INCOME TAX OFFICER-19(2)(3), MUMBAI vs. SHRI MADHUBEN PRAKASH PAREKH, MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1) 'Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in not confirming the addition of Rs.81,74,123/- made by the Assessing Officer on account of non-genuine purchases made by the assessee, without even calling for the remand report from the Assessing Officer and also in view of the decision of the Hon 'ble Supreme Court dated 10.01.201 7 in the case of N. K. Proteins Ltd. wherein the Hon'ble Supreme Court confirmed the entire addition on account of bogus purchase?" 2) Whether on the facts and in the circumstances of the case and in law, the 14. CJT(A) is justified in confirming the addition @6.5% of total purchases of Rs.81,74,123/- made by the assessee from three parties when during the investigation made by sales tax department of Maharashtra Government, it was conclusively proved beyond doubt that these parties are only into providing accommodation entries and do not do any real business.?" 3) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in not appreciating the fact that during the investigation made by sales tax department of Maharashtra Government, director/Pro./Partners of such parties have accepted on oath that they are providing only accommodation entries and not doing any real business, the treatment of such purchases as being genuine does not hold ground?" 4) The appellant prays that the order of the Ed. CIT(A) on the above grounds be set-aside and that of the AO be restored. 5) The appellant craves leave, to amend or alter any ground or add a new ground which may be necessary.”

4. The brief facts of the case are that the assessee filed his return of income on 22.07.2009 declaring total income to the tune of Rs.1,45,870/-. The case was reopened u/s 147 by issuance of notice u/s 148 of the Act dated 03.03.2014 on the basis of information received from the DGIT(Inv.) & 2079/M/2018 A.Y. 2009-10 & 2010-11 Wing, Mumbai that there was a scam unearthed by the Sales Tax Department regarding issue of hawala bills or accommodation entries by several parties in Mumbai which were availed of by several assessees in order to inflate the purchase or expenses and thereby reduced the tax liability. The information was conveyed by CIT-16, Mumbai vide letter dated 27.12.2013. The assessee was also beneficiaries who had taken the accommodation entries from 5 parties in sum of Rs.81,74,123/-. The details are hereby mentioned below.:-

Sr. No Name of the Hawala Parties Bill Amount 1 Vardhaman Trading Co. 23,35,518 2 Rajeshwari Trading P. Ltd. 9,44,912 3 Manav Metal 13,34,250 4 Nakoda Tubes P. Ltd. 17,19,195 5 Navkar Metal P. Ltd. 18,40,248 Total 81,74,123

ISSUE NOs. 1 to 3:-

ITA. Nos.2080 & 2079/M/2018 A.Y. 2009-10 & 2010-11 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 540 and Sumati Dayal 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 & 2079/M/2018 A.Y. 2009-10 & 2010-11 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.”