2011 (10) TMI 294 - HC - Income Tax

Whether Bogus purchases can be a question of law - Held That - when assessee filed copies of vouchers of purchases which contained sales tax registration number - Bank Account showing payment made to parties - export invoices and bank correspondence. Its a question of fact and not question of law. once the CIT(A) and Tribunal accepted the factual explanation offered by the assessee and on that basis deleted the additions made by A.O. then it would not involve any substantial question of law for its examination. Decided in favour of assessee.

Summary

Issues:
Appeal under section 260A of the Income-tax Act against an order dated 30.6.2008 passed by I.T.A.T., Jaipur Bench, Jaipur for the period AY 2004-2005. The main issue is whether the appeal involves any substantial question of law within the meaning of section 260A ibid.

Analysis:
The Tribunal dismissed the Revenue's appeal and upheld the order of Commissioner of Appeals regarding certain additions amounting to Rs. 89,49,075/- made by the Assessing Officer (AO) on account of alleged bogus purchases. Both the CIT(A) and Tribunal found the transactions genuine based on the factual explanation and evidence provided by the assessee. The Tribunal detailed the evidence submitted by the assessee, including vouchers, bank transactions, export invoices, and confirmations, to establish the genuineness of the purchases. The Tribunal concluded that the AO failed to provide positive evidence to refute the genuineness of the transactions. The Tribunal's decision was supported by various case laws cited by the assessee's representative, emphasizing the sufficiency of evidence provided by the assessee.

The appellant contended that the AO was justified in adding the amount and that the Tribunal's finding on deletion of the additions was perverse. However, the High Court rejected these submissions, stating that the issue was a question of fact, not law. The High Court highlighted that it cannot re-examine factual issues or draw inferences based on the assessee's explanation once accepted by the appellate court. The court emphasized that the concurrent findings of fact by the CIT(A) and Tribunal are binding and do not constitute a substantial question of law for appeal under section 260A.

The High Court further explained that to determine the genuineness of a transaction, the manner in which it was conducted must be considered. In this case, the assessee provided detailed documentation, including vouchers, bank records, and confirmations, which were thoroughly examined by the CIT(A) and Tribunal. The court reiterated that once the factual explanation was accepted by the appellate authorities and the additions were deleted, there is no substantial question of law to be examined. The High Court clarified that unless the findings of the appellate authorities are devoid of reasoning or against the law, there is no basis for formulating a substantial question of law. Consequently, the High Court dismissed the appeal, holding that it did not involve any substantial question of law under section 260A of the Act.