Vidhi Metal Industries 2009-10 37,88,064 5. Vardhaman Trading Co. 2009-10 50,92,201 6. Shre Ganesh Trading Co. 2009-10 53,16,274 TOTAL 1,81,65,330 4.1.1. On the basis of this information, the AO had issued notice u/s.148 on 14.10.2014. The assessee vide its letter dated 4.1.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table Trust vs. CCIT and Others 365 ITR 233(AII.) wherein the Hon'ble High Court held AO should have relevant and credible material with him to form requisite reason to believe that income of assessee has escaped assessment. Material available on record has rational connection and relevant bearing on such formation of belief for issuing valid notices for re-assessment.- sufficiency or correctness of material was not to be considered at this stage. 2) Sun Pharmaceuticals Industries Ltd. Vs. DCIT 353 ITR 474 (Guj.) where the Hon'bte High Court held formation by belief by AO is essentially within his subjective satisfaction - at the stage of issue of notice, only question is whether there was relevant material on which reasonable person could have formed requisite belief. 3) NX Industries Ltd. vs. ITO 362 ITR 542 (Guj.) where the Hon'ble HC held if a particular issue is brought to the notice of the AO by audit party and AO of his /her application of mind finds this ground as valid, reopening of assessment cannot be quashed merely because such ground was brought to the notice of AO audit party. 4.2.2. In this case, the AO has ample reason to believe that income has es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the action of the AO in making the addition of 12.5% on the alleged jus purchases is upheld." 8. Against the above order, assessee is in appeal before the ITAT. 9. I have heard the learned Departmental Representative. None appeared on behalf of the assessee despite service of notice. It is noted that this appeal has earlier also been adjourned on the request of the assessee. Further it is noted that the issue relating to bogus purchases has already been decided by the Mumbai ITAT Benches in a number of cases. Accordingly, the appeal is being decided upon hearing the learned Departmental Representative and perusing the records. 10. As regards the reopening of the assessee, on a careful consideration, I note that in this case information was received by the Assessing Officer from DGIT Investigation (Mumbai) there are some parties who are engaged in the hawala transactions and are also involved in issuing bogus purchase bills for sale of material without delivery of goods, which information was based on information received by Revenue from Maharashtra Sales Tax Authority. Information was received that the assessee was beneficiary of hawala accommodation entries from entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected ..... X X X X Extracts X X X X X X X X Extracts X X X X
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