TMI Blog2014 (6) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... f transportation and proof of transport of the goods purchased by the assessee are also not brought on record despite due opportunity given in the assessment proceedings as well as in the remand proceedings - merely because the assessee claimed to have been making payment through cheque is not sufficient to establish the genuineness of the transactions when the AO has brought on record the facts and circumstances to indicate the non-genuineness of the purchase transactions in respect of the two parties – thus, there was no error in the order – Decided against Assessee. Addition of unaccounted sales – recognition of income - Held that:- CIT(A) has directed the AO that if the amount has been recognized as sales by the assessee in the subsequent year then the AO should verify and consider the same - the amount is only an advance received and work was executed only in the subsequent year – the amount cannot be treated as sales for the year under consideration - if the assessee has recognized this sale in the subsequent year on the basis of the fact that work has been executed in the subsequent year then this amount cannot be treated as sales of the assessee – the AO is directed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not Known . Accordingly the AO asked the assessee to give correct address of the parties and also submit sample bills of these parties. In response the assessee submitted copy of purchase bills from these parties. The sample bills submitted contained TIN numbers of the vendors. The Assessing Officer verified these parties from the website of Maharashtra Sales Tax Department wherein the name of M/s N B Enterprises has been specifically put up as Hawala Dealer . In case of M/s Maa Chamunda Sales Pvt. Ltd., no reply was received by the AO from the said part. Accordingly the AO treated the purchase from these two parties as bogus and consequently the purchases from these two parties amounting to Rs. 24,05,035/- is added to the total income of the assessee. 4. On appeal, the assessee submitted before CIT(A) that the purchases made from these parties were genuine as the goods were supplied by these parties against the duly issued invoice. It was further contended that as per the Government of Maharashtra Sales Tax Department N B Enterprises was not shown as Hawala Dealer for the year ended 31.03.2009 and was actively filing six monthly returns in time and duly paid the VAT. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third party who has supplied the goods then the disallowance made by the authorities below is not justified. The assessee has discharged its onus to prove the genuineness of the purchases. 6. On the other hand, the Ld. DR has submitted that the assessee has faield to establish the genuineness of the purchases from these two parties. One of these parties namely M/s N B Enterprises has been notified by the Maharashtra Saltes Tax Department as Hawala Dealer and, therefore, the purchase claimed to have been made from M/s N B Enterprises are nothing but accommodation entries without real supply of goods. As regards the purchase from M/s Maa Chamunda Sales Pvt. Ltd., the assessee has failed to produce any record in support of its claim, therefore, mere payment through cheque is not sufficient to discharge its onus of genuineness of the purchase transaction when the AO has brought on record the material to suspect these transactions. Despite the opportunities given to the assessee in the remand proceedings nothing has been produced by the assessee to prove these transactions. He has relied upon the orders of authorities below. 7. We have considered the rival submissions and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of the transactions when the AO has brought on record the facts and circumstances to indicae the non genuineness of the purchase transactions in respect of these two parties. Hence, we do not find any error or illegality in the orders of authorities below qua this issue. 8. The alternative plea of assessee in ground no. 2 that the addition should be restricted to 10% of the alleged non-genuine purchases cannot be accepted because the purchase in question has the impact of full value on the income of the assessee by deflating the profit to that extent and, therefore, there is no question of taking any percentage of purchases treated as non-genuine. 9. Ground no. 3 is regarding addition in respect of unaccounted sales to the extent of Rs. 32,87,529/-.. During the course of assessment proceedings the AO asked the assessee to submit the AIR reconciliation statement. The assessee submitted the reconciliation statement vide letter dated 15.12.2011. The AO noted that the assessee has not accounted a sum of Rs. 32,87,529/- as sales though the amount was actually received. Out of Rs. 32,87,529/- a sum of Rs. 29,89,000/- was received from M/s Suburban Developers . The assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the Assessing Officer should verify and consider the same. It is the case of the assessee that this amount is only an advance received and work was executed only in the subsequent year, therefore, this amount cannot be treated as sales for the year under consideration. We are of the view that if the assessee has recognized this sale in the subsequent year on the basis of the fact that work has been executed in the subsequent year then this amount cannot be treated as sales of the assessee for the year under consideration. Accordingly the Assessing Officer is directed to verify this fact and then allow the claim of the assessee if found correct. As regards the other amounts though the assessee could not reconcile the discrepancies between the AIR information and book entries, however the entire unaccounted sale cannot be added to the income of the assessee and only the profit margin involved in the sale can be treated as income. Therefore, the Assessing Officer is directed to restrict the addition only to the profit margin of the sales treated as unaccounted sales. 15. In the result appeal of the assessee is partly allowed.. Order pronounced in the open court today i.e 30- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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