VIKESH KANTILAL DOSHI,MUMBAI vs. IOT-CIRCLE 17(1), MUMBAI, MUMBAI

In the instant case, the Assessee’s assessment was reopened under section 147 of the Act on the basis of information received from the Investigation Wing that the following parties, from whom the Assessee allegedly made purchases, were engaged in providing accommodation entries without carrying on any genuine business.

The AO thus in order to examine the above transactions, issued notices to the Assessee, however, the Assessee neither furnished any explanation or supporting documents nor complied with the notices.

The Assessee therefore being aggrieved, preferred the first appeal before the Ld. Commissioner and furnished, inter alia, purchase invoices, corresponding sales invoices, quantitative details of purchases and sales, bank statements evidencing payments through account-payee cheques and ledger accounts of the suppliers.

The Assessee also furnished sales-tax returns, reconciliation of purchases and sales and the VAT audit report. The Assessee also claimed that the books of account were audited under section 44AB of the Act, and subjected to no adverse remark and that the suppliers were available at the stated addresses at the relevant time.

The Ld. Commissioner, though considered the Assessee’s claim, however, being dissatisfied with the explanation, dismissed the appeal and affirmed the addition.

Thus, the Assessee being aggrieved, has preferred the instant appeal.

We have heard the parties, perused the material available on record and considered the rival submissions.Admittedly, before the Authorities below the Assessee furnished the financial statements, audit report in Forms Nos.3CB and 3CD, purchase bills, corresponding sales invoices, bank statements, VAT audit report etc. and duly discharged its prima facie onus of substantiating the purchase transactions. Further the audited accounts reflect total purchases of Rs.66,57,964/- and sales of Rs.78,57,526/-, whereas the disputed purchases were of meager amount of Rs.4,31,788/-. However still both the authorities below have primarily relied upon the information received from the DDIT (Investigation), Mumbai.

Though the addition made by the AO and sustained by the Ld. Commissioner is unsustainable, however, considering the uncertainty, as to whether any part of the alleged purchases has already been offered to tax, the Assessee’s alternate request and by way of abundant caution, we direct the JAO to restrict the addition to 5% of the alleged bogus purchases, over and above the amount, if any, already voluntarily offered by the Assessee.

In the result, the Assessee’s appeal is partly allowed.