TMI Blog2018 (4) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... these parties are non-existent - purchase bills from these non-existent the/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. The overall consideration of facts and circumstances and following the decision of Hon’ble Gujarat High Court in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice. - Decided partly in favour of assessee. - I.T.A. Nos. 47 And 48/Mum/2018 - - - Dated:- 2-4-2018 - SHRI SHAMIM YAHYA, AM For The Appellant : None For The Respondent : Ms. N. Hemalatha ORDER Per Shamim Yahya, A . M .: These are appeals by the assessee against the common order of the Commissioner of Income Tax (Appeals) for the assessment years 2010-11 and 2011- 12. The issues are common and the appeals were heard together, these have been disposed of by this common order. 2. The common issue raised is that the ld. Commissioner of Income Tax (Appeals) erred in upholding the validity of the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company. The Assessing Officer also referred that as per section 106 of Indian Evidence Act 1872, when any fact is specifically within the knowledge of any person, then burden of proving that fact is upon him. In the background of facts of the case and provisions of Indian Evidence Act, it was concluded by the Assessing Officer that the assessee company has failed to establish the genuineness of the purchases. The Assessing Officer also specifically mentioned that books of accounts, maintained by the assessee did not reflect true and genuine picture of financial status of the company. Finally, the Assessing Officer disallowed the purchase of ₹ 5,12,541/- and added to the total income. 5. Upon the assessee s appeal, the ld. Commissioner of Income Tax (Appeals) has confirmed the addition which is 100% of the bogus purchases. 6. Against the above order, the assessee is in appeal before the ITAT. 7. As regards the reopening of the assessee, on a careful consideration, I 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer to assess or reassess income chargeable to lax if he has reason to believe that income for any 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 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 income . At the stage of issue of notice, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer 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. 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. 11. Hence purchase bills from these non-existent the/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 present case the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions. 12. In these circumstances learned departmental representative has referred to Hon ble Gujarat H ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
