2011 (1) TMI 435 - HC - Income Tax

Disallowance - Bogus purchase - Out of the four parties in question, one of the parties, namely M/s North East Coal Mining was found non-existing during the assessment proceedings for assessment year 2002-03 - In view of the history culled out by the Commissioner of Income-tax (A) to which there is no controversion from the side of the assessee - Assessing Officer has not conducted any verification exercise as done in the assessment year 2002-03 with respect to the said three parties - Ostensibly, the genuineness of purchase made from the said three parties is to be made on the basis of the material and the evidence on record - As per ITAT out of the total addition of Rs.3,37,695, AO was directed to retain the addition of Rs.1,34,569/- only - Order of ITAT sustained - The appeal stands dismissed

Summary

Issues:
Delay in refiling the appeal condoned. Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal. Disallowance of expenditure on purchases of coal from M/s North East Coal Mining.

Analysis:
1. The delay in refiling the appeal was condoned by the High Court. The appeal was filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal pertaining to the assessment year 2003-04. The appellant raised substantial questions of law regarding the disallowance of expenditure on purchases of coal from M/s North East Coal Mining and the differential treatment compared to purchases from other parties.

2. The facts of the case revealed that the original assessment was set aside by the Commissioner of Income Tax (Appeals) and subsequently reframed by the Assessing Officer. The disallowance of the amount paid on purchases was a point of contention. The CIT(A) partially sustained the addition, leading to the appellant filing an appeal. The Tribunal partly allowed the appeal, but maintained the addition on purchases from M/s North East Coal Mining, prompting the present appeal by the assessee.

3. The main issue revolved around the disallowance of expenditure on purchases from M/s North East Coal Mining. The Assessing Officer had disallowed the amount citing non-traceability of the party and its non-existence during previous assessment proceedings. This disallowance was upheld by the CIT(A) and the Tribunal, based on findings that the purchases were not genuine and the party was non-existing during earlier assessments.

4. The Tribunal's decision to uphold the disallowance was based on the history of non-traceability and non-existence of M/s North East Coal Mining during previous assessments. The Tribunal found no mistake in sustaining the disallowance, considering the past records and lack of controversion from the assessee's side. Additionally, the Tribunal examined the evidence presented by the assessee regarding purchases from other parties and concluded that the burden of proof had been discharged successfully, leading to the deletion of the addition on purchases from three other parties.

5. The High Court, after hearing the appellant's counsel, found no grounds to interfere with the concurrent findings of the Assessing Officer, CIT(A), and the Tribunal. The Court concluded that the findings were not perverse and no substantial question of law arose in the appeal. Consequently, the appeal was dismissed by the High Court.