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2016 (1) TMI 180 - ITAT PUNE

2016 (1) TMI 180 - ITAT PUNE - TMI - Addition of alleged bogus purchase - Held that:- we are of the considered view that in the facts of the present case, where books of account of the assessee had not been rejected and in view of substantial evidence filed by the assessee in order to establish the purchases made from the said parties and where payments to the said concerns have been made by cheque, though after gap of time and where no evidence has been brought on record to establish that the c .....

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Per Sushma Chowla, JM This appeal filed by the assessee is against the order of CIT(A)-V, Pune, dated 17.05.2013 relating to assessment year 2009-10 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the lower authorities erred in making the addition of alleged bogus purchase of sum of ₹ 1,45,50,189/- by disregarding appellan .....

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s against the addition made on account of bogus purchases to the tune of ₹ 1,45,50,189/-. 4. Briefly, in the facts of the present case, the assessee, a partnership firm was carrying on the business of electrical works contract and re-seller of electrical items. For the year under consideration, the assessee had furnished return of income declaring total income of ₹ 22,49,250/-. The assessee for the year under consideration had carried out sub-contract on behalf of M/s. S.T. Electrica .....

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as creditors by the assessee for goods purchased from December, 2008 to March, 2009 and not a single rupee was paid to the said parties during the year and the payment was made to them in the month of April, 2010. On comparison of bills of two suppliers, which were submitted by the assessee, certain striking similarities were noticed i.e. both the bills had same font and style of printing by using dot matrix printer, phone numbers mentioned on the bills were almost the same with just difference .....

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e other letter though might have been delivered was not replied. Further, the Assessing Officer issued Summons under section 131 of the Act to the creditors on 16.11.2011 seeking certain information i.e. copy of ledger accounts of the assessee in their books, sale bill books maintained and used by them for the months from November, 2008 to March, 2009, details of trading accounts in respect of Cables of various types traded during the year and name and addresses of two other top parties to whom .....

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lls supplied by them were fake insofar as no goods have been supplied as per the bills. The striking similarities of the bills were brought to the notice of the assessee and it was pointed out that the payments were made much later in financial year 2010-11. The assessee was show caused as to why the said purchases from the said two concerns should not be taken as fake to inflate the purchases. Further, vide order sheet entry dated 25.11.2011 , the Assessing Officer intimated the assessee that t .....

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few commercial establishments. On marking enquiries from various Departments, the whereabouts of M/s. S.G. Enterprises could not be traced. The Survey No.37 i.e. the place where M/s. S.G. Enterprises has shown its address was upcoming area where many construction activities mainly of residential were going on. Further, the telephone numbers mentioned on the bills of M/s. S.G. Enterprises submitted by the assessee had no connectivity. In respect of the other concern M/s. Steel Craft at 640, Datta .....

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view of the entire exercise was of the view that From the discussions made in the above paragraphs the following points emerge: 1) The supply of goods in big amounts without payments for more than 15 months is unusual. 2) The outward appearance of the bills of two different creditors are strikingly similar which indicates these to be handiwork of same person / agency. 3) Non-response to notices issued makes the supply of goods more doubtful. 4) Actual physical verification of the locations reve .....

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e assessment proceedings and the various verification exercises tried to be carried on by the Assessing Officer and after considering the reply of the assessee, which is incorporated at pages 5 to 10 of the appellate order, noted that though the Assessing Officer tried to gather information in respect of two creditors shown by the assessee, but in reply the assessee merely filed the confirmation in respect of M/s. S.G. Enterprises, while no confirmation was filed in respect of M/s. Steel Craft. .....

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of the parties from the information available on public domain. The CIT(A) in this regard observed that in view of the fact that once the Assessing Officer had made his findings known to the assessee, it was incumbent upon the assessee to discharge his onus, which had not been done in the case. In any case, having TAN, PAN or having filed return of income electronically, does not ipso facto prove the genuineness of the transactions made, especially when the parties were not available at the giv .....

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und to be non-existing on verification made by the Assessing Officer, for which, the assessee has no reply and even at this stage, where the assessee is not in a position to produce parties, as it claims that it has no contacts with the said parties, this being the case of bogus purchases, there is no merit in the claim of the assessee. The addition made by the Assessing Officer in this regard was upheld at ₹ 1.45 crores. 7. The assessee is in appeal against the order of CIT(A). 8. The lea .....

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cted purchases from both the parties. It was stressed by the learned Authorized Representative for the assessee that both the parties were unrelated parties and because of issue of contract i.e. laying of cables, payments from the contractor were received after a delay and the payments to the creditors were also delayed in this regard. The payments against the goods purchased were made by cheques and one of them filed the confirmation and had also declared the turnover in the VAT returns. Admitt .....

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Bombay High Court in CIT Vs. Nikunj Eximp Enterprises (P.) Ltd. (2013) 35 taxmann.com 384 (Bom), Hon ble Gujarat High Court in CIT Vs. M.K. Brothers (1987) TAXMANN 547 (Guj) and Hon ble Bombay High Court in Babulal C. Borana Vs. Third ITO (2005) 144 TAXMAN 674 (Bom). 9. The learned Departmental Representative for the Revenue in turn relying on the findings of Assessing Officer pointed out that the notices / Summons issued to the said parties were returned and there was huge credit balance outst .....

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all the details were filed, but there was no appearance by the concerned party and in such circumstances, the Hon ble Bombay High Court held that the said purchases were genuine. In respect of reliance placed upon by the learned Authorized Representative for the assessee in CIT Vs. M.K. Brothers (supra) i.e. the ratio laid down by the Hon ble Gujarat High Court, the learned Departmental Representative for the Revenue pointed out that the facts of the case were also at variance. 10. We have hear .....

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r Book. This job order was dated 24.11.2008 which was for supply, installation and erection of cables and poles to various sites at PCMC and Pune. The items for supply and erection are clearly mentioned thereunder. Another work / job order dated 20.01.2009 was issued by the said concern to the assessee for supply, installation and erection of cables and poles at various sites at PCMC and Pune. The copy of the said work / job order along with annexure are placed at pages 81 to 83 of the Paper Boo .....

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te the contract of supply, installation and erection of cables, the assessee claims to have bought the materials from different parties including two parties i.e. one M/s. S.G. Enterprises for totaling ₹ 91,90,787/- and another M/s. Steel Craft totaling ₹ 53,59,402/-. The assessee has furnished on record the details of supplies made by the said concerns i.e. quantity-wise, rates and the total amounts, which are placed on record. The assessee has also furnished details of the purchase .....

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ncerns. The notices / Summons to M/s. S.G. Enterprises were returned back. However, Summons was delivered to M/s. Steel Craft, but again no reply from the said concern was received. The Assessing Officer asked to the assessee to produce the said parties and also to furnish complete evidence in this regard. The assessee had produced the bills in respect of the said parties. However, the Assessing Officer noted that font size of the bills issued by both the concerns were identical and could not be .....

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, immediately, cheques were issued on 31.03.2010. All the payments to the said parties were paid by cheque and it is not the case of the Revenue that the money has travelled back to the assessee. Our attention was drawn to the copies of bills along with delivery challans issued by M/s. S.G. Enterprises and M/s. Steel Craft, which are placed at pages 11 to 35 of the Paper Book. The perusal of the said bills reflect the complete details in respect of items sold by the said concerns along with quan .....

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of the parties i.e. M/s. S.G. Enterprises, who admitted to have made those aforesaid supplies to the assessee. The PAN number of the said concern was also available on record, which is placed at page 51 of the Paper Book. Further, both the concerns were registered with the Sales Tax Department and the VAT details have been generated by the assessee and placed at pages 52 and 53 of the Paper Book. The aforesaid details reflect the assessee to have furnished the return of income for VAT from year .....

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respective parties mentioned on the bills. The report of the Assessing Officer in this regard was that despite enquiries, the said two addresses could not be found at that addresses nor any person admitted to have dealt with the said concerns. Admittedly, there are certain evidences against the assessee. However, there are other evidences filed by the assessee, which very clearly establishes the existence of the said concerns. The first and foremost is the PAN number issued to the two concerns, .....

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essment order, which was passed on 16.12.2011. Further, the assessee during the course of hearing has tried to reconcile the details of works contract supplied party-wise vis-à-vis consumption of various items. The assessee has furnished sample details in this regard and has also pointed out that VAT details clearly reflect the purchases made from the said concerns. Further, the assessee has placed on record the copy of bank statement for the relevant period, under which the payments to t .....

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ses (P.) Ltd. (supra) had laid down the proposition that a pragmatic view has to be taken where the sales of the purchased goods were not doubted and where substantial amount of sales were made by the assessee to government department. Further, where the books of account of the assessee had not been rejected, but merely because suppliers had not appeared before the Assessing Officer or CIT(A), it could not be concluded that the purchases were not made by the assessee. 12. The Hon ble Gujarat Hig .....

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