RICHI JEWEL,MUMBAI vs. INCOME TAX OFFICER -18(3)(2), MUMBAI

आदेश / O R D E R

PER RAVISH SOOD, JUDICIAL MEMBER:

P a g e | M/s. Richi Jewel Vs. ITO Wd-18(3)(2)

1 The learned CIT(A)-29 has erred in dismissing the appeal without considering the submission made by the appellant and also without considering the judgment by CIT(A)-29, Mumbai for the same assessee for A.Y. 2009-10 for the same facts and circumstances, and upheld the addition made by Income Tax Officer Ward-18(3)(2). 2 The appellant craves leave to add, amend, alter or delete the said ground of appeal

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2. Briefly stated, the facts of the case are that the assessee firm which is engaged in the business of trading in imitation jewellery had e-filed its return of income on 21.09.2010, declaring total income of Rs.39,130/-. The Director of Income tax (Inv.), Mumbai shared with the A.O certain information received by him from the Sales tax department, Maharashtra, which revealed that the assessee during the year under consideration had taken accommodation entries as regards bogus purchases from the following party:

Sr. No. Name of the entry PAN F.Y. Amount of bill provider taken by the assessee (Rs.) 1. Harsh Metal ALGPG2817C 2009-10 11,84,844/- Corporation The A.O on the basis of the aforesaid information reopened the case of the assessee and issued a notice under Sec. 148 of the Act. That while framing the assessment the A.O in order to verify the genuineness and veracity of the purchases claimed by the assessee to have been made from the aforementioned party, viz. M/s Harsh Metal Corporation, issued a notice under Sec. 133(6), therein calling upon the latter to place on record the confirmation of the transactions carried out with the assessee during the year under consideration. However, the aforementioned party, viz. M/s Harsh Metal Corporation failed to furnish any reply with the A.O. The A.O in the backdrop of the aforesaid facts called upon the assessee to explain as to why the P a g e | M/s. Richi Jewel Vs. ITO Wd-18(3)(2) purchases which were claimed by it to have been made from the aforementioned party may not be characterised as bogus purchases and added back to its return of income. The reply filed by the assessee in its attempt to drive home its contention that the purchases made from the aforementioned party were genuine, however, did not find favour with the A.O, who observed as under:-  The primary onus is casted on the assessee to establish the genuineness of purchases claimed by him. As per section 101, 102 and 106 of the Indian Evidence Act, the onus lies upon the assessee to prove all expenses, including purchases to the satisfaction of A.O. In the instant case, the assessee to discharge this onus. Further, he failed to furnish confirmations from the alleged suppliers and also failed to produce these parties for examination.  Mere filing ledger account and payment made through account payee cheque cannot be a proof at all in a case where genuineness of transaction is itself is in doubt. There is a specific finding of Maharashtra Sales Tax Department that these parties has issued false bills, without delivery of goods and payment of sales tax.  On examination of the facts in totality and from the submissions of the assessee, it is to be inferred that assessee has not purchased the goods from the alleged suppliers. The assessee has purchased the goods from some undisclosed parties in cash and just obtained bogus bills in fictitious names and made the payment to give a color of genuine purchases. The assessee has been unable to give any convincing or cogent explanation as to how these goods happened to come in his possession. Logical conclusion which may be drawn in such a situation is that the assessee has recorded sales in the books of accounts which materials are purchased from the undisclosed parties without bills at comparatively lesser prices. To regularize the purchases from undisclosed parties, the assessee has taken accommodation bills from the above said parties.  The assessee by his mysterious and clandestine dealings, has not only evaded the excise duty and sale taxes, but also caused great loss to the Revenue. The first and foremost is that he has taken away the right of the Revenue for cross- verification of his bogus purchases and his book result. It is to be noted that it is the inalienable right of the Department to cross verify wherever there is reasonable doubt on the books or book result of the a s s e s s e e . T h e s e c o n d , h e h a s m a n i p u l a te d h is p u r c h a s e s t o th e disadvantage of the Revenue as he pleases. He circumvented the provisions of 40A (3) and other sections of the Act to his advantage. Finally, caused loss to Revenue by manipulating the purchases.”