2009 (1) TMI 855 - HC - Income Tax

Addition u/s. 68 - Bogus purchases - Tribunal upheld the order of the CIT (A) deleting the addition made by AO - revenue contended that order of the Tribunal on the ground that the deletion of addition was perverse - HELD THAT - Tribunal made a particular note of the fact that the statement of Sh. Ashok Kumar who is the brother of Sh. T.R. Chadda, the source from which the revenue had received information about bogus purchases by the assessee had evidently made a statement on 26-2-2002 admitting therein that he was carrying on the business of issuing bogus accommodation bills on commission basis with the assessee; which was not put to the assessee, for rebuttal or cross-examination. Ld counsel for the revenue had laid great stress on the fact that the Department had carried out investigation which revealed that purchases have been made from non-existent parties and this was established by virtue of the fact that inquiries with the banks of the suppliers had revealed that they were operated by Sh. Ashok Kumar, who was the brother of Sh. T.R. Chadda or his employees. We note that this aspect of the matter was obviously not put to the assessee as this was not part of the report which the inspector had prepared for the perusal of AO. Therefore, this submission of the counsel for the revenue cannot in our view take his case any further. As a matter of fact, CIT(A) orders the evidence regarding Sh. T.R. Chadda s operation collected by the investigating wing was not even available with AO. In view of the findings of fact returned by two authorities below which are not perverse, no question of law, much less a substantial question of law arises for our consideration. Appeal is dismissed.

Summary

Issues:
Appeal against Tribunal's judgment upholding deletion of addition for bogus purchases by assessee.

Analysis:
The case involved an appeal by the revenue against the Tribunal's decision upholding the deletion of an addition of Rs. 54,50,276 made by the Assessing Officer for alleged bogus purchases by the assessee during the assessment year 1998-99. The assessee, engaged in trading computer parts, was asked to identify and produce confirmation of parties from whom purchases of Rs. 1 lakh and above were made. The Assessing Officer, based on an inspector's inquiry, added the amount as bogus purchases. The CIT(A) later deleted this disallowance, leading to the revenue's appeal to the Tribunal.

The Tribunal, in its judgment, carefully examined the evidence on record and found that the assessee maintained complete accounts, audited under relevant laws, with all payments made by cheques. The Tribunal noted that the Department had accepted the purchases, and there was no evidence of inflated purchases. It highlighted that the statement of Sh. Ashok Kumar, admitting to issuing bogus accommodation bills with the assessee, was not cross-examined. The Tribunal also observed substantial debit balances in the ledger accounts of suppliers, indicating advance payments by the assessee.

The revenue contended that investigations revealed purchases from non-existent parties operated by Sh. Ashok Kumar, but this aspect was not presented to the assessee during assessment. The High Court noted that evidence on Sh. T.R. Chadda's operations, crucial to the case, was not available to the Assessing Officer. Considering the factual findings of the lower authorities as not perverse, the High Court dismissed the appeal, stating no substantial question of law arose for consideration.