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2015 (12) TMI 758 - ITAT MUMBAI

2015 (12) TMI 758 - ITAT MUMBAI - TMI - Bogus 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 th .....

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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 i .....

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mand J ORDER PER B.R. BASKARAN (AM) The assessee has filed this appeal challenging the order dated 12-02-2013 passed by Ld CIT(A)-27, Mumbai and it relates to the assessment year 2009-10. The assessee is aggrieved by the decision of Ld CIT(A) in holding that the purchases made from M/s Chirag Corporation is bogus in nature and consequently the corresponding purchases is assessable as unexplained investment. 2. The facts relating to the above said issue are that the AO, during the course of asses .....

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ation order was also filed by Geeta Jaykant Mehta. The assessee claimed that the payments against purchases were made by way of Account payee cheques and accordingly contended that the reply given by M/s Chirag Corporation was not correct. The AO made enquiries with various banks and found that the cheques issued by the assessee have been encashed by various other concerns, who are not connected with the assessee. The assessee further submitted that the materials purchased made from M/s Chirag C .....

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roprietor of the above said concern has denied the transactions and further the payments made by the assessee were found to have been encashed by some other concerns. He also noticed that the assessee did not make the payments during the year under consideration and hence the entire purchases were shown as outstanding, i.e., the payments were claimed to have been made in the succeeding year. Under these set of facts, the Ld CIT(A) held as under:- (a) The assessee has violated the provisions of s .....

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orporation was found to be bogus, it is the responsibility of the assessee to show as to from whom the goods were purchased. (d) Since the assessee had claimed to have purchased goods worth ₹ 95,19,775/- from M/s Chirag Corporation, the Ld CIT(A) enhanced the addition to the above said amount and held that the same is assessable as unexplained investment. 4. The Ld Counsel submitted that the assessee had purchased from a person named Shri Chirag Vora, who claimed to be representing the con .....

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nd hence no addition is called for. In the alternative, he submitted that the addition may be restricted to a reasonable rate of Gross Profit. The Ld A.R placed reliance on the following case law in support of his contentions:- (a) CIT Vs. Hariram Bhambhani (2015)(92 CCH 0046)(Mum) (b) CIT Vs. Nikunj Eximp Enterprises Pvt Ltd (ITA No.5604 of 2010)(Mum) (c) Sri Ganpatraj A Sanghavi Vs. ACIT (ITA No.2826/Mum/2013 dated 5.11.2014 of Mumbai Tribunal). 5. On the contrary, the ld D.R submitted that th .....

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e is that he has purchased goods through a person named Shri Chirag Vora, who claimed to be representative of M/s Chirag Corporation. The AO has also noticed that the purchase bills have been signed by Mr. Chirag Vora only. However, the undisputed fact remains that the concern M/s Chirag Corporation has closed its business in 2006 itself and the same has also been confirmed by its proprietor with supporting evidences. Before the AO, the assessee has contended that the payments have been made by .....

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t the year end, the Ld CIT(A) has held that the assessee would have purchased the goods by paying cash from third parties and hence the entire amount of purchases was held to be unexplained investment by Ld CIT(A). 7. We have noticed that the claim of purchases made from M/s Chirag Corporation could not be proved to be genuine by the assessee. On the contrary, the AO has established the same to be bogus by collecting the relevant details. Similarly the claim of payments made to M/s Chirag Corpor .....

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observed by Ld CIT(A), the onus is placed upon the assessee to prove the purchases. 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 .....

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