| Question And Answer | |
|---|---|
| Subject: | Bogus Purchase and Bogus Creditor |
| Category: | Income-Tax |
| Querist: | Arun Kumar Arora |
| Answered by: | Advocate Neelam Jadhav |
| Tags: | Bogus Purchases, creditors |
| Date: | January 29, 2023 |
- Assessment on Assessee made u/s 143(3) for the Asst Year 2021-22.
- Taxable amount of purchase of Rs.10 crores from a Supplier disallowed u/s 37 as the said Suplier has denied the sale transactions with assessee.Supplier has also intimated that he is only a Watchman in a Residential Colony.Supplier has not been cross examined by the Assessee.
- GST amount of RS.60.00 Lakhs claimed as ITC on above purchases added as unexplained investment.
- Amount of Rs. 4 crore standing outstanding in the account of above supplier as on 31-03-2021 was also added as unexplained credit.The said amount was paid to the Supplier through Banking Channels in the subsequent year.
- All the payments to above supplier were made through Banking Channels.Assesse is having full record of above purchases such as Bills,Transport Receipts,Stock Tally,GSTR-2A,TDS deducted u/s 194-Q etc.All these documents and facts submitted before A.O.
- Sales have not been disputed by the A.O.
- Observation of A.O about Stock Tally submitted before him is that the same was not submitted in Tax Audit Report .Hence same can not be relied upon. Also the same is not signed by a C.A.
KINDLY ADVISE for Appeal Before CIT(A).
Take the grounds on natural justice . Prepare additional evidence before the CIT(A and file the same along with affidavit. Try to get the confirmation from the parties . Demonstrate the quantity tally along with movement of goods , such as stock register , lorry receipt etc . In PCIT v. S. V. Jiwani (2022) 449 ITR 583 / 145 taxmann.com 230 (Bom.)(HC) after referring N.K. Proteins Ltd v. Dy. CIT (2020) 421 ITR 15 (St) N.K. Industries Ltd. v. Dy. CIT (2017) 8 ITR-OL. 336 (Guj)(HC ) held that only profit element can be taxed . All has to be proved on facts .
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