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Reliant Pipes & Tubes Pvt. Ltd. Versus ITO-5 (3) (1) , Mumbai

2017 (11) TMI 318 - ITAT MUMBAI

Bogus purchases - Assessee was found to have taken accommodation entry - Held that:- Credible and cogent information was received in this case by the Assessing Officer that certain accommodation entry provider / bogus suppliers were being used by certain parties to obtain bogus bills. - AO 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 the party. Assessee has also not been able .....

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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. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. I find it further strange that assessee wants the Revenue to produce assessee’ .....

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l by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-10, Mumbai ( CIT(A) for short) dated 20.01.2017 and pertains to the assessment year (A.Y.) 2011-12. 2. The grounds of appeal read as under: 1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal)-10 erred in confirming addition of ₹ 15,05,155/- out of ₹ 28,94,528/- on estimated profit element on treating the genuine purchases of ₹ 2,31, .....

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ade under section u/s 143(3) r.w.s. 147 of the Act by the learned Assessing Officer is bad-in-law, ultra virus and without appreciating the facts, submission made and law in their proper perspective and is liable to be annulled. 3. In this case, the information has been received from the DGIT (Inv.), Mumbai which was in turn received by the office of the DGIT(lnv) from the Sales Tax Authorities that the assessee has received accommodation entries from the following 10 hawala parties- SR.NO. NAME .....

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ed out by the Sales Tax Authorities, it was revealed that certain traders have only issued invoices without the sale of goods for certain commission. To this effect, they have given sworn affidavits to the Sales Tax Authorities. Such an information was passed on to the Assessing Officer through the DGIT(Inv), Mumbai. To verify the genuineness of purchases, notices u/s 133(6) were sent to the above parties who claimed to have supplied goods to the assessee company. All the notices have been retur .....

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of ₹ 2,31,56,224/-which works out to ₹ 28,94,5287- as unexplained income. 4. Against the above order, the assessee appealed before the ld. CIT(A) who restricted the addition to 6.5% of the bogus purchase. 5. Against the above order of ld. CIT(A), the assessee is in appeal before the ITAT. 6. I have heard the ld. Departmental Representative and perused the records. This case has been fixed for hearing earlier also and was adjourned at the request of the assessee. Today also despite no .....

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la transactions and are also involved in issuing bogus purchase bills for sale of material without delivery of goods, which information was based on information received by Revenue from Maharashtra Sales Tax Authority. Information was received that the assessee was beneficiary of hawala accommodation entries from entry providers by way of bogus purchase. The accommodation entry provider has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were e .....

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l from hawala entry operators in favour of the assessee wherein the assessee made alleged bogus purchases through these bogus bills issued by hawala entry providers in favour of the assessee. These dealers were surveyed by the Sales Tax Investigation Department whereby the directors of these dealers have admitted in a deposition vide statements/affidavit made before the Sales Tax Department that they were involved in. issuing bogus purchase bills without delivery of any material. There is a list .....

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criminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the guilt. In this regard, I refer to the decision of the Hon'ble Apex Court in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500:- Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to lax i .....

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nbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of .....

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me Court). 9. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Since, the issue has been decided on the basis of the Hon ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee s case. 10. Further, I find that credible and cogent information was received in this case by the Assessing Officer that certain accommodation entry provider / bogus suppliers were being used by certain parties to obtain bogu .....

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onfirmation from any of the party. Assessee has also not been able to produce any of the parties. Necessary evidence relating to transportation of the goods was also not on record. In this factual scenario it is amply clear that assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills are bogus and non-existent. 11. The Sales Tax Department in its enquiry have found that parties to be providin .....

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her strange that assessee wants the Revenue to produce assessee s own venders, whom the assessee could not produce. The purchase bills from these non-existent / bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon ble Apex Court decision in the case of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540. In the pre .....

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the sales in that case were basically to Government Departments. Hence the ratio from this decision is not applicable on the facts of the case. 13. In these circumstances, the ld. 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 added in the hands of the assessee and tribunals restriction of the a .....

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