INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition under section 69C - Bogus purchases -

AO made addition under section 69C on account of bogus purchases. Tribunal restricted addition to 20% holding that there was no independent enquiry made by AO except for the report of sales-tax authorities, which could not find basis for coming into conclusion of entire amount of purchases being bogus. Held: From perusal of relevant extracts of order passed by AO, it was axiomatic that AO has conducted an independent enquiry and thereafter, recorded the conclusion with regard to genuineness of transaction as follows : 1. The assessee could not produce parties from whom purchases are claimed to be made; 2. Enquiries made showed that the alleged suppliers were not present at the address given by them; 3. Enquiries with STO revealed that the Sales Tax Registration Number shown on the invoices given by the alleged suppliers were bogus; Sales Tax Authorities have categorically stated that no entity by the names shown in the invoices ever were registered with them. 4. Stamps of APMC were not present in the purchase bills; 5. Stamps of Check-posts are not present in the invoices; 6. The documents relied upon assessee, viz., receipt for goods, weighment slips, inward slips were all self made, 7. There was no independent evidence to prove purchases made from Solapur parties. 8.Identity of three parties was not established by assessee, 9. The assessee had used at least two of its own employees to operate and withdraw from bank accounts of alleged suppliers, 10. Assessee had not proved genuineness of transactions. However, Tribunal vide impugned order has held that there was no credible evidence to suggest that assessee had not made any purchase of material at all and even though an inference could be drawn that the parties/sellers were bogus but not the entire purchase of materials, therefore, finding recorded by the Tribunal that AO had not made any independent enquiry was perverse and impugned order passed by Tribunal was quashed and the matter was remitted to Tribunal to decide the issue afresh.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2007-08

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