Case Law Details
RELEVANT PARAGRAPH
18. When an expenditure is claimed to have been incurred the initial burden lies on the assessee to prove the genuineness of the purchases. It is held by Rajasthan High Court in the case of Indian Wollen Carpet Factory (supra) that, if the assessee having failed to prove the genuineness of credit purchase by producing the parties from whom the purchases are said to have been made and whose whereabouts are not known, the finding of the Tribunal sustaining the addition was held justified. The High Court held in paragraph 4 as under:
” Heard learned counsel for the parties. Whether transactions with the parties referred to in para 6 of the original order is genuine or not, that is basically a question of fact. There times assessment has been made to find out as to whether the purchases from the persons referred to in para 6 is genuine or not. The case of the assessee is that the persons aforestated belong to Khatic community and they are nomadic. In our view it is basically wrong as Khatics are not come in the category of nomadic, they have their permanent houses. If for some period, they carry their sheep for grazing in some nearby places, they cannot be termed as nomadic and at least it cannot be said that they do not have their permanent houses. On verification it is found that whereabouts of many persons, from whom the wool was purchased are not known.
We can understand that they will not be available at one point of time. When the parties form whom the wool was purchased are not nomadic, it cannot be said that they have no permanent address and if they are the genuine parties, they should have some address. No person in the name of such party was found particularly when the summons were issued under section 121 to those parties. If the transactions are genuine and if the parties have migrated somewhere else, their latest address should have been supplied and burden is on the assessee to prove the genuineness of the transaction, when the assessee claimed that the purchases are genuine”.
19. That onus in that present case has not been discharged. No material has been brought on record to prove the genuineness of the purchases made. The five parties from whom purchases were claimed to have been made were not found existing at the addresses given by the assessee and addresses given by them to the bank were different. The payments claimed to have been made by the account payee cheques were not verified as to whom the cheques were handed over by the assessee and as to who has deposited these cheques in the bank accounts and who was that person who withdrew cash from bank account of the aforesaid five parties. All the five parties had accounts in the same bank, Sevalia Urban Co-operative bank, Sevalia, Payments were made to these parties on the same dates, some common person had withdrawn the amounts from the bank immediately after deposits. Who that common person withdrawing huge amounts in cash through self cheques from the bank accounts of the aforesaid five parties was? Signatures on the confirmation produced by the assessee in respect of M/S Bharat Sales Corporation and M/S Ashirwad Corporation were found to be quite different from the signatures available in the introduction forms obtained from the bank in respect of these parties. The CIT(A), overlooked all these facts and went by the quantitative details given by the assessee of consumption, purchase and production of rubble and crushed stone aggregates and deleted the addition. There exist no reasons as regards steep fall in GP rate. Without ascertaining the veracity of the claim, the CIT(A) accepted the claim of the assessee. The fact that in earlier years assesseehad not been selling kapchi, grit etc. is contrary to the details of composition of sales of rbble and kapchi given in his order and no reasons are found on record explaining fall in GP rate by more than 100%. In view of the above, the order of the Commissioner (Appeals) cannot be upheld and it would be proper to restore the matter to the file of the Assessing Officer for fresh decision in the light of necessary material filed or ascertained in connection with genuineness of purchases.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
