YOGESH AMRUTLAL DOSHI,THANE vs. ITO 2 (4), MUMBAI

सुनवाईकीतारीख / Date of Hearing: 05/12/2019 घोषणाकीतारीख /Date of Pronouncement: 13/01/2020 आदेश / O R D E R

PER AMARJIT SINGH, JM:

The Ld. CIT(A)-1, Thane erred in passing, the order dated 29.08.2018 upholding the order dated 15.03.2015 passed by the Ld. AO's disallowing an amount of Ps. 17,66,160/- u/s 40A(3) of the Income Tax 'Act 1961 without appreciating the facts and circumstances of the case. The disallowance of the amount under Section 40A(3) of the Act is not justified and the same may be deleted.

2. The Ld. CIT(A) failed to appreciate the Appellants claim that there are corresponding sales against the alleged purchases of Rs.17,66,160/-, which have not been rejected by the Ld. Assessing Officer, and that there cannot be any sales without there being corresponding purchases.

3. The Ld. CIT(A) erred in upholding the disallowance of Rs.17,66,160/- being alleged non-verifiable purchase without appreciating the fact that books of accounts of the Yogesh Amrutlal Doshi appellant are audited under section 44AB of the Income 'Fax Act, 196 1. hence, the disallowances without rejecting the books of accounts u/s 145 of the Act is against the provisions of law and the same may be deleted.

4. The appellant craves leave to add, amend, alter, delete any ground of appeal.”

3. The brief facts of the case are that the assessee filed his return of income on 09.10.2010 declaring total income to the tune of Rs.2,76,970/- for the A.Y. 2010-11. The assessee was engaged in the business of Trading in Iron and Steel Products. The case of the assessee was reopened on the basis of an information received from the Sales Tax Department of Maharashtra in which it was conveyed that the assessee has taken the bogus purchase entries from the following three parties. The details are as under: - S. No. Name MVAT No. Amount 1 M/s. Maruti Corporation 27200629853V 3,68,713 2 M/s. D. D. Corporation 27560609770V 7,17,188 3 M/s. Amit Trading Co. 27910631063V 6,80,259 17,66,160

4. Thereafter, notice was issued and after the reply of the assessee, the bogus purchase in sum of Rs.17,66,160/- was added to the income of the assessee and the total income of the assessee was assessed to the tune of Rs.20,43,130/-. Feeling aggrieved, the assessee an appeal before the CIT(A) who confirmed the order of the AO, therefore, the assessee has filed the present appeal before us.

ISSUE Nos. 1 to 3

“All the issues are in connection with the restricting the addition to the extent of 6.5% of the total bogus purchase by the CIT(A). The Ld. Representative of the revenue has argued that the total bogus purchase is required to be added to the income of the assessee and the AO has also failed to find the parties, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable and is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - “7.3 1 have carefully considered the rival contentions on the issue 01) hand. On perusal of the material on record it is noticed that, in the appellant's case, Ld. AO, made independent verifications by issuing notices u/s. 133(6) of the I.T. Act, which could not be served as the parties were not available at the given address, and there was an overwhelming evidence in the form of statements of some of the suppliers given before the Sales tax authorities that it was engaged only in issuing hawala bills and no goods were ever supplied by them. 7.4 After weighing the evidence pros and cons, I find that the appellant has not reconciled the purchases with the items sold and failed to reconcile one to one of the items purchased and sold. Onus was always on the appellant to prove as to how the material purchased was firstly obtained. Thus, it can be 'safely presumed that either they are non-existent or even if they do exist, they were not backed by sufficient evidence to undergo the test of scrutiny. 7.5 The suppliers were in fact the appellant's witness and the Ld. A.0 was not required to force their attendance. It was for the appellant to produce them as per Civil Procedure Code which applies on all fours to the income-tax proceedings. It is trite that once a transaction is shown to be of the nature of income, the onus shifts to the assessee to show that the same was not taxable. It can thus be safely assumed that the appellant has grossly failed in its duty to mitigate the burden cast upon it in so far as proving the genuineness of the transaction from the said party is concerned. 7.6 In this regard it is also pertinent to mention that while dealing with the concept of burden of proof, onus of proving is always on the person who makes the claim and not on the Revenue. While dealing with the issue of deciding the burden of proof, Hon’ble Supreme Court in the cases of CIT Vs. Durgaprasad More 82 ITR Yogesh Amrutlal Doshi 540 and SumatiDayal Vs. CIT 214 ITR 801 has held that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that Taxing Authorities are entitled to look into surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. The Hon’ble court also held that, it is no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden to prove that it is not taxable because it falls within exemption provided by the, lies upon the assessee. In the case of Durgaprasad More (Supra), the Hon’ble Court went on to add that a party who relies on a recital in a Deed has to establish the truth of this recital, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party who relied on those recitals. If all that an assessee who wants to evade tax has to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. The Hon’ble Court further held that the Taxing Authorities were not required to put on blinkers looking at the documents produced before them. They were entitled to look the surrounding circumstances to find out the reality of the recitals made in those documents. 7.7. The onus to prove that apparent, is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 and CIT v. Durga Prasad More (supra). In the latter case, it has been held by the Apex Court that though an apparent statement must be considered real until it was shown that there were reasons to believe that apparent was not the real, in a case where an authority relied on self -serving recitals in documents, it was for the party to establish the proof of those recitals. 7.8 It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore, onus is always on a person who asserts a proposition or fact, which is not self-evident. The onus, as a determining factor of the whole case can only arise if the Tribunal, which is vested with the authority to determine, finally all questions of fact, finds the evidence pro & con, so evenly balanced that it can come to no conclusion, then, the onus will determine the mattes, there cannot be any doubt that onus as a determining factor comes into play where, either there is no evidence on either side, or where it is equally worthless or where it is equally balanced. It is imperative to mention here that where such is not the case and all available evidence is considered, without reference to the onus and without relying on the circumstances that onus lies on a particular party, the issue is determined on facts and the onus cannot be said to have influenced the decisions. However, in the instant case, the appellant has miserably failed to lead evidence.”