2021 (2) TMI 779

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..... 'Act'). 2. In this case, the assessment was reopened on the basis of information received from the office of DGIT (Inv.), Mumbai to the effect that during the year relevant to the assessment year under consideration, the assessee had obtained accommodation bills from four bogus dealers for an amount of Rs. 19,16,034/-, without actually purchasing goods from them. During reassessment proceedings, the assessee failed to prove the genuineness of the transaction to the satisfaction of the AO. Accordingly, the AO made addition of the said amount to the income of the assessee u/s 69C of the Act. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee restricted the addition to 12.5% of the .....

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..... failed to establish the genuineness of the transaction, the AO had rightly made addition of the total amount of the bogus purchases shown by the assessee. Therefore, the Ld. CIT (A) ought to have confirmed the addition made by the AO. The Ld. DR further submitted that the findings of the Ld. CIT (A) are not in accordance with the law laid down by the Hon'ble Supreme Court in the case of N.K. Proteins Ltd. vs. DCIT, therefore, the impugned order is liable to be set aside. Accordingly, the Ld. DR submitted that the order passed by the Ld. CIT (A) may be set aside. 6. We have perused the material on record including the cases relied upon by the authorities below. The Ld. CIT (A) has restricted the addition to 12.5% of the total amount of bog .....

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..... this into consideration while examining the documentation submitted by the appellant in support of its claim. The documentary evidences such as purchases bills, payments by cheque etc. would all have been orchestrated to present a façade 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 to as to prove genuineness of purchases when the surrounding circumstances are suspect. However, the appellant has shown onward sales which has not been doubted by the Assessing Officer. Since there can be no sales without corresponding purchases, the only logical explanation is that the appellant would have made purchases from undisc .....

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