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2015 (12) TMI 758 - AT - Income TaxBogus Purchases - Purchase of goods from related parties - addition u/s 40A(3) cash paymetns - contention of the assessee is that the goods could not have been sold without purchasing the same and accordingly contended that the purchases were genuine - Held that:- In the instant case, the initial explanations furnished by the assessee have been proved to be wrong. Subsequently, the assessee could have produced Shri Chirag Vora, who had supplied goods to the assessee, to prove the claim of purchases. Similarly, the assessee could not offer proper explanations with regard to the payments made against the purchases. The assessee also could not offer proper explanations as to why the amount due against purchases was shown as outstanding as at the year end. We notice that the assessee had purchased the goods in the months of May and June, 2008. However, the payments have been made from September, 2009 onwards, i.e., after expiry of about one and half years. It is also not shown that the assessee could avail credit period of one and half years under normal trade practice. Hence, we are of the view that the assessee has failed to establish the genuineness of purchases claimed to have been made from M/s Chirag Corporation. Since the assessee has claimed to have sold the goods and since the amount due to M/s Chirag Corporation was shown as outstanding as at the year end, we are of the view that the Ld CIT(A) was justified in drawing inference that the assessee could have purchased goods from third parties by making payment. In that kind of situation, the payments that could have been so made should be considered as unexplained investment. The facts and circumstances of the case, in our view, supports the inference so drawn by the Ld CIT(A). - Decided against assessee
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