HASSAN LAXMAN RAO VIDYA,BENGALURU vs. INCOME TAX OFFICER, WARD-2(2)(2), BANGALORE

The impugned order passed by the Learned CIT(A) and AO, to the extent prejudicial to the Appellant, is not justified in law and on the facts and circumstances of the case. 2. The learned CIT(A) has erred in law and on facts in upholding the order of the Learned AO. 3. The learned CIT(A) and AO have erred in law and on facts in passing the order against the principles of natural justice. 4. The Order of CIT(A),that is against the provisions of section 250(4) and (6) of the Act, is bad in law and therefore liable to be quashed; 5. The Ld.CIT(A) and AO have erred in sustaining the addition of Rs. 130,05,000 by considering the purchases to be bogus in nature; 6. That the A.O. has erred in doubting the purchases are made only in the last fag of the end of the year without appreciating that the Appellant is supplying the goods when there is an order from the keonics (a Karnataka State Government Enterprise). 7. The A.O. has erred in considering the assessment on a fair and accurate basis and taking the figures for additions to the income is totally baseless. 8. The mere reliance by the A.O. on information obtained from the sales tax department would not be sufficient to trust that the purchases are bogus and thereafter to make an addition to the income already declared. If the A.O. had doubted the genuineness of the purchase, it was incumbent upon the A.O. to have caused further enquiries in the matter to ascertain the genuineness of the transaction. 9. The Ld.CIT(A)/AO have not brought on record any material evidence to conclusively prove that the said purchases are bogus. Mere reliance by the A.O. on information obtained from the sales tax department without affording the Assessee any sufficient opportunity examine those bogus purchases. 10. Without causing any further enquiries with respect to the said purchases. The Ld.A.O. cannot make the additions and consider the total income u/s 143(3). The A.O. has failed to cause any enquiry to be made to establish his suspicion that the said purchases are bogus. 11. If the purchases were held to the bogus, then as a logical consequence, the sale also had to be held as bogus. When the Ld.A.O. believed all the sales and held the same as genuine sales, there was no reason to come to the conclusion that the purchases are bogus. Further, it is to be noted that one limb of the transaction cannot be accepted while rejecting the other limb of the same transaction. Page 2 of 6

When one to one reconsideration of purchase and sales is made by the Appellant, no disallowances can be made. And no additions can be made to the net profit when the net profit declared in sales purchases was fair and reasonable. 13. The Ld.AO has erred in law and on the facts in levying interest under section 234A/B and 234C of the Act; 14. The Ld.AO, based on the above, has erred in law and on facts in levying penalty based on the above addition. 3. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual and for the year under consideration filed his return of income on 31.10.2018, declaring a total income of Rs. 15,69,810/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, information was received from the Investigation Wing that the assessee has resorted to bogus purchases by generating fictitious bills/invoices along with E-way bills without the actual moment of goods or services. To verify the information, notices were issued to the assessee requiring certain information. In response, the assessee furnished part of the information and assured to submit the remaining information in due course. Accordingly, another opportunity was granted to the assessee to furnish the necessary documents for verifying the genuineness of the purchases made by the assessee. However, no compliance was made by the assessee even after issuance of a show cause notice asking the assessee to explain as to why the purchases amounting to Rs. 1,30,05,200/- made by ARS Enterprises and Suman Fin Page 3 of 6