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2016 (12) TMI 57 - AT - Income TaxLevy of penalty under section 271(1)(c) - addition of unexplained sundry creditor - bogus purchases - Held that:- The assessee has failed to substantiate the purchases made from M/s Unifoil Enterprises. Except the purchase bill, no other evidence could be produced by the assessee in support of such bill. The assessee did not even make the payment for such purchases for a period of twelve years and thereafter, wrote back the amount in its books of account. Thus, in effect, the assessee did not make the payment for purchase of such goods. The seller i.e., M/s Unifoil Enterprises has denied to have sold the goods to the assessee by writing a letter to the Assessing Officer and also in the statement recorded by the Revenue authorities. The ITAT in the quantum proceedings has clearly held that the nonpayment of purchase consideration is a strong circumstance regarding non-genuineness of transactions and stands on its own de hors any other evidence. Also it cannot be believed that anybody would sell the goods worth ₹ 66 lakhs and would not pursue for payment thereof. No satisfactory explanation is given by the assessee for not making the payment of goods claimed to have been purchased from M/s Unifoil Enterprises. The only explanation given is that the goods supplied were of inferior quality but no evidence in this regard is produced by the assessee. On the other hand, the assessee claimed that the goods supplied by the assessee were exported by it and, therefore, the genuineness of the purchases cannot be doubted. Once the assessee claimed that the goods supplied by M/s Unifoil Enterprises are exported by it, it itself disproves the assessee’s contention that the goods were of inferior quality.On these facts, the only inference that can be drawn is that no goods were supplied by M/s Unifoil Enterprises because if the goods had actually been supplied, no creditor would forego his claim merely because the other party is disputing the quality of the goods supplied. Thus we uphold the levy of penalty under section 271(1)(c) of the Act. - Decided against assessee.
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