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TMI Blog2022 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer proceeded on the basis of information received from the Director General of Income Tax, Investigation, Mumbai to the effect that the purchases made by the Assessee were appearing in the list of hawala dealers of the Sales Tax Department and issued notices under Section 133(6) of the Act in order to verify the purchases made from three parties viz. (i) Harshil Ferromet : Rs. 1,22,40,800/- (ii) Hans Enterprises : Rs. 1,08,18,184/- (iii) Khushal Mercantile Pvt. Ltd.: Rs. 85,13,856/-. According to the Assessing Officer none of the parties complied with those notices either on account of non availability at the given address or failure to attend before the Assessing Officer. The Assessing Officer vide order dated 13th January, 2014 called for the production of parties and also copies of purchase bills, corresponding sales, etc. The Assessee submitted parties' ledger accounts, bank statements, etc., but failed to produce the parties. It was submitted that since all the payments were made through the banking channel and details as required were produced the onus on the Assessee was discharged. According to the Assessing Officer, mere production of purchase invoices and paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. He also observed that all the purchases were reflected in the stock reconciliation furnished to him in respect of the subject purchases made by the Assessee. According to the CIT(A), the Assessee appeared to have discharged his onus in respect of the purchases in question. He further observed that the Assessing Officer had not doubted the sales arising out of the said export activity and its gross profit ratio ("GPR") and therefore all the purchases in the case could not be treated as bogus. It is also recorded in the order of the CIT(A) that the Assessing Officer had not made available the copies of the documents relied upon by him for the purpose of making the addition which also proves that there was no evidence to show that the money which was given by cheques to such persons has come back to the Assessee in the form of cash. 5. The CIT(A) has observed that it is not the case of the Assessing Officer that the payments against these purchases were in cash as all the payments had been made through account payee cheques/RTGS and had been debited to the bank account of the Assessee in the names of the concerned parties. It is also not the case of the Assessing Officer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said order that the purchase parties have not responded to the notices under Section 133(6) which could not be ignored. 9. The CIT(A) relying upon the various decisions including the decision in the case of CIT Vs. Bholenath Poly Fab (P) Ltd. in I.T.A. No. 63 of 2012 dated 23rd October, 2012 observed that the conclusion drawn by the Assessing Officer that simply because the parties are not available for confirmation of sales made by them to the Assessee or because the parties were declared as suspicious dealers by the Sales Tax Department, will not make the same as bogus purchases, liable to be disallowed in their entirety. The CIT(A) held that it would be fair and reasonable if the disallowance out of the bogus purchases in the case of the Assessee for the year under consideration was restricted to 10% of such purchases and directed the Assessing Officer to dis-allow 10% of the alleged bogus purchases viz. 3,15,72,840/- being the profit from the purchases made from the parties during the year under consideration, thereby confirming the addition of Rs. 31,57,284/- on account of bogus purchases and deleting the balance. Aggrieved by the order of the CIT(A), Revenue fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in providing accommodation entries without doing any actual business or delivery of the goods. He submits that this inference has been drawn by the Sales Tax Department after having done field work and independent inquiries with respect to each of the hawala parties. Learned Standing Counsel would submit that even the Director General of Income Tax, Investigation, Mumbai took up the task of going to the bottom of the truth and pursuant to the action by way of searches and surveys on the basis of such information conducted inquiries, which fortified the findings of the Sales Tax Department that these parties are :- (a) issuing only bills and doing non-genuine business (Hawala Business); (b) not maintaining stock and not keeping Stock Register; (c) not effected any purchase; (d) there were no transaction of goods; (e) entries were being provided by the parties for commission. 13. He submits that the inquiries and investigation revealed that the hawala operators never sold any goods but only issued bogus bills to the beneficiaries for a commission. He submits that the modus operandi was that the hawala operators would raise bogus bills and upon receipt of the cheque for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3,15,72,840/- is called for. 16. He submits that neither the Appellate Authority nor the Tribunal have appreciated that under Section 69C of the Act it is not just that where the Assessee offers no explanation about the source of such expenditure that such expenditure may be deemed to be the income of the Assessee but the said section also refers to a situation where the explanation offered by the Assessee is in the opinion of the Assessing Officer not satisfactory that the said expenditure may be deemed to be unexplained expenditure and liable to be added to the income of the Assessee. 17. Mr. Pinto urges this Court to address this issue as according to him this issue has not been hitherto addressed by any recent decision of this Court. 18. On the other hand, Mr. Mandar Vaidya, learned counsel for the Respondent-Assessee relies upon the decision of the CIT(A) and the Tribunal to submit that both the CIT(A) and the Tribunal have given concurrent findings of fact that the Assessing Officer had not doubted the export sales made by the Assessee, that he had accepted the book results shown by the Assessee and that there was no doubt that the payments were made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire bedrock of the Assessing Officer's case appears to be that the Assessee has not produced the parties from whom the Assessee had made the subject purchases although admittedly parties' ledger accounts, bank statements were produced before him and even though there were sales against purchases and payments were made by account payee cheques through banking channels. The CIT(A) also records that all the purchases were reflected in the stock reconciliation furnished before him and the Assessing Officer. 24. The Assessing Officer came to a conclusion that though the goods were certainly purchased by Assessee but not from persons, who had supplied the bills. Statedly relying upon the purported affidavits filed before the Sales Tax Authorities, the Assessing Officer was of the view that the goods were purchased in cash from the market and sale bills were obtained from hawala dealers for that purpose. No material has been brought on record by the Assessing Officer to show that the Assessee purchased material from the market or from unexplained cash. In the alternate, he presumed that the sales were effected from unaccounted stock and held the said amounts as unexplained investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has produced before the Assessing Officer delivery challans, purchase bills as well as evidence of payments through banking channels. As such, the Assessee has discharged the initial burden or onus of providing the details of the parties; and it was incumbent on the Assesssing Officer to rebut the evidence produced by the Assessee. We do not find anything on record controverting the findings of fact of the CIT(A) as well as the Tribunal. Despite uncontroverted findings of fact and keeping in mind that the Assessing Officer had issued 133(6) notices to the three suppliers of goods and the parties had not attended and even though the Assessing Officer did not take any further steps for investigation, in all fairness, the CIT(A) as well as the Tribunal had upheld the dis-allowance in respect of the purchases for the year under consideration to the extent of 10% of such purchases against which admittedly no appeal has been filed by the Assessee. 29. If the CIT(A) relying upon the various decisions including the decision in the case of CIT Vs. Bholenath Poly Fab (P) Ltd.(supra), has restricted the disallowance to 10% of the purchases, which decision has not been disturbed by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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