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2014 (7) TMI 590 - AT - Income TaxExpenses treated as non-genuine purchases AO has made disallowance in respect of those parties where there was difference in amount and to whom notices u/s. 133(6) were sent and returned back unserved or no reply of the parties was received - Held that - While deciding the appeal FAA had not discussed anything about the discrepancies noted and communicated by the AO - time allowed by the AO to the assessee to file details was insufficient, but the FAA had ample time to decide the issue - When the AO had given a categorical finding of fact about the discrepancies in his order, it was the duty of the FAA to deal the issue on merits before allowing the appeal filed by the assessee - it was essential as the assessee had not filed details before the AO thus, the matter is to remitted back to the FAA for fresh adjudication Decided partly in favour of Revenue.
Issues:
1. Addition of expenses as non-genuine purchases 2. Discrepancies in party-wise details of purchases 3. Adequacy of time for furnishing necessary details Analysis: 1. The Assessing Officer (AO) made an addition of Rs. 41,53,983 on account of treating expenses as non-genuine purchases, challenging the order of the CIT(A) who deleted the said addition. The AO issued notices u/s. 133(6) to parties to verify the genuineness of purchases, and discrepancies were found. The AO held that the assessee failed to prove the genuineness of purchases, leading to the disallowance. The First Appeal Authority (FAA) noted that ledger accounts were furnished, balances confirmed, and payments made through account payee cheques. The FAA found no basis to hold the transactions as unaccounted or bogus. The ITAT observed that the FAA did not address the discrepancies noted by the AO, leading to the decision to remand the matter back to the FAA for fresh adjudication, allowing the appeal in part in favor of the AO. 2. The AO raised concerns about discrepancies in the names of parties claimed to be suppliers, with the DR arguing that the assessee did not explain this to the AO. The AR argued that the business relations with the parties were genuine, and the AO did not doubt their authenticity. The ITAT found that the FAA did not discuss the discrepancies communicated by the AO, emphasizing the need for a thorough examination of the issue. While acknowledging the insufficient time given by the AO to the assessee, the ITAT held that the FAA should have addressed the discrepancies. The matter was remanded back to the FAA for a fresh decision after affording reasonable opportunities of hearing to both parties. 3. The ITAT noted the inadequacy of time given by the AO for furnishing necessary details, emphasizing the FAA's responsibility to thoroughly examine the discrepancies highlighted by the AO. The ITAT decided in favor of remanding the matter back to the FAA for a fresh adjudication, ensuring that both the AO and the assessee have adequate opportunities to present their case. The appeal filed by the AO was partly allowed, highlighting the importance of a comprehensive review of discrepancies and the genuineness of transactions in such cases. This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the ITAT's decision to remand the matter back to the FAA for a fresh adjudication, emphasizing the need for a thorough examination of discrepancies and ensuring justice is served in the matter.
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