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TMI Blog2018 (4) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) r.w.s. 147 of the I.T. Act, 1961 was completed by the Assessing Officer on 27.02.2015 determining the total income at Rs. 5,06,750/-. In the assessment so completed, the Assessing Officer has made an addition of Rs. 4,78,194/- on account of bogus purchases. 4. During the course of assessment proceedings, to ascertain the genuineness of purchases shown in the accounts, notices u/s 133(6) of the Act was issued by the Assessing Officer to the said party from whom the purchases were made, by registered post. The notice was returned unserved by the postal authorities with a remark 'not known'. The Assessing Officer asked to prove the genuineness of the said party's and the purchases made from them with adequate supporting evidences and also to produce the party for verification. However, the assessee failed to do so, and only furnished some details and could not produce the vital documents like delivery challans, transport receipts, Octroi, receipts, excise gate pass, goods inward register maintained at godown etc., On going through the submissions and contentions of the assessee at length, the Assessing Officer concluded that the assessee's purchase from the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief that income has escaped assessment. In the present case, it is evident that the AO has received specific and credible information from the DGIT(lnv.), Mumbai that the assessee was involved in making bogus purchases through hawala dealers to the extent of Rs. 38,25,554/- from M/s, Newzone Multitrade P.Ltd. The information prima facie revealed that the appellant has claimed purchases for the A.Y. 2009-10 in their books. Based on this precise information, the AO issued notice u/s. 148 of the l.T. Act as he had prima-facie reasons to believe that income chargeable to tax had escaped assessment within the meaning of sec. 147 of the l.T, Act. Thus, there was cause or justification for the AO to invoke provisions of sec. 147 and issue notice u/s. 148. As already mentioned, at the initiation stage, what is required to be seen is r there are prima-facie 'reasons to believe1 but not the established fact of escapement of income. The AO also recorded proper reasons for formation of the belief that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11. From the above, I find that tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the AO that income has escaped assessment. The information so received by the AO has live link with reason to believe that income has escaped assessment. On these incriminating 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se by the assessing officer that certain accommodation entry provider/bogus suppliers were being used by certain parties to obtained bogus bills, assessee was found to have taken accommodation entry/bogus purchase bills during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening has been confirmed by the learned CIT(A) and by ITAT as above. Furthermore it is noted that in such factual scenario Assessing Officer 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 to produce any of the parties. The necessary evidence for transportation of goods have not been provided by the assessee. In this factual scenario it is amply 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 and there is no cogent evidence of transportation of goods. The sales tax Department in its enquiry have found the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court has dismissed the SLP confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments. 17. Upon careful consideration I find that sales in these cases are not doubted. When sales are not doubted, 100% disallowance for bogus purchase is not sustainable as per the decision of the Hon'ble jurisdictional High Court in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). However, the facts of that case were different inasmuch as sales were to the Government department. However the facts and circumstances of the present case indicate that assessee has engaged into dealings in the grey market. Dealings in the grey market give the assessee various savings at the expense of the Exchequer. Hence, on the overall consideration of facts and circumstances and following the decision of Hon'ble Gujarat High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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