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Prabhat Gupta vs. ITO (ITAT Mumbai)
March, 13th 2018

Bogus Purchases: The fact that s. 133(6) notices could not be served upon the alleged vendors and they were not physically available at the given addresses does not falsify the claim of the assessee that the purchases are genuine if the assessee has produced other evidence and made payments through banking channels

(i) The assessee has also furnished the detail of transportation by mentioning the name of transporter, bill number, cheque number on the basis of which the fair was paid which lies at page no. 481-483. However, the assessee also furnished the transport bill and vouchers of different dates which lies at page no. 484-544 of the paper book. The assessee made the payment to the said parties through banking channel. The assessee filed the bank statement highlighting the payment made to the alleged hawala parties which lies at page no. 81-106 of the paper book. The assessee also submitted the tax audit report which lies at page no. 109-121 of the paper book, balance-sheet and profit loss account of A.Y. 2009-10 which lies at page no.122-128 of the paper book. All these documents were furnished by assessee before the AO as well as CIT(A). In this regard the assessee has filed the under taking along with the paper book before us.

(ii) Anyhow, after receipt of the information from DGIT(Inv.) Mumbai, the Assessing Officer issued the notice u/s 133(6) of the Act to all the parties but the said noticed were not served upon the said parties. The Assessing Officer also deputed the tax inspector to verify the genuineness of the claim and to know about the existence said 20 parties but the 17 parties were not available at the given address. However, notices served upon the Sampart Steel, Revika Trade Impex P. Ltd., Jindal Corporation but these parties nowhere submitted the required information. Sufficient evidence has been submitted by the assessee before the AO.

(iii) Non service of notice nowhere falsify the claim of the assessee. The assessee has adduced the sufficient evidence in support of the claim against 20 parties.

(iv) No doubt if the bogus purchase established then in the said circumstances the profit embedded to the bogus purchase is liable to be considered to the income of the assessee in view of the law settled in Vijay Protein Vs. CIT 58 ITT 458 (Ahd) and CIT Vs. Simit P Sheth 356 ITR 451 (Gujrat High Court). In the present case sale has not been disputed and the books of account have not been rejected In the instant case, when the assessee has adduced the sufficient evidence on record which has been discussed about therefore, in the said circumstances, we are of the view that the no addition is required to be made on account of bogus purchase.

(v) Non service of noticed is not a ground to raise the addition of bogus purchase to the income of the assessee in view of the law settled in CIT Vs. M/s. Nikunj Eximp Enterprises P. Ltd. 2016 taxman.com 171 (Bombay High Court).

(vi) On seeing the above facts and circumstances of the present case and in view of the law settled relied by the Ld. Representative of the assessee we are of the view that the no addition is required to be raised in the instant case. We ordered accordingly, we decide this issue in favour of the assessee against the revenue.

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