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TMI Blog2025 (4) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... up:- Sl. No. Name of parties Purchase amount 1. M/s Kailash 1,18,53,640 2. M/s Arihant 3,52,13,635 3. M/s Sun 1,34,57,090 4. M/s Karnavat 2,43,32,425 5. M/s Kriya 1,07,35,410 TOTAL 9,55,92,200 3. A search and survey action was carried out in the case of M/s Rajendra Jain Group on 03-10-2013. It was noticed that they were engaged in the business of providing accommodation entries in the form of sales, unsecured loans, advances etc. The AO, fully placing reliance on the report given by the Investigation wing, took the view that the purchases made by the assessee from the above said concerns are bogus in nature. In this regard, the AO has also extracted the report of the investigation wing including the statement given by Shri Rajendra Jain in the assessment order. Accordingly, the AO show caused the assessee as to why the above said purchases should not be treated as bogus in nature. 4. In response thereto, the assessee produced the books of accounts, purchase and sales register along with purchase invoices and sales bills before the AO. It was further submitted that the transactions were entered through banking channels. Accordingly, the assessee conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal:- (a) The ACIT vs. Say India Jewellers P Ltd (ITA No.6735/Mum/2010) (b) Tristar Jewellery Exports P Ltd vs. The DCIT (ITA No.8292/Mum/2011) (c) The DCIT vs. Indo Unique Trading P Ltd (ITA No.6341/Mum/2016) (d) The ACIT vs. Shri Ramila Pravin Shah (ITA No.5246/Mum/2013) (e) PCIT vs. Tejua Rohitkumar Kapadia (SC) (f) DCIT vs. Ronak Gems P Ltd (ITA No.3118/Mum/2017) (g) Chandra Exports vs. ITO (ITA No.4444/Mum/2018) The assessee also placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Andaman Timber Industries (Civil Appeal No.4228 of 2006), wherein it was held that non-allowing the assessee to cross examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. 6. The ld CIT(A), however, was not convinced with the contentions of the assessee. Accordingly, he dismissed the appeal of the assessee and confirmed the addition made by the AO. 7. We heard the parties and perused the record. We notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held that the addition made by the AO on account of alleged bogus purchases is not sustainable if the AO has not brought any cogent and convincing evidence to prove his decision. The relevant observations made by Hon'ble Bombay High Court are extracted below:- "17. This very bench had occasioned to deal with a similar issue in the case of Principal Commissioner of Income-tax-1 Vs. SVD Resins & Plastics (P.) Ltd.2, where, repelling a challenge by the Revenue, to a decision of the ITAT curtailing the disallowance of allegedly bogus purchases to 12.5%, the following observations were made:- "11. We may observe that in the facts of the present case, the basic premise on the part of the A.O. so as to form an opinion that the disputed purchases were [2024] 166 taxmann.com 242 (Bombay) October 15, 2024 Aarti Palkar J-904.ITXA.1753.2018.doc not having nexus with the corresponding sales, appears to be not correct. It is seen that what was available with the department was merely information received by it in pursuance of notices issued under section 133(6) of the Act, as responded by some of the suppliers. However, an unimpeachable situation that such suppliers could be labele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be bogus. Such investigation or enquiry by the AO also cannot be an enquiry which would be contrary to the assessments already undertaken by the Sales Tax Authorities on the same transactions. This would create an anomalous situation on the sale-purchase transactions. Hence, in our opinion, wherever relevant any conclusion in regard to the transactions being bogus, needs to be arrived only after the A.O. consults the Sales Tax Department and a thorough enquiry in regard to such specific transactions being bogus, is also the conclusion of the Sales Tax Department. In a given case in the absence of a cohesive and coordinated approach of the A.O. with the Sales Tax Authorities, it would be difficult to come to a concrete conclusion in regard to such purchase/sales transactions being bogus merely on the basis of general information so as to discard such expenditure and add the same to the assessee's income. 14. Any half hearted approach on the part of the AO to make additions on the issue of bogus purchases would not be conducive. It also cannot be on the basis of superficial inquiry being conducted in a manner not known to law in its attempt to weed out any evasion of tax on bog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, the assessee has furnished all the materials to prove the genuineness of purchases and the AO has failed to show that those materials were bogus. Under these set of facts, we are of the view that there is no justification in doubting the genuineness of purchases made by the assessee. Further, these alleged bogus purchases forms a minor fraction of total volume of the assessee company and it is stated that there is no day to day involvement of the management. It was further submitted that the assessee is having strict internal controls. Hence we are of the view that the AO has not made a proper ground in support of the disallowance. Accordingly we set aside the order passed by Ld. CIT (A) on this issue and direct the AO to delete the addition of Rs. 3,23,944/-." 18. Thus, we find that according to the Tribunal the assessing officer had merely relied upon information received from the Sales Tax Department, Government of Maharashtra without carrying out any independent enquiry. Tribunal had recorded a finding that assessing officer had failed to show that the purchased materials were bogus and held that there was no justification to doubt genuineness of the purchases made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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