By TIOL News Service

NEW DELHI, JULY 06, 2018: THE ISSUE IS - Whether statements of seller recorded during search, coupled with incomplete purchase bill and illogical mode used for transport of copper pipe, supports the view of AO that assessee has taken benefit of bogus purchases. YES IS THE VERDICT.

Facts of the case

The assessee, an Individual had filed return for relevant AY. A search was conducted at the premises of Mr Vishesh Gupta and his statement was recorded on oath. The information was extracted from this search by AO that assessee had taken benefit of accommodation entries. The AO reopened the assessment u/s 148 of the Act. A show cause notice was issued to the assessee as to why purchase of Rs.11,55,607/- made from M/s. Shyam Trading Co. should not be added in the light of statement made by Mr Vishesh Gupta. The assessee submitted that assessee had actually purchased goods from M/s. Shyam Trading Co. and copy of bill was filed. But the AO did not accept the contention of assessee because no cogent evidence was filed to substantiate that the purchases were actually made from Shri Vishesh Gupta’s controlled firm M/s. Shyam Trading Co. The AO accordingly made addition of Rs.11,55,607/- on account of bogus purchases. On appeal, CIT(A) upheld the order of AO.

Tribunal held that,

++ assessee claimed to have made purchases of copper pipe. Copy of the bill is scanned in the appellate order. The CIT(A) noted that there is no other description of the goods regarding size, thickness or price have been mentioned in the purchase bill. No detail of copper pipe was given whether it is in the form of coil or tube and for what purpose the copper pipe is to be used have been mentioned. No detail or description have been made in the purchase bill. No details of price have been mentioned. The CIT(A), therefore, correctly noted that the purchase bill did not convey any meaning. The CIT(A) also found that weight of the copper pipe is more than 03 tonnes and as per assessee the mode of transport of copper pipe by Rikshaw which is wholly illogical. The statement of seller was recorded during the course of search in which he has accepted to have provided bogus entries in the nature of purchase bills to various parties in crores. The seller was running many bogus firms. The seller admitted that he did not own any goods which could be sold to others. The seller has provided only bogus accommodation entries. These facts, therefore, clearly show that assessee failed to prove that if actual purchases have been made by the assessee and even mode of transportation of goods shows that purchases have not been proved by the assessee. It is clear that assessee failed to satisfy the authorities below if assessee made any genuine purchase of copper pipe. The CIT(A) on proper appreciation of facts and material on record, correctly dismissed the appeal of assessee. In the result, appeal of assessee is dismissed.

(See 2018-TIOL-1018-ITAT-DEL)