2017 (5) TMI 1485 - HC - Income Tax

Bogus purchases - acceptance of Gross profit declared by assessee - Allowing deduction u/s 10B on the entire profit - Held that - Controversy involved in this case is squarely covered by the decision of this Court in CIT, Jaipur-II, Jaipur Vs. M/s Aditya Gems 2016 (11) TMI 1464 - RAJASTHAN HIGH COURT as remitted back the case to the Assessing Officer for deciding afresh on the factual matrix. The authority will accept the law but the transaction whether it is genuine or not will be verified by the Assessing Officer on the basis of Vijay Proteins Ltd. Vs. Commissioner of Income Tax 2015 (4) TMI 1146 - SUPREME COURT wherein confirmed the order passed by the Gujarat High Court 2015 (1) TMI 828 - GUJARAT HIGH COURT and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2008 (3) TMI 323 - GUJARAT HIGH COURT) and N.K. Industries Ltd. Vs. Dy. C.I.T. 2016 (6) TMI 1139 - GUJARAT HIGH COURT . The issue is answered accordingly. The matter is remitted back to the Assessing Officer. It will be open for the assessee to raise all contentions including opportunity of cross-examination before the Assessing Officer.

Summary

Issues:
Challenge to Tribunal's judgment on addition deletion and gross profit acceptance.

Analysis:
The appellant challenged the Tribunal's decision in this case. The Court framed substantial questions of law regarding the deletion of an addition amounting to ?1,89,29,835 and the acceptance of the gross profit declared by the assessee. The Tribunal had upheld the finding of bogus purchases by the assessee and the rejection of books of accounts. However, it also observed the possibility of revenue leakage. The Court considered whether the Tribunal was justified in deleting the addition made by the assessing officer and allowing a deduction under section 10B on the entire profit.

The Court noted that the controversy in this case was covered by a previous decision involving M/s Aditya Gems. Referring to various legal precedents, the Court emphasized the need for the Assessing Officer to verify the genuineness of the transactions based on specific judgments. Consequently, the Court remitted the case back to the Assessing Officer for a fresh decision, instructing that the authority must accept the law but verify the transactions' genuineness in light of the mentioned judgments.

In conclusion, the Court answered the issue by remitting the case back to the Assessing Officer for further examination. The assessee was granted the opportunity to present all contentions, including the chance for cross-examination before the Assessing Officer. The appeal was disposed of based on the above analysis and instructions.