The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently upheld an addition made by the Revenue for bogus purchases based on incomplete purchase bill & illogical mode of transport used.
A search was conducted on the premises of Shri Vishesh Gupta during which he has given list of concerns controlled by him which includes M/s. Shyam Trading Co. from whom assessee has alleged to have made purchases. He was asked to give details of bogus entries provided and the relevant portion of the statement in which he has admitted to have controlled 11 firms through which bogus purchase bills and accommodation entries have been issued. On the basis of the same, the Revenue made an addition on account of bogus purchase.
On appeal, the CIT(A) also held that since purchases have been held to be bogus and therefore, there is no question of allowing any relief on account of payment of VAT.
Upholding the order of the lower authorities, the Tribunal observed that the assessee claimed to have made purchases of copper pipe. As per the CIT(A) 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.
Judicial Member Bhavnesh Saini observed that, “The Ld. CIT(A), therefore, correctly noted that the purchase bill did not convey any meaning. The Ld. 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”.
“The Hon’ble Supreme Court in the case of Durga Prasad More and Smt. Sumati Dayal held that “Courts and Tribunals have to be judge the evidence before them by applying the test of human probabilities.” If the said test is applied in this case, it is clear that assessee failed to satisfy the authorities below if assessee made any genuine purchase of copper pipe. The Ld. CIT(A) on proper appreciation of facts and material on record, correctly dismissed the appeal of assessee,” the bench said.
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