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TMI Blog2017 (5) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have provided only accommodation entries. The Assessing Officer reopened assessments of the Assessee, believing that the Assessee was provided only accommodation entries from those parties where investigation was conducted by Sales Tax Department and no purchases were effected. The Assessing Officer in the course of reassessment proceedings required the Assessee to justify the purchases made by the Assessee from M/s Manav Impex as genuine. The Assessee submitted a detailed reply in the course of reassessment proceedings stating that the purchases made by the Assessee from M/s Manav Impex are genuine. The Assessee produced list of stock traded by the Assessee, movement of stock purchased by M/s Manav Impex with details of each stock, stock summary, reconciliation of purchases and sales with annual report, confirmation from sales parties, invoices of M/s Manav Impex towards purchase of goods. All these details were produced before the Assessing Officer contending that the purchases made by the Asssessee are genuine. However, the Assessing Officer rejected the explanation of the Assessee by observing that information has been received from the Investigation Wing relating to Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only on the information received from Sales Tax Department without confronting such information received by the Assessing Officer from the Sales Tax Department nor providing any opportunity for cross examination of the party. The Ld. Counsel submits that the Assessee has produced ledger copies of the concerned parties, other necessary evidences like purchase bills, bank statements, proving payments made through cheques etc. to prove the genuineness of the transactions and whereas the Assessing Officer has not brought any evidence against the Assessee except the information obtained from the Sales Tax Department to prove that the purchases are not genuine. The Ld. Counsel submits that since the Department has made allegation that the purchases are bogus, the onus is on the Department to prove such fact through Cogent Evidences.The Ld. Counsel further submits that on identical facts and circumstances, the Hon'ble Jurisdictional High Court as well as the Tribunal of Mumbai benches deleted the addition made under Section 69C in the following cases: Sl. Decision Citation / ITA Nos. 1. CIT Vs. Nikunj Eximp Enterprises (P) Ltd 372 ITR 619 (Bom) 2. ITO Vs. Takhtmal Bhuralal Pichhol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h purchases, in fact, he has accepted the sales. Without there being any purchases, there could not be any sales. It is also not proved by the Assessing Officer that the amounts paid by the Assessee to the dealers were returned back to the Assessee and the purchase bills issued are only accommodation entries. Simply because the Assessee could not produce the dealers, the entire purchases cannot be treated as bogus purchases. The Assessing Officer could have made further investigations to ascertain the genuineness of the transactions which he failed to do. The Assessee has discharged its initial onus of providing necessary information about the purchases. 9. We find that on identical situation and facts, the Coordinate Bench of the Tribunal in the case of ITO Vs. Sanjay V Dhruv in ITA No.5089/2014, dated 29.02.2016 held that the purchases cannot be treated as bogus purchases and addition cannot be sustained under Section 69C observing as under : "We have considered the submissions of the parties and perused the material available on record. It is evident from the assessment order that on the basis of information obtained from the Sales Tax Department, Assessing Officer issued noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no evidence before the Assessing Officer that the payments made were again routed back to the assessee, the addition made under section 69C cannot be sustained. Moreover, the decisions relied upon by the learned A.R. on careful analysis were found to be squarely applicable to the facts of the present appeal. Therefore, finding no infirmity in the order of the first appellate authority, we uphold the same by dismissing the grounds raised by the Department." 10. Similarly in the case of Sharad Construction Pvt. Ltd., Vs. ACIT, ITA Nos.2812-14/2015 dated 30.09.2016, the Coordinate Bench held as under : "2. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. At the outset, we must observe, the Assessing Officer has not rejected the books of account of the assessee. This fact is not disputed by the learned Departmental Representative. It is further evident, the allegation of bogus purchases was contained in a report received from the DGIT (Inv.). It is a fact on record to ascertain the genuineness of purchases, the Assessing Officer summoned one of the directors of the assessee company and record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that before finalizing your opinion, we shall be given enough chance to verify a) Said affidavit of alleged suppliers confirming Havala Bills; b) Opportunity to cross examine such dealers in person; c) Any other remedy allowed to us legally. We are sure, department will clear the matter in view of our requirement as assessee, and we hope our name will be cleared from above allegations. 11. Thus, as could be seen from the aforesaid fact, the assessee not only denied the allegation of bogus purchases but also specifically requested the Assessing Officer to allow him an opportunity to verify the adverse material and also requested for cross-examination of the dealers who allegedly stated of having provided accommodation bills. As against the aforesaid facts, the Assessing Officer has simply relied upon the information received from DGIT (Inv.), to infer that purchases made from certain parties as referred to in the assessment order and reproduced in earlier part of our order are bogus. In fact, in the assessment order, nowhere the Assessing Officer has discussed in detail the nature of information obtained from DGIT (Inv.) nor the specific adverse material on the basis of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee offered to pay the sales tax / VAT, it will not take away his right to be confronted with adverse materials or opportunity of cross-examination. If the Assessing Officer intends to utilise any adverse material in detriment to the interest of the assessee, he is bound to confront them to assessee with opportunity to rebut them. Further, the allegation of the learned Commissioner (Appeals) that the assessee had never asked for cross-examination of the sellers / suppliers before the Sales Tax authorities is factually incorrect as perusal of the letters filed by the assessee before the sales tax authorities on different dates clearly reveals that the assessee had repeatedly requested the sales tax officer not only to provide him with the adverse material but also allow him opportunity to cross-examine the so called bogus dealers. As noted by us and it is also a fact on record, before the Assessing Officer assessee had submitted purchase invoices, books of account, etc., to prove the genuineness of purchases. In addition, it is not disputed that the entire payments towards purchases have been made through account payee cheque. Before the first appellate authority, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s adverse material is brought on record to prove the contrary. This view of ours is supported by the decision of the Tribunal, Mumbai Bench, in Ramesh & Co. v/s ACIT, ITA no.2959/Mum./2014, dated 28th November 2014. Moreover, the decision of the Hon'ble Jurisdictional High Court in CIT v/s Nikunj Exim Enterprise Pvt. Ltd. (supra) also support assessee's case that when payments are made through account payee cheque to suppliers and sales effected are not doubted, further, when books of account are not rejected purchases cannot be treated as bogus. The other decisions of the Tribunal relied upon by the learned Authorised Representative also express the view that merely on the basis of information obtained from the Sales Tax department, no addition can be made on account of bogus purchases. Therefore, on over all consideration of facts and material on record, we are of the opinion that the addition made on account of bogus purchases is legally unsustainable, hence, we delete the same." 11. In view of the above discussion, we hold that there is no material on record to conclusively prove that the purchases made by the Assessee are bogus purchases and nothing is brought on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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