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M/s. Meru Impex Versus ACIT-Circle 17 (2) , Mumbai

2017 (11) TMI 253 - ITAT MUMBAI

Addition on bogus purchases - Information received in office of DGIT (Inv.), Mumbai and subsequently, from the Sales Tax Department, Mumbai, regarding suspicious parties who are only providing accommodation entries without doing any actual business - Held that:- In this case the sales have not been doubted. It is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is .....

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the exchequer. In such situation, in our considered opinion, on the facts and circumstances of the case, 12.5% disallowance out of the bogus purchases meets the end of justice. Accordingly we direct disallowance of 12.% of the bogus purchases. - Decided partly in favour of assessee. - I.T.A. No. 2660/Mum/2017 - Dated:- 1-11-2017 - SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM For The Appellant : None For The Respondent : Shri T. A. Khan ORDER Per Shamim Yahya, A. M.: This Appeal by the Asse .....

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4,99,55,341/-. The order of the ld. CIT(A) is bad in law, against the principle of natural justice, void ab initio and the sustaining of the re-opened assessment is also liable to be quashed. 2) On the facts and circumstances of the case, the learned CIT(A) erred in confirming the addition of alleged purchases from bogus hawala parties amounting to ₹ 4,99,55,341. The appellant did not enter into any transaction with the bogus hawala parties at all and therefore the said addition of ₹ .....

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llowing party/parties are appearing in the list of bogus parties from whom the assessee is shown to have made purchases. S.No. Name Amount (Rs.) 1. M/s. Mihir Diamonds (Prop. Gautam B Jain) 2,34,44,142 2. M/s. Krishna Diamonds Pvt. Ltd. 2,65,11,199 4.2 It is seen that the assessee has claimed total purchases of ₹ 4,99,55,341/- from the above-said parties. It is pertinent to mention here that the Sales Tax Department has conducted independent enquiries in each of the Hawala parties and conc .....

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urnish all relevant evidence to establish that goods have actually been delivered/supplied. The assessee was also asked to furnish its explanation on the purchases purported to have made from the aforesaid parties and the details of brokers/agents through whom purchases were claimed to have been made by the assessee including Name, Address, Contact Number etc. to prove the genuineness of the transaction. The assessee was also asked to show cause as to why the expenditure claimed in respect of pu .....

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alling for all the details of all the transactions that these parties had with the assessee for the relevant assessment year, a copy of the ledger of the account of the assessee as appearing in parties' books of account, mode of receipt of payment, copy of Bank Statement reflecting the transactions made with the assessee, highlighting the same, Income tax return and full set of financial statements of parties etc. However, these notices returned unserved, thus confirming the fact that the af .....

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ance of Probabilities and not Beyond reasonable doubt . Reliance is placed on C. Vasantlal & Co. Vs. CIT (1962) 45 ITR 206 (SC), Chaturbhuj Panauj AIR 1969 (SC) and Sumati Dayal Vs. CIT (1995) 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 Dayal Vs. CIT (1995) 214 ITR 801 (SC). (iii) The purchases from hawala operators falls within the ambit of .....

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v) The DGIT (Inv.), Mumbai made a finding and forwarded the information to this office of the name of entities which are involved in giving bogus bills only after carrying out a detailed enquiry & investigation. 5. On the above reasoning, the Assessing Officer made 10% addition for bogus purchase amounting to ₹ 4,99,55,341/-. 6. Against the above order, the assessee appealed before the ld. CIT(A) challenging both the reopening as well as merits of addition. The ld. CIT(A) dismissed bot .....

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T(A) placed reliance on various case laws including the Hon ble Apex Court decision in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500, which is quite relevant and fully justify the reopening. The credibility of information relating to reopening remains un-assailed. In such factual scenario, the assessing officer has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any confirmation from any of .....

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ntries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances. there are no doubt that these parties are non-existent. We find it further strange that assessee wants the revenue to produce assessee s own vendors, whom the assessee could not produc .....

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uld be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions. 9. In these circumstances, the ld. Departmental Representative has referred to Hon ble Gujarat High Court decision in the case of Tax Appeal No. 240 of 2003 in the case of N K Industries vs. Dy CIT, order dated 20.06.2016, wherein 100% of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the a .....

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