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TMI Blog2017 (5) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in enhancing the income without following the mandatory provision of section 251(2) of the Income Tax Act, the order of the CIT(A) may be set aside. II. Natural Justice i. The learned CIT(A) erred in confirming the order of the Assessing Officer without providing an opportunity for cross examination of the purchase parties statements made before the Sales Tax Authority, hence, the addition made of Rs. 62,40,000/- may be deleted. III. Addition u/s 69C of Rs. 62,40,00/- on the alleged bogus purchase i. The learned CIT(A) erred in confirming the addition of Rs. 62,40,000/- on the basis of information received from the Investigation Wing Department treating the purchases as bogus, without appreciating that the Assessee had submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, that the assessee was one of the beneficiaries of hawala transactions routed through 15 hawala parties. The A.O. noted that the assessee had already added purchases from the 4 hawala parties in the revised return of income filed and paid the tax. Then the A.O. asked the assessee to prove the genuineness of expenditure in the context of 13 hawala parties. In response to it, the assessee submitted before the A.O. the supporting evidences with respect to 11 parties. The A.O. observed that the assessee failed to file bills with respect to 5 parties. One may refer to para 5.4 and 5.5 of the assessment order on the above. The A.O. took into account the fact that 13 hawala parties had accepted during the course of search and seizure b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning inter-alia (i) return of income and computation of total income, (ii) annual accounts for year ended 31.03.2010, (iii) audit report for year ended 31.03.2010 and (iv) details of purchase submitted before A.O. along with ledger accounts, purchase bills, purchases order, goods receipts note, inward quality control report and bank statements. It is stated by him that the above documents were filed before the A.O. Also the learned counsel files a copy of (i) letter dated 08.04.2014 filed before CIT(A), (ii) letter dated 10.06.2014 filed before CIT(A), (iii) letter dated 13.06.2014 filed before CIT(A) under Rule 46A for additional evidence and (iv) letter dated 17.03.2015 filed before CIT(A). 7. Per contra, the learned DR relies on the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Company (Pvt.) Ltd. Polsons Sales Agency Pvt. Ltd. : As the assessee has suo motu considered these hawala parties by adding purchases in its revised 6 return of income stating that the purchases from these parties could not be substantiated, therefore, the remaining purchases of Rs. 6,24,000/- made by the assessee with this party as per the information received from the Investigation Wing of the Department are also held as non-genuine purchases. Balaji Marketing Pvt. Ltd.: As per the information received from the Investigation Wing of the Department, the assessee was one of the beneficiaries of hawala transactions totalling to Rs. 6,24,000/- routed through this hawala party having TIN No. 27760147649V and PAN No. AACCB5252E. This fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact was confirmed during the course of search proceedings by the Sales Tax Department, Mumbai. During the course of stataement of Shri Mahendra Dhabalia, Director / partner of M/s. Palson Sales Agency Pvt. Ltd., Purvi Sales Agency Pvt. Ltd., Volcano Trading Pvt. Ltd., Balaji Marketing Pvt. Ltd., Park Distributors Pvt. Ltd., Radhe Economical Services Pvt. Ltd., Shivam Corporation, Adept Agency Deep Enterprises, etc. recorded on oath under section 14 of the Maharashtra Value Added Tax Act, 2002 on 28.02.2012, it was stated by him that he used to issue only sales invoices to the company who approaches him for invoices of his companies. He further stated that he used to give them invoices at commission of 5% of the bill amount and has int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 5.5 of the assessment order), the A.O. could have examined the witness. The A.O. has failed to do so. 8.2 The issue of bogus purchase arose before the Hon'ble Gujarat High Court in CIT vs. Simit P. Sheth (2013) 38 taxmann.com 385 (Guj). We refer to the above case for guidance. In that case, the assessee was engaged in the business of trading in steel on wholesale basis. The A.O. having found that some of alleged suppliers of steel to assessee had not supplied steel to assessee but had only provided sale bills, held that purchases made from said parties were bogus. He, accordingly added the entire amount of purchases to gross profit of the assessee. In appeal the Commissioner (Appeals) having found that the assessee had indeed made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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