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TMI Blog2021 (2) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... ial. The Ld. CIT decided without even looking to the facts of the case. The reasons cited by Ld. CIT for rejecting ground No. 3(i) & (ii) are not tenable in law. (iii) The Ld. CIT had also erred in law is confirming the disallowance of preliminary expenses of Rs. 11085/-. The conclusion drawn are perverse to record. (iv) That the Ld. CIT(A) had further erred in law to confirm the addition of Rs. 375268811/- alleged as bogus purchase without support of any cogent reason. The reason given by CIT(A) not to agree with the submission of assessee are imaginary in nature and hypothetical and has no legs to stand the test of judicial scrutiny. That the impugned order passed by Ld. C.I.T. (A) confirming additions on account of alleged bogus purchases is arbitrary, illegal and violative of principles of natural justice and the well-established principles of laws. The conclusion drawn by C.I.T. (A) and confirmed for bogus purchase is totally illegal ignoring the vital facts the goods have moved; the payment has been through Banking channel. Value Added Tax under DVAT Act, 2004 had been paid by selling dealers and the said dealers had duly discharged their legal liability on said sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant craves to be allowed to add any fresh grounds of appeal and for delete or amend any of the grounds of appeal. (vi) The Ld. CIT had erred in facts and in law in not considering the ground (v) taken in the grounds of appeal in true spirit of law and facts of the case. The AO had erred in law is not reducing the taxable income of the Assessee by Rs. 92715391/- as out of Rs. 210000000/- (the alleged figure of bogus purchases as stated by assessee to such case) the AO had determined the figure of bogus purchase in this year as Rs. 117284209/- and not 21 crore. This is evident from the assessment orders of the year in question and subsequent year and as such there is perversity of facts in the CIT order and for the same reason the order is liable to be quashed and assessee be held liable to refund of tax which has been wrongly paid by assessee. (vii) The Ld. CIT(A) order confirming charging of interest under sections 234A and 234B of the Act is also illegal and against the provision of law." 5. In IT A No. 5569 /Del/2012 for the AY 2010-11, following grounds have been raised by the assessee: "(i) On the facts and circumstances of the case and in law the Ld. CIT (Appeals) had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming charging of interest under sections 234A and 234B of the Act is also illegal and against the provision of law." Disallowance of preliminary expenses: 6. Ground No. (iii) for assessment years 2008-09 to 2010-11 are not pressed by the assessee, hence do not required to adjudicate. Issue of addition on account of bogus purchases: 7. Ground No. (iv) for AY 2008-09 of Rs. 37,52,68,811/-, the AO noted that in the list of parties from whom purchases had been made, certain names were appearing who had been considered as entities not dealing in actual business but only issuing bills to accommodate various parties like the assessee company M/s Golf Technologies Pvt. Ltd. 8. From the details of purchases, transaction with following parties had been considered as bogus by the AO in view of reply of Sh. Col. H.S. Bedi in his statement recorded under section 132(4) at the time of search under section 132 of the income tax act, on 25th September, 2009 and on the basis of investigation made during the search operation, post search investigation and during assessment proceedings. 9. In the course of assessment proceedings it had been held by the AO that purchases made from the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but only paper entities which were providing accommodation entries by issuing bogus sales bills on account of which the so called buyer (in whose names bill is issued) could inflate its expenditure and reduce profits. Therefore, in view of statement of Sh. Col. H.S. Bedi, CMD of Tulip group and information filed in the case of M/s golf Technologies Pvt. Ltd., purchases made by the assessee company from the entities/companies as above, were held as bogus purchases for which the assessee company had no explanation to offer to the satisfaction of AO. 12. In the course of assessment proceedings in the case of M/s Jay Enn Infotech Pvt. Ltd., whose case was also centralized with AO, it had been taken to notice that the assessee was not able to furnish details of sales made by it and nor had been able to produce sales bills of items sold. Merely by booking the sale on papers, the AO held that it does not justify the sales made by it. During the course of survey proceedings, no stock, at the premises of M/s Jay Enn Infotech Pvt. Ltd. was found. This lead to the findings that M/s Jay Enn Infotech Pvt. Ltd. was only a paper entity providing accommodation entries to other entities/persons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be verified with certainty that the items sold are not purchased from any other entity but only from these fictitious and paper entities. The appellant states that the purchases were made through banking channel and VAT paid. This is not a sound argument as these elements always exist in case of bogus purchases. When the supplier himself admitted accommodation transaction of bogus purchases and chief of appellant group company admitted this fact, where the doubt remains. Moreover, the appellant company in the A.Y.2009-10 surrendered an amount of Rs. 21,00,00,000/- on account of bogus purchases in its return of income. In view of the above I find no reason to interfere with the assessment order and the ground is thus rejected." 15. Before us, during the hearing, the ld. AR argued that there is no nexus between purchases made by assessee and bogus purchases declared by Group Company. The A.O. has not proved beyond doubt-the fact that the purchases made from alleged company are bogus whereas the assessee had produced and shown party wise purchase and sales during the assessment proceeding proving that these transactions are not paper transaction. The payment has been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue are wrong that the assessee has debited bogus purchases to reduce the profits, this observation is wrong and against the facts of the case as assessee has shown profit of Rs. 74,73,422/- on alleged bogus purchases. 21. On the other hand, the ld. DR vehemently argued that the assessee has been continuously in the habit of raising the bogus bills to deflate the profits and the material collected during the search & seizure operation amply proves the fact. The assessee has also surrendered a whooping amount of Rs. 75 crores only after the revenue made due enquiries and recorded the statements of alleged sellers who undisputedly agreed that no sale have been made by them. She has taken us through the entire statements recorded and the investigations carried. 22. Heard the arguments of both the parties and perused the material available on record. 23. The issue narrows down to the finding of the fact whether the purchases have been indeed made, payments have been made against such purchases, whether goods have been received, whether such goods have been sold or not and if sold what is the profit earned and whether the profit has been declared for tax or not ? 24. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings, it had been taken to the balance at the end of the year out of the amount of loan raised and also made advances to sister concerns without charging interest or lower interest. 31. In the course of assessment proceedings from the details submitted, it had been perused that against payment of interest of Rs. 1,64,18,710/- the assessee company has shown receipt of interest of Rs. 17,33,333/- and for the difference in interest payments no satisfactory reply has been submitted. From the transaction recorded in the bank accounts, it was held that the assessee company transferred the funds to its sister concerns during the year and no business purpose has been indicated behind transfer of these funds to sister concerns. 32. Further, the disallowance on investments had already been made. The AO noted that the funds were given to family members who had not paid any interest on these loans, in particular Tulip Jewels & Sh. Vishwajeet Sinha to whom a total amount of Rs. 60 lac was given as advance. The AO held that the assessee company raised the funds at higher rate of interest which were utilized by the family members for a purpose other than business without paying any intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (vi) for AY 2010-11 of Rs. 12,60,000/- 39. During the assessment proceedings, on going through the AS-26, the AO found that the receipts on account of rent were to the tune of Rs. 1,73,30,112/- received from M/s Tulip Telecom Ltd. and due tax has been deducted u/s 194-I of the Income Tax Act, 1961. From the computation, the AO observed that out of Rs. 1,73,30,112/- received , the assessee only an amount of Rs. 1,60,33,050/- in the P&L account and the remaining amount of Rs. 12,97,062/- has been treated as 'income from house property' on which 30% deduction u/s 24 has been allowed. 40. For the assessment year 2009-10, the assessee submitted copy of the computation of income wherein assessee has added back an amount of Rs. 11,48,924/- to the profit before taxes in the P&L account. 41. The ld. CIT (A) has confirmed the addition. 42. Before us, it was argued that no show-cause notice has been given with regard to the addition made. The revenue could not dispute the contentions of the assessed by the way of production of any show cause notice issued. Hence the addition made by the AO is hereby directed to be deleted for failure to follow the principles of natural justice. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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