LATE NIRMALA MEVALAL VERMA (THRU LEGAL HEIR RAMESHCHANDRA M. VERMA),MUMBAI vs. ITO 21 (3)(4), MUMBAI

Briefly stated facts are that the assessee is engaged in the business of manufacturing of plastic moulded items. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs.12,16,951/- as admitted by these hawala dealers in their deposition before the authorities. The same reads as under: - S.No. Name of the seller Amount 1. J.B. Traders 10,30,313/- 2. Amrish Traders 1,86,638/- Total 12,16,951/- 4. The AO issued noticed under section 133(6) to the parties which returned back with the remark as “left” and assessee failed to produce these parties. According to information received the name of this party was appearing in the list of hawala entry operators as supplied by sales Tax Department of Maharashtra. The hawala traders admitting before the sales tax authorities in their deposition that they were providing only accommodation purchase bills on commission basis without being actual purchase/ sale of goods. The AO during the course of scrutiny assessment proceedings required the assessee to file the details of purchase. The assessee filed copies of purchase 3 | P a g e Late Nirmala Mevalal Verma bills from the above said parties, copies of ledger extract and copies of bank statements to prove the payments by cheque. The AO required the assessee to produce these parties for verification but assessee expressed his inability to do so. According to the AO, the assessee failed to establish the genuineness of the purchase and accordingly, he made addition of whole amount as unproved purchase at Rs.12,16,951/- to the return income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the addition made by the AO by observing in para 9.3.6 as under: - “9.3.6 The assessee failed to produce the suppliers and the documentary evidences produced not establish genuineness of the alleged purchases claimed to have made from the alleged suppliers. From the assessment order can be seen that the appellant has been granted sufficient opportunities on more than five occasions to produce and submit documentary evidences relied upon by the appellant. The Assessing Officer has issued show cause notice on more than three occasions before concluding the assessment proceedings. This is evident from the fact that the appellant furnished written submissions four times vide letters dated 10.01.2014, 20.01.2014, 25.02.2014 and 07.03.2014 4 | P a g e Late Nirmala Mevalal Verma during the assessment proceeding after taking adjournment twice each time of three weeks. The appellant was provided the statements recorded of the aforesaid key persons of the alleged concerns along with the reasons recorded for reopening the assessment u/s 147. Despite granting enough opportunities to prove contrary to the suppliers’ deposition before the Sales Tax Authorities, the appellant has not discharged the onus of providing the genuineness of the alleged purchases. It is a settled law that onus lies on the assessee to prove the genuineness of any expenditure which is claimed as deduction in computing taxable income and that onus to prove the genuineness of purchase of materials made from the two parties which has been alleged as bogus by the Sales Tax Authorities and confirmed by the facts stated above has not been discharged by the appellant. It is essential for the assessee to discharge the burden of evidencing genuineness of the alleged purchases with very strong and clinching evidence, given the fact that the said parties have out rightly admitted before the Investigating Authorities of having indulged in providing bogus bills to the purchasers which 5 | P a g e Late Nirmala Mevalal Verma includes the appellant for enabling accommodation entries in the books of the appellant for the commission the alleged parties get in return from the appellant but that has not been done. Taking into consideration the above facts and circumstances of the instant case, I concur with the view of the AO that the appellant has invariably failed to rebut the allegations that purchases that claimed to have made from the said parties, M/s Amrish Traders amounting to Rs. 1,86,313/- and M/s J.B Traders Rs. 10,30,313/- in total amounting to Rs. 12,16,951/- are not genuine and therefore I hold the alleged purchases as bogus and as never have been purchased and confirm the addition of Rs. 12,16,951/- to the total income of the appellant. This ground of appeal is dismissed.”