2013 (5) TMI 359 - HC - Income Tax

Addition in income made by AO on account of bogus purchases Deletion of the same by CIT(A) and the same is upheld by Tribunal. - Held that - In respect of purchases by the assessee from M/s. VISPL other than the allegation of fake and ingenuine purchases and a statement from the Director of VISPL, which remained uncorroborated, there is no evidence contrary to the claim of the purchases by the assessee herein. Therefore, it is clear that the question raised by the Revenue is a pure question of fact. The finding recorded by the Tribunal in that regard is final.

Summary

Issues: Appeal by Revenue challenging deletion of addition on account of alleged bogus purchases made by the Assessee from a particular company.

Analysis:
The case involves an appeal by the Revenue challenging the deletion of an addition made by the Assessing Officer on account of alleged bogus purchases by the Assessee from a company. The Assessing Officer added a substantial amount to the income of the assessee based on a statement by the director of the seller company, alleging the purchases were bogus. The assessee contended that the purchases were genuine, supported by relevant documents and bank payments, and requested the director for cross-examination. However, the Assessing Officer, without providing an opportunity for cross-examination and citing time constraints, proceeded to make the addition. The CIT(A) subsequently deleted the addition, leading to the Revenue's appeal to the Tribunal.

The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence contradicting the genuineness of the purchases apart from the uncorroborated statement by the director of the selling company. The Tribunal deemed the Revenue's arguments unsubstantiated and rejected them, concluding that the issue primarily revolved around factual determinations. The Tribunal's finding on this factual aspect was considered final, leading to the dismissal of the Revenue's appeal by the High Court.

In summary, the judgment underscores the significance of factual findings in tax matters and highlights the importance of corroborated evidence in challenging additions based on alleged bogus transactions. The case serves as a reminder of the necessity for thorough examination and substantiation of claims before making significant adjustments to an assessee's income.