Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1296 - AT - Income TaxReopening of assessment u/s 147 - Bogus purchases - accommodation entries - failure to explain the consumption by way of production register or stock register - whether there is a live link between the material coming to the notice and formation of the belief regarding escapement of income? - HELD THAT:- in the instant case assessment year involved is 2010-11 and the assessment has been reopened on 19/03/2015, which is within four years from the end of the relevant assessment year. Thus, the reliance placed by the Ld. counsel of the assessee on the decision of the Hon’ble Bombay High Court in the case of Hindustan Lever Ltd [2004 (2) TMI 41 - BOMBAY HIGH COURT] is of no assistance being distinguishable on facts. Bogus purchase - accommodation entries - HELD THAT:- AO issued notice under 133(6) of the Act for verification of the purchase parties however those notices were returned un-served with the remark by the postal authorities as parties ‘left’ or ‘not known’. The Assessing Officer made effort to serve notice on those purchase parties through inspector of his office, however those parties could not be located at the given address. AO asked the assessee to provide the current address of those parties, however the assessee failed to provide the address from where an independent verification of existence of those parties could have been done and also asked the assessee to produce those parties, however the assessee also failed in compliance. AO then ask the assessee to substantiate the purchases from those parties by way of evidence in support of the delivery or payment for transport of the goods, but the assessee failed on this account also and no evidence were filed by the assessee in this regard. In view of failure on the part of the assessee in substantiating the purchases from those two parties, the Assessing Officer in background of the information in investigation report, interalia, those parties were engaged in providing accommodation entries, without physical delivery of goods, held the purchases from those two parties as bogus purchases. Finding of the Ld. CIT(A) on the issue in dispute are justified, according to which first category of cases, where a percentage of profit could be added in cases where sales corresponding to the bogus purchases are verifiable from the day-to-day inventory tally or from the stock register and sales have been made to government bodies or export sales , then in such cases an assumption can be drawn that actual purchases were made from unknown parties whereas only bills were taken from bogus billers. In such case, unexplained investment made for purchases made from the unknown parties may also be considered. But in second category of cases, where purchases have been claimed as consumed in manufacturing or non-trading activity and the assessee fails to explain the consumption by way of production register or stock register, then in those cases purchases clearly goes to reduce the profit earned by the assessee and therefore in such cases 100% percent purchases are liable for disallowance. The case of the assessee falls under second category of the cases and therefore, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground of the appeal of the assessee.
|