TMI Blog2022 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... nal that the sales in question have not been doubted, that the payments have been made by the Assessee through banking channels and that the AO has also accepted the book results shown by the Assessee. It is also finding of fact that the Assessee has produced before the AO delivery challans, purchase bills as well as evidence of payments through banking channels. Assessee has discharged the initial burden or onus of providing the details of the parties; and it was incumbent on the AO 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 AO had issued 133(6) notices to the three suppliers of goods and the parties had not attended and even though the AO did not take any further steps for investigation, in all fairness, 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. If the CIT(A) relying upon the various decisions including the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired were produced the onus on the Assessee was discharged. According to the Assessing Officer, mere production of purchase invoices and payments having been made through banking channels would not be sufficient to conclusively establish the genuineness of purchases since the Assessee had not produced the parties. The explanation by the Assessee was that the entire purchases from the said parties were exported and that all the purchases made were settled by payment through account payee cheques which were cleared by such seller s bank account. 3. The Assessing Officer after considering the submissions held that though there were sales against purchases and payments for purchases were made by account payee cheques, yet it does not make purchases genuine and held that the goods were certainly purchased but not from the persons who had supplied the bills. According to the Assessing Officer, the goods were purchased in cash from the market and sale bills were obtained from hawala dealers for that purpose. The Assessing Officer has relied upon the Affidavits of such persons filed in the Sales Tax Department. He therefore added the sum of Rs. 3,15,72,840/- on the ground that the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 he made further investigation to prove that these payments made to the parties in question were withdrawn from that account in cash and flown back to the Assessee. It is also recorded in the order of the CIT(A) that the Assessing Officer had access to the bank account of the parties, that he could not bring on record any evidence of the money flowing back to the Appellant. It was a mere assumption that the Assessee had received the money back from the said parties. The CIT(A) accordingly held that in the absence of any such evidence thereof, no the purchases made from the said parties cannot be treated as bogus in entirety. 6. According to the CIT(A), the Assessing Officer has made an addition on the basis of presumption of third party purchases and cash payment thereof. He observed that no matter, howsoever, wild suspicion may be, that cannot partake the character of proof and observed that no addition or dis-allowance can be made on mere presumption, conjecture or surmises. He further observed that the parties from whom purchases ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby 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 filed an Appeal before the ITAT. 10. The ITAT after considering the submissions, found that the Assessing Officer had not doubted sales (exports) made by the Assessee; that he had accepted the book results shown by the Assessee; that the payments made by the Assessee through banking channels were not in doubt and that there was no evidence of making unexplained investments. The Tribunal records that except issuing notice under Section 133(6) to the suppliers of the goods, the Assessing Officer has not made any further investigation. It is also recorded by the Tribunal that the Assessee had produced before the Assessing Officer the delivery challans, purchase bills and evidence of payment made through banking channels. Holding thus, the Tribunal came to a conclusion that Assessee had discharged the initial burden and it was the duty of Assessing Officer to rebut the evidences produced by the Assessee, but he did not bring anything on record. The Tribunal confirmed the order of the CIT(A) and held that the CIT(A) had rightly held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the bills, the amounts were withdrawn by the such operators in cash and then returned to the beneficiaries in cash after deduction of commission. 14. Learned Standing Counsel further submits that in the facts of the present case also, the Assessee made purchase from the three parties in question and on collating the data provided by the Sales Tax Authority and the Director General of Income Tax, Investigation, it was observed that the three parties were hawala bill issuers. Therefore, notices were issued under Section 133(6) to provide the details with respect to the purchase transactions entered into with the Assessee; however, none of the parties have complied with the said notices, either on account of non availability at the given addresses or they simply chose to remain silent and therefore, the Assessee was requested to produce the parties for cross-verification. But instead of producing the parties, the Assessee has only produced parties ledger and bank statements. Learned counsel subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessee through banking channels. He submits that the Assessee had produced before the Assessing Officer the delivery challans, purchase bills as well as evidence that the payments were made through banking channels and as such the Assessee has discharged his initial burden. Mr. Vaidya would submit that it was the duty of the Assessing Officer to rebut the evidences but no such rebuttal was brought on record before the Tribunal. He submits that this is not the case of bogus purchases or accommodation entries and the CIT(A) and the Tribunal have rightly deleted the addition except to the extent of 10% of the purchases and against which the Assessee has no grievance. 19. We have heard Mr. Arvind Pinto, learned Counsel for the Appellant- Revenue and Mr. Mandar Vaidya, learned Counsel for the Respondent and with their able assistance, we have perused the papers and proceedings in the matter. 20. Before proceeding further, we deem it appropriate to reproduce the said Section 69C of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how 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 investment under Section 69 of the Act. No evidence or material appears to have been brought on record or finding given by the authorities to arrive at this presumption. 25. On the basis of the above, the Assessing Officer propounds a hypothesis that the money which was given by cheques to such persons has come back to the Assessee in the form of cash. The CIT(A) has found that neither the Assessing Officer has made available any documents nor is there any evidence to demonstrate the same. 26. There is no dispute that the subject purchases were infact made, that the Assessee has made payments by account payee cheques which have been cleared through the normal banking channels, the Assessee had furnished the bills, delivery challans relating to the said purchases, the transactions appear to have been duly accounted for in the books of Assessee. The CIT(A) has observed that all the purchases were reflected in the stock reconciliation furnished before him in respect of the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tribunal, we find that The view taken by the Tribunal is a possible view and cannot be faulted with. 30. The decision of this Court (Per Dhiraj Singh Thakur, J) dated 18th July, 2022 in ITXA No. 398 of 2018 , where similar issue came to be decided is useful. Paragraph 12 of the said decision is pertinent and is quoted as under:- We are of the opinion that the view expressed by the Tribunal in upholding the order passed by the learned CIT(A), cannot be said to be in any manner perverse or legally untenable, inasmuch as, if the entire amount of Rs. 4,74,54,793/- were to be held as non-genuine purchases, then it would not be possible to justify as to how the works allotted to the assessee for execution by the semi Government Agencies could be completed. Therefore, the argument that the entire amount of Rs. 4,74,54,793/- ought to have been added to the income of the assessee is untenable, especially when the learned CIT(A) in its order as upheld by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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