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TMI Blog2017 (11) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... ually purchased except on paper. The Sales Tax Department has investigated this fraudulent input tax credit indulged by the hawala operators. The beneficiaries have claimed such bogus purchases as expenditure in order to fraudulently claim tax deduction thereby reducing their taxable income. The assessee firm is one of such beneficiaries identified by the Sales Tax Department. In the statements recovered by the Sales Tax authorities, these hawala operators have admitted the fact that the transactions are not genuine. The hawala operators have also submitted affidavits to the Sales Tax Authorities stating that the purchase transactions are only on paper. In some of the cases the bank statements of the hawala parties are also provided. It is clearly seen that the cheques are deposited and cash is withdrawn immediately. In some of the cases it is stated that the bank account was not operated by them but operated by the other persons. 2.2 The aforesaid purchases from the hawala parties are booked by the assessee firm in its books of accounts as expenses. Therefore, the onus to prove the genuineness correctness of the purchase transactions lies with the assessee firm only. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for from the AO, however, on perusal of the remand report, the aforesaid parties/suppliers did not attend in response to notice u/s.133(6), therefore, the appellant was asked to produce the parties for cross examination, but failed to do so. In view of the above stated facts, the appellant was given opportunity by AO as well as during the appellate proceedings, by remanding the matter to the AO, but the appellant failed to comply, hence, this ground of appeal of the appellant is dismissed." 4. As regards the merits of the addition, the learned CIT(A) confirmed the same holding as under:- (a) First of all, adequate opportunity was given to the appellant at the time of assessment proceedings, in fact, the AO has issued show cause u/s 144 dated 13.09.2013, served on 13.09.2013 and to attend on 25.09.2013, but failed to attend on the appointed date. Again, during appellate proceedings, on the basis of new evidence filed and in view of Rule 46A of the I.Tax Rules, the matter was remanded to AO to conduct verification, which could not be done earlier by the AO, however, as discussed in Para 6.0(A)(i) & (ii) above, the appellant has not complied and not even attempted to file de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial burden is on the appellant to prove that purchases were genuine. Reliance is placed on the decision in the case of CTT vs. Chandra Vilas Hotel (1987) 164 ITR 102(Guj). This onus has not beer; discharged by the appellant. e) It is seen that the appellant has not maintained stock register, therefore, the appellant failed to give the quantitative details with regard to opening stock, purchases, consumption of raw materials, sales and closing stock, And also, quantitative details with regard to consumption of raw materials are not verifiable. Hence, the purchases and sales cannot be co-related with the quantitative details. f) The case laws relied upon by the appellant are not similar to the facts of the case of the appellant, therefore, It is not applicable in the case of the appellant. Considering the totality of the facts of the case, I am of the considered opinion to disallow 100% as bogus / inflated purchases made from unverifiable / hawala dealer. Accordingly, the book result of the appellant is rejected u/s 145(3) of the Act. The disallowance @ 100% of unverifiable purchases from hawala dealers had been upheld in the following cases: (1) CIT vs. La Medica (2001) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material 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 of such parties wherein the assessee is stated to be beneficiary of bogus purchase bills. 8. From the above, I find that tangible and cogent incriminating material w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court fully justify the validity of reopening in this case. 10. Up on careful consideration of the facts of the case, I find that overwhelming evidence have been referred by the authorities below that the impugned purchases are bogus. There is no evidence of the actual movement of the goods under dispute. In these circumstances learned 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 will held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. The Special Leave Petition against this order along with others has been dismissed by the Hon'ble Apex Court vide order dated 16.1. 2017 as under:- "Delay condoned. The Special Leave Petitions are dismissed. Pending application(s) if any stands disposed of accordingly." 11. I find that dismissal of Special Leave Petition by the Hon'ble Apex Court by a simple non-speaking order does not merge order of the Hon'ble High Court with that of the Hon'ble Supreme Court. Furthermore the addition / ..... X X X X Extracts X X X X X X X X Extracts X X X X
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