Furnishing delivery challans and purchase bills sufficient to discharge burden of proof: HC

Case Details: PCIT v. Jagdish Thakkar - [2022] 145 taxmann.com 414 (Bombay)

Judiciary and Counsel Details

• • Dhiraj Singh Thakur & Abhay Ahuja, JJ.
  • Arvind Pinto, Adv. for the Appellant.
  • Mandar M. Vaidya, Adv. for the Respondent.

Facts of the Case

Assessee was a proprietor engaged in the business of resale of industrial goods. During the assessment proceedings, the Assessing Officer (AO) made additions under section 69C on the ground that the assessee purchased goods in cash from the market and sales bills were obtained through hawala dealers.

On appeal, CIT(A) held that all the purchases couldn’t be treated as bogus. Thus, it restricted the disallowance to 10% of such purchases. The Tribunal upheld the order of CIT (A). Aggrieved-assessee preferred an appeal to the Bombay High Court.

High Court Held

The High Court held that AO concluded that the assessee had purchased goods, but not from the sellers listed on the bills. Based on affidavits submitted to the Sales Tax Authorities, the AO believed that the goods were bought with cash from the market and fake bills were obtained from illegal money brokers for that purpose.

However, there was no evidence to support the AO’s assertion that the assessee purchased the goods from the market or with unexplained cash.

Further, the purchases were made and paid for with account payee cheques that have been cleared through normal banking channels. The assessee provided bills and delivery challans for the purchases and they were properly recorded in the assessee’s books. The Commissioner (Appeals) found that there was no evidence that the purchases were made for cash or that the purchasers returned cash corresponding to the cheque payments received from the assessee.

These were all findings of fact for which the Tribunal was the last fact-finding authority and the Tribunal upheld the order of CIT(A) on the ground that assessee had discharged initial burden or onus of providing details of parties. Thus, the order passed by Tribunal did not give rise to any substantial question of law.

List of Cases Reviewed

• • Order ITAT-Mumbai in ACIT v. Jagdish Thakkar [IT Appeal No. 768/Mum/2015 dated 6-1-2017] (para 31) affirmed.

List of Cases Referred to

• • CIT v. Bholanath Poly Fab (P.) Ltd. [2014] 220 Taxman 82 (Mag.)/[2013] 40 taxmann.com 494/355 ITR 290 (Guj.) (para 9)
  • Pr. CIT v. Ram Builders [ITXA No. 398 of 2018, dated 18-7-2022] (para 30).