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TMI Blog2018 (12) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... al is partly allowed. - ITA.No.667/Ahd/2016 - - - Dated:- 11-12-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Assessee : Shri Parimal Parmar, AR For The Revenue : Shri Mudit Nagpal, Sr. DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of ld.CIT(A)-2, Ahmedabad dated 25.1.2016 passed the Asstt.Year 2011-12. 2. Assessee has taken eight grounds of appeal, which are argumentative and descriptive in nature. In brief, its grievances revolve around three issues viz. (i) the ld.CIT(A) has erred in confirming disallowance of purchase amounting to ₹ 3,06,32,999/- after holding it to be bogus; (ii) the ld.CIT(A) has erred in confirming disallowance of ₹ 21,566/- out of ₹ 4,20,334/- made by the AO under section 14A r.w.r. 8D; and (iii) the ld.CIT(A) has erred in confirming disallowance of ₹ 2,19,474/- under section 36(1)(va) of the Act on account of late payment of employees contribution towards provident fund. 3. At the time of hearing no arguments were advanced qua disallowance of ₹ 21,566/- made with aid of section 14A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of above goods and such profit has been offered for taxation. The assessee has submitted other supporting evidence showing the genuineness of purchases. The ld.AO was not satisfied with the explanation of the assessee. He relied upon the statement of representatives of these concerns given before the Maharashtra Sales Tax Department and treated the purchases as bogus. Accordingly, he made the additions. Dissatisfied with the additions, the assessee carried the matter in appeal before the ld.CIT(A). It has filed written submissions which has been reproduced by the ld.CIT(A). Let us take note of relevant part of such submissions, which is self-explanatory. It reads as under: The relevant extracts from the submission dtd. 18.11.2015 of the appellant are reproduced here under:- 4. The first issue pertains to action of learned AO in treating purchases of ₹ 3,06,32,999/- as bogus purchases. 4.1 During the year under consideration, learned AO found that Maharashtra Sales Tax. Department has investigated that M/s. Parasnath Enterprises, M/s. Navkar Impex and M/s. Sendoz Steels - with other parties were involved in issuing bogus tax invoices without mov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, learned AO asked the appellant to produce evidences in respect of freight paid to transport companies, octroi, bills/invoices of transport companies and vehicle nos. of transport vehicles used as carriers. In response to the same, it -was explained to the learned AO that the amount mentioned in purchase bills was inclusive of all such expenses which is a normal practice in trading business. Even the appellant has sold such goods at price inclusive of such expenses. Hence, question of producing evidences in respect of such expenses doesn 't arise at all 4.3 Further, learned AO has heavily .relied on affidavit dated 13.12.11 by various persons wherein they have admitted that they are engaged in the activity of issuing bogus tax invoices without movement of goods. Learned AO has also relied on statement of Shri Manoj Uday Mehta, proprietor of M/s. Navkar Impex dated 05.07.11. Learned AO has further relied on letter dated 06.08.11 addressed to Jt. Commissioner of Sales Tax, Registration Branch, Mumbai by Asst. Commisisoner of Sales Tax. (Investigation)-!5, Mumbai wherein it has been stated that M/s. Sendoz Steels was not available on the given address. Appellant most re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the real owner of the goods. These purchases are though described as bogus purchases, in fact, represent at the highest inflated purchases when the factum of receipt of goods cannot be denied nor disputed. In this situation, disallowance of the entire item of purchase from these parties would be wholly unjustified nor could it be held that these purchases are bogus (though described as such) because the expression bogus means sham or nominal when there is no effective receipt of goods. 5.3 The third situation may arise under which also the expression bogus purchase used is that when the purchases are effected from unaccounted for money, these purchases are not reflected in the books at all but they get reflected in the stock and consequently in sales if the assesses chooses to bring the sale proceeds in books or otherwise the sales are made outside the books at all. In this situation, the addition could only be made for unaccounted undisclosed expenditure in purchases -which -would fall under the provisions of Section 69C of the Act. 5.4 Further the Appellant respectfully submits that entire purchases have been properly recorded in the books of account and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the seller transfers or agrees to transfer the property in the goods to the buyer for a price. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called sale. 7. The ld.CIT(A) thereafter reproduced case laws cited by the assessee, however, did not concur with the submission of the assessee and confirmed the disallowance. Before us, the ld.counsel for the assessee raised two fold of submissions. In the first fold of contentions, he submitted that evidence possessed by the AO is the information supplied by the Maharashtra Sales Tax Department for doubting the purchases made by the assessee. The statements of representative of these concerns were recorded from the back of the assessee. The AO has not supplied copies of these statement as well as affidavits alleged to have been filed by these persons deposing therein that they provided accommodation entry. Hence, in view of the Hon ble Supreme Court judgment in the case of Andaman Timber Industries Vs. CIT, 62 taxmann.com 3 (SC) such statement as well as affidavits could not be relied upon by the AO unless an opportunity to cross-examine these persons given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f bill and ledger. It has produced details of payment through banking channel and confirmation from one of the supplies i.e. Sendoz Steel. To our mind, the quantity and quality of evidence produced by the assessee is not sufficient. The ledger and purchases bills are maintained by the assessee. No corresponding entries from the suppliers. Thus, the assessee failed to discharge onus of demonstrating purchases are genuine. Even if we exclude evidence referred by the AO by putting reliance upon the judgment of Hon ble Supreme Court in the case of Andaman Timber Industries (supra), then also we are not satisfied with the quality of evidence produced by the assessee to believe that purchases made by it from these concerns are genuine. Therefore, we do not find force in the first fold of contention raised by the ld.counsel for the assessee. However, we find force in the alternative contention of the assessee. Element of extra profit earned by the assessee in this exercise deserves to be added in the total income. First dispute can be appreciated with an example. An assessee makes a purchase from party A but obtain bill from party B . In this exercise, it avoids to pay certain taxes sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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