4. Modus Operandi of Bogus Transactions [An Overview]
3
5. Burden of Proof
3
6. Issues in Identifying a Bogus Transaction
3
7. Why it is Important to Identify Fake Invoices and to Curb Them
4
8. Impact of Bogus Transactions on Income Tax Department
4
9. Reasons Behind Lack of Fear Among Dealers of Fraudulent Transactions
5
Chapter 1
Introduction
1. Nuisances of Bogus Purchases
7
2. Why Bogus Purchases are Made?
7
3. Impact of Bogus Purchases to Government
8
4. Nuisances of Bogus Sales
9
5. Why Bogus Sales are Made?
9
6. Impact of Bogus Sales to Government
10
Chapter 3
Role of Entry Providers
1. Who are entry providers and how they carry out bogus transactions
11
2. Taxability of Entry Provider
13
3. Case Law: Where Addition under section 68 is done along with Commission Portion
14
4. Case Law: Only Commission Income Component is Liable to Tax
23
Chapter 4
Role of Beneficiaries
1. Beneficiaries to bogus purchases and their motive
29
2. Modus operandi
30
3. Why bogus purchase/sales/expenditure transactions are conducted?
30
4. Documentation required for purchases made by assessee
31
5. Case Laws: Where assessee discharges his onus and assessing officer is unable to discharge his burden
33
Chapter 5
Taxability of Bogus Purchases
1. Introduction
42
2. Case Law 1: Where it is held that bogus purchases is a question of fact
43
3. Case 2: High Court dismissed the appeal on the basis of lack of question of law
45
4. Addition in income if assessee fails to prove genuineness of purchases
48
5. Addition towards bogus billing of genuine purchases/services or purchases are genuine and suppliers are found to be bogus
48
6. Case Laws: Addition is restricted to G.P. rate or an enhanced rate in case of bogus billing of genuine purchases
49
7. Why GP is added in case of bogus billing of genuine purchases?
96
8. Addition towards bogus expenditure
97
9. Case Law: Where bogus purchases/expenditure is disallowed under section 37
98
10. Case Law: In favour of revenue: Where entire purchase are added to income
105
11. Treatment of commission paid for taking accommodation entries for bogus purchases
110
12. Percentage of Estimation is a Question of Fact [Important Point from Author]
110
13. Case Law: High Court held that percentage of estimation is a question of fact and not a question of law
110
Chapter 6
Taxability of Bogus Sales
1. Introduction
114
2. Case Laws: Where Sales are Left Unrecorded by the Assessee
114
3. Where bogus billing of genuine sales has been made by the assessee i.e. Actual sales made to one party but sale bill has been issued in other party name
118
4. Case law: where the genuineness of sale is disputed by A.O. Without any evidence or corroboration or cross examination
118
5. Case Laws: Where Only Markup Included in Sales is Considered as Income
132
6. Important Note From Author
147
7. Important Note
147
8. Applicability of Section 271(1)(C)/270A 147
9. Case Law: Deletion of Penalty under section 271(1)(C) Where Penalty Imposed in a Case Where Addition Has Been Confirmed on Estimation Basis or Ad Hoc Basis
148
Chapter 7
Consequences of Bogus Transactions
1. Introduction
153
2. Source of Information
154
3. Issues if Transactions are Proved Bogus
154
4. Rejection of books of accounts by A.O. and its consequences
154
5. What is Section 68?
155
6. What is Section 69?
155
7. What is Section 69A?
155
8. What is Section 69B?
156
9. What is Section 69C?
156
10. What is Section 69D?
156
11. What is Section 144?
157
12. What is Section 271(1)(c)?
157
13. What is Section 270A? [Applicable from A.Y. 2017-18]
157
14. What is section 271AAB?
158
15. What is Section 271AAC?
159
16. Tax under section 115bbe and penalty thereon under section 271aab(1a) and under section 271aac
160
17. What is Section 271AAD?
161
18. What is Section 115BBE?
161
19. What is Section 133(6)?
162
Chapter 8
Action Plan by Government and Tax Department Against Bogus Transactions
1. Brief Introduction
163
2. Why it is important to curb bogus transactions?
163
3. Measures to Curb Bogus Transactions
164
4. Legal Actions Available with Revenue Department
165
5. Initiatives Taken by Revenue Department
166
Chapter 9
Survey under Income Tax Act
1. What is Survey?
168
2. Objective Behind Conducting a Survey
168
3. Whether Survey can be Conducted at Residential Premises?
169
4. When Survey can be Conducted?
169
5. Can Survey be Conducted on Assessee’s CA or Tax Advocate?
169
6. Can Survey be Conducted at a Function or Ceremony or Event?
169
7. What if Assessee does not Cooperate During Survey?
170
8. Power of Officer Upon Entering into the Premises
170
9. What if Assessee is Forced to Give a Confession Statement
170
10. What if any Undisclosed Income is Identified During Survey
170
11. Case Law: Where Undisclosed Income is Identified During Survey Operation
171
12. Section 133B: Power to Collect Information
172
13. When Information udner section 133B can be Collected
172
14. Section 133C: Power to Call for Information by Prescribed Income Tax Authority
173
Chapter 10
Assessment/Reassessment/Reopening of Case under Section 148
1. Importance of this topic?
174
2. Can Case be Opened if Department Receives Information from Third Party
175
3. Case Law: Where Case is Opened on the Basis of Information Received From Third Party
175
4. General Introduction for Assessment under section 148
179
5. Time Limit for Issuance of Notice
180
6. What to do if Notice Issued under section 148A
180
7. What if Assessee Fails to Respond to the Notice Issued under section 148?
181
8. What Remedy is Available to Assessee Against Order under section 148A(D)
181
9. Case Law: Where Aggrieved Assessee Filed Writ Petition Against Order under section 148A(D)
182
Chapter 11
Some Leading Judgements on Bogus Purchases/Sales
Case 1: Addition for Bogus Purchases Made on Estimation Basis Even if Assessee is Not Able to Substantiate his Purchases
185
Case 2: Where Assessee Discharges his Onus and Assessing Offier is Unable to Discharge his Burden
188
Case 3: Commission Paid for Bogus Purchases and Sales Deleted by ITAT
217
Case 4: What if Any Undisclosed Income is Idenified During Search
235
Case 5: Where Undisclosed Income is Identified During Survey Operation in the Form of Bogus Purchase/Sale
240
Chapter 12
Cross Examination
1. What is Cross Examination?
244
2. Importance of Cross Examination
245
3. Cases Where Importance of Cross Examination was Highlighted by Courts
246
4. Cases Where not Providing Opportunity of Cross-Examination was Held Irregularity
268
5. Cases Where Request for Cross Examination may be Deined
269
Table of Cases
A.C.G. Arts & Properties (P.) Ltd. v DCIT [2018] 93 taxmann.com 486/171 ITD 184 (Mum.)
199
Anantharam Veerasinghaiah & Co v CIT (1980) 123 ITR 457
CIT v Sanjay Chhabra, Proprietor of Sanjay Chhabra Traders [2011] 336 ITR 71 (P&H): [2021] 21 taxmann.com 221 (P&H)
137,144
CIT v Simit P. Shet [2013] 38 taxmann.com 385/219 Taxman 85/356 ITR 451 (Gujarat)
66,89,92,112,187
CIT v Vijay M. Mistry Construction Ltd. vide order dated January 10, 2011 passed in Tax Appeal No. 1090 of 2009—since reported in [2013] 355 ITR 498 (Guj)
96
Common Cause (A Registered Society) v Union of India [2017] 394 ITR 220 (SC)
116,117,124
Dee Vee Projects Ltd. v Union of India & Ors., Writ Petition No. 2693/2021, dated 11.02.2022 (Bombay High Court))
240
Deepak Jain v ITO [2023] 104 ITR (Trib) 61 (ITAT[Jai])
119
Deepraj Hospital P. Ltd. v ITO (ITA No. 41/Agra/2017) [2018] 65 ITR (Trib) 663 (Agra)
126
DCIT v Adinath Industries [2001] 252 ITR 476 (Guj)
33
DCIT v Hi-Tech Engineers [2023] 222 TTJ 785 (Mumbai)
200
DCIT v J.S.W. Ltd. In ITA No. 6264/M/2018 and 6103/M/2018 for AY 2013-14 order dated 14th May 2020.
CAclubindia
