Taxpoint: Purchase can’t be treated as Bogus when payment is made via Bank: ITAT

Purchase can’t be treated as Bogus when payment is made via Bank: ITAT

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

5. I have heard the rival submissions and carefully perused the materials on record and also the paper book submitted by the assessee running to 1 to 303 pages. On perusing the same I find that they are not certified for having been produced before the ld. Revenue Authorities. I have also gone through the elaborate written submissions made by the assessee running to 5 pages. However, from the facts of the case, I find that the assessee had not submitted any material other than the bills and vouchers and the bank statement to establish the genuineness of the transaction.

It is also apparent that the revenue has come across various incriminating materials during the course of search and seizure operation U/s. 132 of the Act with respect to the persons who had purported to have sold Gold / Gold Jewellery to the assessee. It is also a known fact that Gold / Gold Jewellery is often purchased in the grey market. This is done in order to avoid taxes/customs duty etc., by the traders. In this situation, the onus is on the assessee to establish the genuineness of the suppliers. Though the payment made by the assessee towards the purchases are through banking channels, it is also revealed that the suppliers were issuing bogus bills and vouchers to various parties.

In this situation, producing the bills and vouchers and evidencing the payment made through cheque alone will not establish that the transactions are genuine. Therefore, the Ld. AO was right in relying on the decision of the Hon’ble Apex Court in the case of M/s. Kachwala Gems vs. JCIT and other various decisions of the Tribunal cited in his order and estimating the additional income of 10% on the bogus purchases made from the grey market which works out to Rs. 9,30,487/ -.

However, I am of the view that the order of the Ld. CIT (A) to enhance the addition by treating the entire bogus purchases as the income of the assessee is not appropriate because it is evident that the assessee had made purchases apparently from his accounted money as the payments have made through banking channels. Further, it is also a fact that the Gold/Jewellery purchased are either sold by the assessee or remains with the assessee as his closing stock since there are no other contrary findings by the Revenue. Therefore, I hereby set aside the order of the Ld. CIT (A) and confirm the order of the Ld. AO.

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Tags: Judgement, Appellant Tribunal, Income Tax