Issues involved: The issue involves the deletion of an addition of Rs. 52,254 by the Income-tax Officer as the income of the assessee, based on alleged bogus transactions with certain parties.
Judgment Details:
Assessment Proceedings: The assessee, engaged in manufacturing spindles and machinery spare parts, was found to have made purchases from parties involved in issuing bogus vouchers. The Income-tax Officer treated the transactions amounting to Rs. 52,254 as bogus income of the assessee and initiated penalty proceedings under section 271(1)(c) of the Income-tax Act.
Appellate Assistant Commissioner's Decision: The Appellate Assistant Commissioner upheld the Income-tax Officer's decision, stating that the assessee failed to produce the parties and discharge the burden of proof. He found the Income-tax Officer had sufficient grounds to disbelieve the purchases, thus confirming the addition.
Tribunal's Decision: In the second appeal before the Tribunal, the assessee argued that the transactions were genuine business dealings, supported by cheque payments. The Tribunal noted the lack of evidence implicating the assessee in the bogus transactions and found insufficient proof to conclude the purchases were fake. The Tribunal, therefore, disagreed with the Appellate Assistant Commissioner's decision and deleted the addition.
Court's Opinion: The High Court observed that the question of whether the transactions were genuine or not was a matter of fact. The Tribunal highlighted the absence of evidence showing funds returning to the assessee or vouchers being issued. The Court agreed with the Tribunal's assessment that the evidence was inadequate to deem the purchases as bogus. Noting the credit facilities and cheque payments, the Court upheld the Tribunal's decision in favor of the assessee, disposing of the reference with no costs awarded.
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