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TMI Blog2021 (1) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of this Court vide order dated 24.11.2015 on the following substantial questions of law: "(i) Whether the Tribunal was correct in holding that the assessing officer did not make any independent enquiry, whereas, in fact it was the assessing officer who had initiated enquiry and requested the sales tax Department to investigated the existence of the three purchase parties at Solapur? (ii) Whether the Tribunal was correct in holding that there was no independent enquiry made by the assessing officer except for the report of the sales tax authorities, which cannot find basis for coming into conclusion of entire amount of purchases being bogus and considering the facts the tribunal has ordered for disallowance of only 20% of the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 13.02.2014 partly allowed the appeal of the assessee and restricted the disallowance to 20% of the purchases made from the aforesaid three parties to the extent of Rs. 1,92,59,401/-. In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for the revenue submitted that the tribunal itself has categorically accepted that all the aforesaid three parties were never in existence and their representatives were never produced for verification and therefore, there were no purchases from the aforesaid three parties. It is further submitted that the suppliers to the assessee have not been identified and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial is not bogus is baseless and the tribunal grossly erred in accepting the supply of material as genuine merely on the ground that if the purchase cost is disallowed, the gross profit would be 35% to 37%, whereas, gross profit for further years is in the range of 8% to 10%. 5. It is also argued that only because gross profit would be higher the purchases of the material from non existing person or bogus purchasers cannot be termed to be genuine. It is also urged that there is no basis for restricting the disallowance to 20% and holding that 80% of the supplies as genuine once the tribunal accepts non existence of suppliers. Alternatively, it is submitted that even if the finding of the tribunal is to be accepted that without there bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was increased from 8.56% and 8.30% to 37% and 35% for Assessment Years 2006-07 and 2007-08, which is not possible. Our attention has also been invited to para 30 and 31 of the memorandum of appeal filed by the assessee in I.T.A.Nos.285-286/2014 and it has been submitted that the tribunal has rightly made disallowance at 20% of the purchases from the three parties. It is also urged that the expenditure was incurred by the assessee exclusively for the purpose of business for the procurement of raw materials and the same has rightly been allowed by the tribunal under Section 37(1) of the Act and once there exists a nexus between the business of the assessee and the expenditure incurred, the same cannot be disallowed on the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es did not contain stamps of APMC, Check Post seals, etc., in order to ascertain the genuineness of the above purchases, enquiries were made in the addresses at Solapur, mentioned in the invoices of suppliers mentioned above. Also, the addresses given by the above suppliers to the bank at the time of opening the account were obtained and enquiries were caused at such addresses. 3.1 Enquiries at the addresses given in the account opening forms and the invoices of suppliers at Solapur showed that the above parties were not found in the places / addresses given by them. Enquiries were caused through the jurisdictional Sales Tax Officer of the above parties of Solapur. The above officer after enquiry has filed a report stating that the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the conclusion with regard to genuineness of the transaction as follows: 1. The assessee could not produce the parties from whom purchases are claimed to be made. 2. Enquiries made showed that the alleged suppliers were not present at the address given by them. 3. Enquiries with the sales tax officers revealed that the Sales Tax Registration Number shown on the invoices given by the alleged suppliers were bogus. 4. Sales Tax Authorities have categorically stated that no entity by the names shown in the invoices ever were registered with them. 5. Stamps of APMC are not present in the purchase bills. 6. Stamps of Check posts are not present in the invoices. 7. The documents relied upon the assessee viz., receipt for goods, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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