TMI Blog2017 (10) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per Shamim Yahya, AM This is an appeal by the Revenue and cross objection by the assessee directed against order of learned CIT(A) dated 10.04.2015 and pertains to assessment year 2009-2010. 2. The issue raised in the Revenue s appeal is that learned CIT(A) erred in deleting the entire addition made by the Assessing Officer on account of bogus purchases amounting to ₹ 1,67,26,325. 3. The issue raised in the cross appeal read as under:- 1. The learned CIT(A) erred in not holding that the assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 is bad in law and void ab initio in view of decision of Hon ble Supreme Court in the case of GKN Drive shafts (India) Limited [259 ITR 19 (|SC)] 2. The learned CIT(A) is correct on facts and in law in deleting the addition made under section 69 of the Act of ₹ 1,67,26,325/- as all the purchases made from the alleged bogus purchases are in turn sold and all the evidences of both purchases and sales were filed before the Assessing Officer and the CIT(A). 4. At the outset, learned Counsel of the assessee submitted that he shall not be pressing the ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be mentioned that the above entities have been proclaimed as hawala dealers engaged in the activity of providing bogus bills of purchases by the Sales Tax Department, Maharashtra. Analysis of the information received from the DGIT(lnv), Mumbai and the information available in the public domain i.e. the website of the Sales Tax Authorities, is that the above entities are providers of bogus bills. These parties have issued the bills without actual delivery of goods. As per the information provided by the Investigation Wing, it has emerged that the purchases shown by the assessee from the above parties are non-genuine and the assessee has obtained accommodation entries in the shape of bogus bills of purchases to suppress its income for AY 2009-10. In view of the above, I have reason to believe that income chargeable to tax, in the garb of purchases by way of accommodation entries from the aforesaid entities has escaped assessment for AY 2009-10 within the meaning of section 147 of the Act. Therefore, it is clear that the assessee took accommodation entries through person to regularize its purchases which is made out of books of account. The source of funds in such pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995) 214 ITR 801 (SC). One has to consider the totality of facts, surrounding circumstances and human probability for arriving at a conclusion as held in CIT Vs. Durga Prasad 82 ITR 540 (SC) and Sumati Daya Vs CIT (1995) 214 ITR 801(SC). 6) The purchases from Hawala operator falls within the ambit of the term colourable devices' and the Hon'ble Supreme Court observed in the case of McDowell Co. Ltd. Vs. CTO 154 ITR 148 that tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertainment the belief that it is honourable to avoid the payment of tax by resorting to dubious method. It is obligation of every citizen to pay the taxes honestly without resorting to subterfuge. 4.6 The Sales Tax Department made a finding and uploaded on its website the name of entities which are involved in giving accommodation entries. As far as the independent enquiries in the above mentioned case conducted by the Sales Tax Department are concerned, the reports of the Sales Tax Department, which were given after conducting enquiries, indicates that either in their statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown to have made from the above mentioned parties. The assessee has not given any evidence which leads to conclusion that there were actual purchases from above mentioned parties and that these parties actually exist. The only inescapable conclusion that can be drawn from above is that the purchase from the above parties is bogus and not genuine. Hon'ble Delhi High Court in the case of CIT Vs. La Medica 117 Taxman 628 (2001) has held that once it is accepted that the supplies were not made by the bogus party to whom the payments were alleged to have been made, the question whether the purchases were made from some other source ought not to have weighted with the Tribunal as a factor in favour of the assessee. In light of the above exercise and conclusions, I am not satisfied with the submissions given by the assessee. From the above transactions, I am satisfied that the assessee has intentionally inflated the purchases to reduce his taxable income. This has been done by only showing the quantum of purchases in rupees and not the units of purchases which would otherwise clearly establish the matching aspect of number of units purchased with number of units sold with individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Hon. Gujarat High Court decision in case of CIT Vs Nangalia Fabrics P. Ltd. (2014) 220 Taxman 17 12. Hon. Mumbai ITAT judgment dated 17.6.2016 in the case of M/s. Om Shree International Vs ACIT in ITA No. 3304/M/2014 and ITA No. 4575/M/2012. 13. Kishanchand Chelaram Vs. CIT-125 ITR 713-SC 14. H.R. Mehta Vs ACIT in ITA No.58 of 2001 (Bom) 15. CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. [372 ITR 619 (Bom)2015] 16. ACIT Vs. Ramila Pravin Shah (ITA No.5246/Mum/2013) 17. ACIT Vs.Tristar Jewellery Exports Pvt. Ltd. (ITA No.7593/Mum/2011) 18. ITO Vs. Deepak Popatlal Gala (ITA No.5920/Mum/2013 and ITA No.6203/Mum/2013) 19. DCIT Vs.Rajiv G.Kalathil (ITA No.6727/Mum/2012/RGR 20. Ramesh Kumar Co. Vs. ACIT in ITA No.2959/MUM/2014 dt.28.11.2014. 21. Shri.Ganpatraj A.Sanghavi Vs. ACIT in ITA No.2826/Mum/2013 dt.5.11.2014. 22. West Coast Paper Mills Vs.JCIT[100 TT] 833(Mum)] 23. ITO Vs.A.C Export[13 DTR 98(Mum)]. 24. Unitex Products [22 SOT 429(Mum)]. 25. Teletronics Dealing System Pvt. Ltd. [53 Taxmann.com20(Mum)]. 26. Free India Assurance Services Ltd. Vs. DCIT(132 ITD 60) Mumbai Tribunal. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 540. In the present case the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above Apex Court decisions. 13. Hence we find that learned CIT(A) s observation that Assessing Officer has not made proper enquiry is totally incorrect. Further, learned CIT(A) has referred to a list of orders without discussing anything about the contents. Learned Counsel of the assessee has also referred to them without making any discussion about the contents therefrom. Furthermore, we note that learned Counsel of the assessee has placed reliance on a couple of Tribunal decision. But in the light of Hon ble Apex Court decision and Hon ble High Court s decision referred hereinbelow, we are following the precedent from Hon ble High Court. 14. In these circumstances learned departmental representative has referred to Hon ble Gujarat High Court decision in the case of Apex Appeal No. 240 of 2003 in the case of N K Industries vs Dy CIT, order dated 20.06.2016, wherein hundred percent of the bogus purchases was held to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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