2015 (10) TMI 1764 - HC - Income Tax

Bogus purchase of M.S. Steel - ITAT deleted the addition - Held that - Tribunal has concurred with the findings recorded by the Commissioner (Appeals), namely, that the assessee had provided copies of bills of purchase and had also given evidence to establish that the steel reached the assessee s factory at Anjar by way of weigh bridge receipt which showed that the steel had actually reached the assessee s factory. The purchases made by the assessee were duly supported by various documentary evidences such as inward stamped bills and weigh bridge challans, etc. and that M/s. Dhruv Steel had confirmed sale of the steel to the assessee. It was noticed that the assessee had in fact constructed a huge plant, which, in the absence of purchases of steel could not have been set up. The Tribunal, correctly concurred with the conclusion arrived at by the Commissioner (Appeals) that the Assessing Officer was not justified in holding that there were bogus purchases of M.S. steel in assessment year 2004-05. - Decided in favour of assessee.

Summary

Issues:
Challenge to Tribunal's order under section 260A of the Income Tax Act, 1961 regarding the genuineness of purchase transactions and disallowance of depreciation claimed.

Analysis:

Issue 1: Genuineness of Purchase Transactions
The appellant revenue challenged the Tribunal's order questioning the authenticity of the purchase transactions of M.S. Steel from Dhruv Steel. The Assessing Officer suspected the transactions as non-genuine due to discrepancies in records and lack of warehouse facilities. The appellant cooperatively explained the transactions, providing detailed evidence of purchases, payments, and compliance with accounting practices. The Commissioner (Appeals) found in favor of the assessee, emphasizing the confirmation of sales by Dhruv Steel and the absence of concrete evidence to declare the purchases as bogus. The Tribunal upheld the Commissioner's findings, highlighting the documentary evidence provided by the assessee, including bills, weigh bridge receipts, and the establishment of a plant based on the purchased steel. The Tribunal concluded that the Assessing Officer's doubts regarding the purchases were unjustified, leading to the dismissal of the revenue's appeal.

Issue 2: Disallowance of Depreciation Claim
The Assessing Officer disallowed 25% of the depreciation claimed by the assessee, adding it to the total income. However, the Commissioner (Appeals) overturned this decision, citing the lack of evidence to support the disallowance. The Tribunal concurred with the Commissioner's findings, emphasizing the documentary evidence provided by the assessee to substantiate the purchases and the utilization of the steel in constructing a significant plant. The Tribunal dismissed the appeal, stating that the Assessing Officer's disallowance of depreciation was unwarranted. The Tribunal's decision was based on the appreciation of factual evidence and the lack of legal grounds to challenge the allowance of depreciation.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of documentary evidence, compliance with accounting practices, and the establishment of facts to prove the genuineness of transactions. The Tribunal's findings were based on a thorough analysis of the evidence on record, leading to the dismissal of the revenue's appeal due to the absence of substantial legal questions warranting interference.