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TMI Blog2023 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... nly ground no. 2 was argued, which is against the action of the Ld. CIT(A) sustaining disallowance of Rs. 20,84,190/- u/s 69C of the Act being 100% disallowance of total purchases from two (2) parties namely (i) M/s. Kriya Impex Pvt. Ltd. and (ii) M/s. Sun Diam. 6. Brief facts are that the assessee had filed his return of income for AY. 2009-10 declaring total income of Rs. 9,01,650/- which was processed u/s 143(1) of the Act. Thereafter, the AO issued notice u/s 148 of the Act dated 28.03.2016 conveying his desire to reopen the assessment u/s 147 of the Act. The reasons recorded for reopening the assessment has been reproduced at page no. 1 & 2 in his assessment order wherein AO notes that he received information from Director of Investigation Tax (Inv.) (DIT) that during the course of search proceedings on Shri Rajendra Jain Group and others, it came to light that Shri Rajendra Jain had admitted of providing accommodation entries to the beneficiaries through his concerns/companies and named eleven (11) concerns through which such fraudulent activities were being carried out. The AO noted that during the relevant assessment year, the assessee has transacted with Shri Rajendra Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Qty Amount Date Outward Party Name Qty Amount 1 Cut & Polished diamonds 08.11.2008 Kriya Impex Pvt. Ltd. 550.00 897,050.00 2 Cut & Polished diamonds 11.11.2008 Bothra Gems & Jewels 550.00 990,550.00 3 Cut & Polished diamonds 09.01.2009 Sun Diam 780.50 1,187,140.00 4 Cut & Polished diamonds 15.01.2009 Bothra Gems & Jewels 780.50 1,307,337.50 1330.50 2,084,190.00 1330.50 2,297,887.50 8. Moreover, the Ld. AR drew our attention to the details of the purchases of diamonds which are given page no. 20 of the PB as well as the details of the sales of diamonds which are placed at page no. 22 of the PB. To show the genuineness of the transaction, the assessee has placed copy of the purchase details and proof of hand delivery of diamonds purchased from two concern; and sales of the said diamonds details which placed at page no. 23 to 26 of PB. In order to show that the purchases have been effected through banking channel he drew our attention to banks taken placed at page no. 27 to 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, the ITAT was justified in directing the A.O. to delete the addition made on account of bogus purchase ignoring the fact that the parties from whom the impugned purchases were claimed to be made were not available on their given addresses and further the assessee did not produce such parties before the A.O. to confirm the veracity of the impugned purchases? d. Whether in the facts and circumstances of the case, and in view of the Hon'ble Supreme Court's judgment dated 16-1-2017 in the case of N.K. Proteins Ltd. Vs DCIT [2017] 84 taxmann.com 195 (SC), it was incumbent on the ITAT to restrict the addition made on account of 'Bogus Purchases', it having once come to a categorical finding that such total amount of addition made represented alleged purchases from bogus suppliers? 4. Briefly stated the material facts are as under: The Respondent assessee is engaged in the business of trading in industrial oil and transport services. A return of income was filed by the assessee declaring a total income at Rs. 4,47,970/-. The Sales Tax Department of the Government of Maharashtra provided information to the Assessing Officer (A.O.) giving names, addresses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the assessee, directed the A.O. to delete the addition on account of bogus purchases. 7. From the above facts it is thus clear that the CIT (Appeals) partially allowed the appeal of the assessee on the ground that the A.O. had not disputed the sales and, therefore, this was not a case of bogus purchases, inasmuch as if the purchase was bogus, it would not be possible for assessee to complete the transaction by way of sale, unless it could be shown from the record that the corresponding sale was also a sham transaction. We are in agreement with the view expressed by the CIT (Appeals) that, if the purchases are bogus, it would be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the purchase also cannot be held to be bogus, rather it would be a case of purchase from bogus entities/parties. That view has been upheld by the Tribunal in principal while dismissing the appeal of the Revenue. In view of the above, we are of the opinion that the questions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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