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2016 (10) TMI 890 - ITAT MUMBAI

2016 (10) TMI 890 - ITAT MUMBAI - TMI - Bogus purchases - information obtained from the Sales Tax Department relied upon - Held that:- The assessee itself had filed conformations for purchases from two of the three parties, copies of purchase bills, copies of bank account statements to show payment for the same were through banking channels, copies of stock register to show that the material from these parties had been received, etc. to establish the genuineness of these purchases. It is a fact .....

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e opportunity to cross examine that person or the fact that these parties did not respond to notice under section 133(6) of the Act would not suffice to treat the purchases as bogus and make the addition. If the AO doubted the genuineness of this said purchases, it was incumbent upon him to cause further inquiries in the matter to ascertain the genuineness or otherwise of the transactions. Without causing any further enquires in respect of the said purchases, the AO cannot make the addition unde .....

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V.K. Bora For The Respondent : Shri Neelkanth Khandelwal and Ms. Bhumika Vora ORDER Per Jason P. Boaz, A.M. This appeal by Revenue is directed against the order of the CIT(A)-35, Mumbai dated 09.05.2013 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee, Prop. Ispat Steel Supplies engaged in the business of trading in iron and steel sheets, filed its return of income for A.Y. 2010-11 on 24.09.2010 declaring total income of ₹ 52,93,,655/-. On the basis of .....

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) 1 M/s. Hiten Enterprises ₹ 1,46,17,686/- 2 M/s. Rushabh Enterprises ₹ 58,23,655/- 3 M/s. Shree Traders ₹ 44,69,575/- 4 M/s. Simandhar Trading Corporation ₹ 1,09,53,073/- 5 M/s. Swastik Enterprises ₹ 17,23,304/- Total ₹ 3,75,87,293/- 2.2 To ascertain the genuineness of such purchases (supra) the AO issued notice to the assessee to show cause as to why the aforesaid purchases amounting to ₹ 3,75,87,293/- should not be treated as unexplained expenditure. .....

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supported by lorry receipts or delivery challans; that the assessee was not able to produce the three parties from whom alleged purchases were made before him for verification and placed reliance on the statement on oath and affidavit of one Rajendra Dodhiwala (proprietor of M/s. Rushabh Enterprises) given before Sales Tax authorities. In this view of the matter, the AO treated the purchases made from these three parties (supra) amounting to ₹ 3,75,87,293/- as unexplained expenditure unde .....

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ence earlier filed before the AO; such as copies of purchase bills, copies of bank statements to show that payments to these parties for the said purchases have been made by account payee cheques, copies of stock register to show that the goods were received from these parties. It was submitted that the sales effected in respect of these purchases have not been doubted or questioned by the AO and therefore the purchases made by the assessee could not be held to be bogus, as without purchases the .....

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elation to the assessee nor named it therein and in respect of which no opportunity for cross examination of that party were afforded to the assessee. The learned CIT(A) observed that the assessee had submitted the above referred documentary evidences before the AO and also in appellate proceedings before him to prove that purchases made from the above referred three parties were genuine. No material was brought on record by the AO to establish that the payments made for purchases to the above t .....

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e of CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. 372 ITR 619 (Bom) deleted the addition of ₹ 3,75,87,293/- made by the AO under section 69C of the Act vide the impugned order dated 09.05.2013. 4.1 Aggrieved by the order of the CIT(A)-35, Mumbai dated 09.05.2013 for A.Y. 2010-11, Revenue has preferred this appeal raising the following grounds: - (i) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of ₹ 3,75,87,293/- on account o .....

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d. without appreciating that the facts involved in the appellant's case are different from the facts of the above case law. (iv) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has grossly erred in not appreciating the fact that the notices under 133(6) 'Issued to the parties from whom alleged bills were received were returned undelivered by the postal authorities. (v) The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside that o .....

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bogus. 4.3 Per contra, the learned counsel for the assessee strongly supported the impugned order of the learned CIT(A), deleting the additions on account of bogus purchases of ₹ 3,75,87,293/- made by the AO under section 69C of the Act. It was submitted that, the assessee to prove the genuineness of purchase transactions had produced material evidence in the form of purchase bills issued by these parties, copies of bank statements to establish that the said purchases were made through ba .....

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d to the assessee, wherein the assessee s name was not mentioned. The learned counsel for the assessee submitted that on identical facts and circumstances, the Hon'ble Bombay High Court and the Coordinate Benches of this Tribunal had deleted such additions made under section 69C of the Act in, inter alia, the following cases: - (i) CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. (372 ITR 619) (Bom); (ii) Hiralal Chunilal Jain vs. ITO (ITA NO. 4547/Mum.2014 dated 01.01.2016; (iii) Imperial Imp &am .....

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urchases, as well as notices under section 133(6) of the Act to the said three parties from whom purchases were made, which were returned unserved. As the assessee failed to produce the said parties, the AO primarily relying on the information obtained from the Sales Tax Department and the statement of an unconnected third party, Shri Rajendra Dodhiwala (Prof. Rushabh Enterprises ) held the said purchases to be bogus. While it may be true that the said three parties did not appear before the AO, .....

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is in order to conclude that without corresponding purchases being effected, the assessee would not have made sales. 4.4.2 In our view, the AO has not brought on record any material evidence to conclusively prove that the purchases are bogus. Mere reliance by the AO on information obtained from the Sales Tax Department or the statement of a third party before the Sales Tax Department, without affording the assessee adequate opportunity to cross examine that person or the fact that these parties .....

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