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TMI Blog2019 (3) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... are referring to facts and figures from the A.Y. 2009-10. 3. Brief facts of the case are that it was observed by the A.O. that as per the information received from the Investigation Wing of the Income Tax Department, Mumbai, the assessee company was one of the beneficiaries of Hawala transactions routed through the hawala dealers as informed by the Sales Tax (VAT) Department, State of Maharashtra. During the year the assessee company had shown purchases from the following alleged hawala parties: SI. No. Name of the party Purchase value Rs. 1 Omkar Trading 4250026 2 Somnath international 1078002 3 Foram Traders/Apple India Marketing Ltd. 5450681 4 Rumeet Enterprises 2,55,53,472 5 N.K. Trading & Co. 2,20,850 6 Nageshwar M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses if any of the aforesaid parties and also prove the genuineness of purchases transactions entered with the aforesaid parties with all relevant supporting documentary evidences i.e. copies of purchase orders, copies of bills raised/invoices raised, goods receipt note (GRN), Goods/survey inspection report, delivery challan(s)/Lorry receipt(s), details of payment(s) made and all othe relevant details with supporting documentary evidences, etc. However, the assessee company did not furnish any such details or produce the parties for verification. The assessee was, thus, asked to show cause as to why these purchases should not be considered as bogus and the same be disallowed accordingly. 5. In response, the Director of the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been purchased from these parties. The parties were also nonexistent at the given addresses. The assessee also could not produce these parties. The fact of payment by cheque was not sacrosanct and did not necessarily mean that the purchases made from these parties were genuine. In view of all these, the A.O. was of the considered opinion that the transactions in respect of the material shown as purchases by the assessee from the above mentioned parties were not genuine transactions. The A.O. observed that it was reasonably clear and glaringly obvious that the sales invoices claimed to have been issued by them were fictitious ones. Therefore, applying the ratio of the decision in the case of M/s. Vijay Proteins Ltd. (1996) (25 ITD 428 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sacrosanct and does not necessarily mean that the purchases made from these parties are genuine given the modus operand! followed in such hawala transactions. There is no evidence that the goods purportedly purchased from these parties were actually supplied by them. The documentary evidences such as purchase bills , payments by cheques, etc. are all orchestrated to present a facade of genuineness and does not necessarily mean that the purchases from these parties are genuine. The Courts have held that payment by cheque by itself is not sacrosanct so as to prove genuineness of purchases. However, the appellant has shown onward sales which has not been doubted by the Assessing Officer. Since there can be no sales without corresponding pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860 order dt 18.6.2014). In this case, the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to the government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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