Tax Management India.Com

Home Page

Home List
← Previous Next →

2017 (12) TMI 532

Bogus purchases - estimating of profit - Held that:- When the assessee made purchases and sold the finished goods as a natural corollary not the entire amount covered under such purchases would be subject to tax but only the profit element embedded therein. Similar view has been taken by the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) that 12.5% disallowance out of the bogus purchases serves the interest of justice. Simply because the .....

X X X X X X X

Full Contents

X X X X X X X

in law, the Ld. CIT (A) erred in upholding purchases made from alleged bogus parties as accommodation entries, ignoring the fact that appellant is a trader and there are documentary evidences available to substantiate purchases i.e. payments were made by account payee cheques, quantitative records are maintained and for every purchase there was corresponding sales which has been accepted by AO, (3) On the facts and in law and without prejudice to above grounds of appeal, the Ld. CIT (A) erred in .....

X X X X X X X

Full Contents

X X X X X X X

tnership firm, engaged in the business of trading in ferrous and non-ferrous metal pipes and tubes. The return of income for the year under appeal was filed declaring total income of ₹ 72,22,654/-. The assessment u/s.143(3) of the Act was completed assessing the total income at ₹ 73,65,740/-. Thereafter, information was received that the assessee is one of the beneficiaries of the accommodation entries in the form of purchase bills. On the basis of tangible material available, the As .....

X X X X X X X

Full Contents

X X X X X X X

ent of Maharashtra. AR has not filed any documentary evidences and not responded to the order sheet entry dated 24-12-2013 to produce the parties. In these circumstances, Assessing Officer issued show cause notice to furnish the details and also to produce the parties for verification. Subsequently, vide letter dated 16-01-2014 & 06-02-2014, furnished the ledger accounts, Xerox copies of sale invoices, delivery challans chart showing bill wise purchases in respect of the purchase parties and .....

X X X X X X X

Full Contents

X X X X X X X

h peak represents the amount of undisclosed cash that has been utilized in this arrangement and income to the said extent has escaped the assessment and added the same to the total income assessed as per the order passed u/s 143(3) r.w.s. 147 of the Act. 7. Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals) challenging both the validity of reopening and merits of the addition. 8. The ld. Commissioner of Income Tax (Appeals) confirmed the reopening .....

X X X X X X X

Full Contents

X X X X X X X

ubject to the ' provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that .....

X X X X X X X

Full Contents

X X X X X X X

re on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment. 2.5.7 The facts of the present case are now tested in the light of the aforesaid provisions of sec. 147 as applicable to the year under consideration. On verification of details placed on record, it is found that the notice under section 148 of the Act for the assessm .....

X X X X X X X

Full Contents

X X X X X X X

al that the assessee has adopted this modus operandi in this year as well. This is apparent from the details of purchases from these parties (from whom the assessee had taken accommodation bills) in FY2008-09 relevant to AY 2009-10, which are as follows:- TIN Name Amount of sale to assessee in FY 2007-08 (Rs) 27680272629V Shiv Industries 11,039 27620641456V Kiran Sales Corporation/ Nidhi Impex India 3137940 27090277561 Revathi Steel Traders 135980 27020229342 Universal Enterprise 2614238 2762037 .....

X X X X X X X

Full Contents

X X X X X X X

ior to issue of notice under sec 148, assessment was made under sec 143(3). In such case for reopening the assessment which was finalized u/s 143(3) of the Act, the conditions are the income chargeable to tax should have escaped assessment by reason of failure on the part of the assessee either (i) to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148, or (ii) to disclose fully and truly all material facts necessary for his asses .....

X X X X X X X

Full Contents

X X X X X X X

information received by the AO has come on record by the AO to trigger reopening of assessment beyond four years. In these circumstances, the condition precedent for a valid exercise of the power to reopen the assessment, within four years from end of the relevant Assessment Year, is present in the case. The conditions which are prescribed by the statute for the exercise of such a power are fulfilled. 2.5.9 Since in the original assessment, the issue was not verified by the Assessing Officer an .....

X X X X X X X

Full Contents

X X X X X X X

the bogus purchase. 10. Against the above order of ld. Commissioner of Income Tax (Appeals), the assessee is in appeal before the ITAT. 11. We have heard both the counsel and perused the records. As regards the reopening of the assessee, on a careful consideration, we note that in this case information was received by the Assessing Officer from DGIT Investigation (Mumbai) there are some parties who are engaged in the hawala transactions and are also involved in issuing bogus purchase bills for .....

X X X X X X X

Full Contents

X X X X X X X

ee 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 .....

X X X X X X X

Full Contents

X X X X X X X

ny assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As obs .....

X X X X X X X

Full Contents

X X X X X X X

edent from Hon ble Apex Court fully justify the validity of reopening in this case. Further we find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, we do not find any infirmity in the same. Accordingly, we uphold the order of the Ld. CIT(A) on the issue of reopening. 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. 14. We further n .....

X X X X X X X

Full Contents

X X X X X X X

t overwhelming evidence that the provider of these bills is bogus and nonexistent. 15. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. 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 .....

X X X X X X X

Full Contents

X X X X X X X

on in the case of Tax Appeal No. 240 of 2003 in the case of N K Industries vs. Dy. CIT vide 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 addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus, 100% disallowance was required. The special leave petition against this order along with others has been dismissed by the Hon ble Apex Court .....

X X X X X X X

Full Contents

X X X X X X X

 

 

← Previous Next →