Case Law Details
Brief of the Case: ITAT Delhi Has held In the case of Piyush Developers Pvt. Ltd. & Others vs. ACIT, that despite search and seizure no adverse material was found to substantiate the disallowance made by the A.O. The purchases which are disallowed relate to cement and steel which are essential for the purpose of construction. No enquiries are made with the banks, other statutory authorities on the identity of the parties. All the parties are registered with sale tax department and have charged VAT in the each bill. All these parties have bank accounts and payment have been made through account payee cheques. Mere non production of parties can not be a ground for disallowance of the purchases.
Facts of the Case: The assessee is engaged in Real Estate development and construction activity. It does not own land. It carries out construction activity and development activity, in the capacity of a contractor, on the land owned by its clients. The assessee neither purchased land nor sells the same. A search and seizure was conducted and a notice u/s 142(1) was issued to the assessee. In response, the assesses filed a return of income declaring income of Rs.61, 79,070/-. AO completed assessment u/s 143(3) r.w.s. 153A determining the total taxable income at Rs. 3,51,14,490/-. He made addition of Rs.2, 89, 34,711 as the purchases from three parties were found bogus and non genuine on account of non furnishing of any confirmed copy of account, income tax particulars, correct address and also failed to produce the parties during the assessment.
Contention of the Assessee: The Ld.Counsel for the assessee submitted that the identity of the parties from whom purchases were made was beyond doubt because they were registered with the sales tax department and had paid VAT. He also stated that payments were made through banking channels and the evidences such as copies of bills, purchase invoices, material weighment proofs, material receipt notes along with bill numbers and truck numbers, were produced as well as entries in stock registers and the consumption of material to prove the genuineness of the transaction. He relied on number of case laws and submitted that there is a violation of principle of natural justice as the record of spot enquiries was not put to the assessee.
Further he submitted that mere non filing of confirmations from the parties and none producing of parties cannot be reasons for rejection of books of account. He also submitted that rejection of books cannot be made on the basis of the fact that the gross profit rate is less than that of other concerns.
Contention of the Revenue: The ld counsel of the revenue submitted that the assessee could not produce these three parties before the A.O. and enquiries made by the A.O. demonstrate that these particular firms were not existing at the addresses given for the last six to seven years. He argued that the assessee had not furnished confirmation copies of accounts, income tax return etc. of these firms and under those circumstances purchases made by them were rightly held as non genuine. He submitted that mere payment through cheques does not demonstrate genuineness of the transactions.
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