TMI Blog2017 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot controvert overwhelming evidence that the provider of these bills is bogus and non-existent. 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, there is 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 produce. The purchase bills from these non-existent/bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge. 2. Learned Assessing Officer erred in disallowing the purchases on the basis of information received from Sales Tax Authorities which contrary to the material fact on record and more particularly is contrary to the provisions of Section 69C since the source is in dispute and not the purchase expenditure. 3. In this case, the return of income was filed on 16.09.2009 declaring total income at ₹ 8,13,210/-. The Assessing Officer in the assessment order has stated that assessment in this case was initiated on the basis of information received from the office of DGIT(Inv.), Mumbai. The information was that the sales tax department has exercised due diligence which revealed that the assessee is involved in taking accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary evidences such as transportation bills, bank statements and so on. The assessee was asked to produce the principal persons of the impugned parties which the assessee failed to do so. The assessee filed ledger account of all the parties and copy of his bank statements reflecting the payments made to these parties. No evidence of transportation of goods required by the Assessing Officer were furnished. The assessee further admitted that the concerned parties are not available at their last known addresses nor does he know the current whereabouts of the parties. The assessee confirmed that it has sold the goods which have been purchased from the alleged hawala dealers and has realized the sale proceeds. Therefore, it was pleaded that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v/s CIT 316 ITR 0274 dealt with similar case where some of the alleged suppliers who had issued bills to the assessee were not genuine as they were not traceable. The goods were received from other parties. The likelihood of the purchase price being included could not be ruled out and therefore the Hon'ble High Court has upheld the decision of CIT(A) and the ITAT disallowing 25% of the payments made to such parties. The Hon'ble High Court of Gujarat in the case of CIT vs. Simit P. Sheth 356 ITR 0451 held that once the sale is accepted by the AO, the very basis of purchases could not be questioned. Not the entire purchase price could be disallowed but only the profit element embedded in such purchases could be added to the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bills is bogus and non-existent. 7. 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, there is 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 produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls 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 vide order dated 16.1.2017. 10. We further note that Hon ble Rajasthan high court has similarly taken note of decisions of the apex court on the issue of bogus purchases in the case of CIT Jaipur vs Shruti Gems in ITA No. 658 of 2009. The Hon ble High Court has referred to the decision of CIT Jaipur vs. Aditya Gems, D. B. in ITA No. 234 of 2008 dated 02.11.2016, wherein the Hon ble Court had inter alia held as under: Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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