TMI Blog2020 (2) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... d the genuineness of the purchases, it was incumbent upon the AO to have caused further enquiries in the matter to ascertain genuineness or otherwise of the transaction and to have given an opportunity to the assessee to examine/cross-examine those two parties vis-a-vis the statements made by them before the Sales Tax Department. Without causing such further enquiries in respect of the purchases, it was not open to the Assessing Officer to make the addition under Section 69C of the Act. We are in agreement with the view expressed by the Tribunal. In fact, Tribunal has only affirmed the finding of the first appellate authority. Thus, there is concurrent finding of fact by the two lower appellate authorities. As relying on M/S NIKUNJ EXIMP ENTERPRISES PVT LTD. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT ] held that merely because the suppliers had not appeared before the Assessing Officer, no conclusion could be arrived at that the purchases were not made by the assessee. - Decided against revenue - INCOME TAX APPEAL NO. 1940 OF 2017 - - - Dated:- 29-1-2020 - UJJAL BHUYAN, MILIND N. JADHAV, JJ. Mr. Akhileshwar Sharma for the Appellant. ORAL ORDER (PER UJJAL BHUYAN, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The case was selected for scrutiny and notices under Sections 143(2) and 142(1) of the Act were issued. In the course of the assessment proceeding, Assessment Officer doubted the expenditure of ₹ 4,75,42,385/- stated to be on account of purchase from two parties i.e. Impex Trading Co. for an amount of ₹ 2,90,80,292/- and Victor Intertrade Pvt. Ltd. for an amount of ₹ 1,84,62,093/-. Assessing Officer acted on the basis of information received from the office of Director General of Income Tax (Inv), Mumbai and from the Sales Tax Department that in the list of bogus sales parties the names of the aforesaid two parties were included which rendered the purchase transaction doubtful. Show cause notice was issued by the Assessing Officer to the assessee to show cause as to why the aforesaid amount should not be treated as unexplained expenditure and added back to the income of the assessee. It is seen that the assessee submitted reply and the matter was heard. 7. Assessing Officer observed that the assessee did not produce lorry receipts and other related documents to reflect movement of goods sold and purchased which were crucial for determining genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee shall not be allowed as a deduction under any head of income. 15. Section 69C deals with unexplained expenditure. It says that where an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof or if the explanation offered by him is in the opinion of the Assessing Officer not satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for the financial year under consideration. As per the proviso, once such expenditure is treated as unexplained expenditure which is deemed to be the income of the assessee, the same shall not be allowed as a deduction under any head of income. 15.1. Thus, Section 69C contains a deeming provision. As per the deeming provision, if an assessee incurs any expenditure in the relevant previous year but he offers no explanation about the source of such expenditure or part thereof or if the explanation provided is not satisfactory to the Assessing Officer, then the amount covered by such expenditure or part thereof shall be deemed to be the income of the assessee and once it is so deemed, the same shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements to evidence that payment from these purchases were made through normal banking channels, etc. to establish the genuineness of the said purchases. It is a fact evident on record that the AO has not doubted the sales effected by the assessee and therefore it is in order to conclude that without corresponding purchases being effected, the assessee could not have made sales. 4.4.2 In our considered view, the AO has not brought on record any material evidence to conclusively prove that the said purchases are bogus. Mere reliance by the AO on information obtained from the Sales Tax Department or the sworn statement of two parties before the Sales Tax Department, without affording the assessee any opportunity to cross examine those witnesses in this regard or the fact that these parties did not respond to notice under section 133(6) of the Act, would not in itself suffice to treat the purchases as bogus and make the addition. If the AO doubted the genuineness of this said purchases, it was incumbent upon him to cause further inquiries in the matter to ascertain the genuineness or otherwise of the transactions. Without causing any further enquires in respect of the said purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials purchased, copies of bank statements to show that payment for such purchases were made through regular banking channels, etc., to establish the genuineness of the purchases. Thereafter, Tribunal held that Assessing Officer could not bring on record any material evidence to show that the purchases were bogus. Mere reliance by the Assessing Officer on information obtained from the Sales Tax Department or the statements of two persons made before the Sales Tax Department would not be sufficient to treat the purchases as bogus and thereafter to make addition under Section 69C of the Act. Tribunal has also held that if the Assessing Officer had doubted the genuineness of the purchases, it was incumbent upon the Assessing Officer to have caused further enquiries in the matter to ascertain genuineness or otherwise of the transaction and to have given an opportunity to the assessee to examine/cross-examine those two parties vis-a-vis the statements made by them before the Sales Tax Department. Without causing such further enquiries in respect of the purchases, it was not open to the Assessing Officer to make the addition under Section 69C of the Act. 18. We are in agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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