2017 (10) TMI 1309 - AT - Income Tax

Addition of 12.5% in respect of bogus purchase - Held that - We found that Tribunal have confirmed the addition of 12.5% in respect of bogus purchase after observing that there was failure on the part of the assessee to produce such bogus parties for examination to the AO. CIT(A) in his order has categorically noted that the said three vendors not only appeared before the AO during the remand proceedings but also confirmed that they indeed entered into the transaction with the assessee. This finding of CIT(A) is recorded at page 4 of the CIT(A) order dated 23/04/2014. In view of this finding of CIT(A), the observation made by the Tribunal and confirming the addition of 12.5% of bogus purchase amounts to mistake apparent from record.

Summary

Issues: Appeal against the order passed by the Tribunal regarding the addition of bogus purchases.

Analysis:
1. The Miscellaneous Application (M.A.) was filed by the assessee challenging the order passed by the Tribunal on 11/01/2017 in relation to ITA No.1045/Mum/2016. The contention raised by the learned AR was that the Tribunal proceeded on the misconception that the assessee did not produce the vendors before the Assessing Officer (AO) and that they did not confirm the transactions entered into with the assessee.

2. The AR argued that the finding of the Tribunal was factually incorrect as it was noted by the Commissioner of Income Tax Appeals (CIT(A)) that the vendors did appear before the AO during the remand proceedings and confirmed the transactions with the assessee. The CIT(A) recorded this finding in his order dated 23rd April 2014, which contradicted the Tribunal's observation. The AR requested the order passed by the Tribunal to be recalled based on this discrepancy.

3. The Departmental Representative (DR) opposed the AR's argument, stating that there was no mistake in the Tribunal's order. However, upon careful examination of the miscellaneous petition, the Tribunal's order, and the orders of the lower authorities, it was found that the Tribunal confirmed the addition of 12.5% for bogus purchases due to the failure of the assessee to produce the alleged bogus parties for examination.

4. Contrary to the Tribunal's observation, the CIT(A) explicitly mentioned in his order that the vendors did appear before the AO during the remand proceedings and confirmed the transactions with the assessee. This finding by the CIT(A) was considered a mistake apparent from the record, leading to the decision to recall the Tribunal's order and direct a fresh hearing by a regular bench.

5. Consequently, the Miscellaneous Application filed by the assessee was allowed, and the order was pronounced in open court on 27/10/2017.

This detailed analysis highlights the discrepancies between the findings of the Tribunal and the CIT(A) regarding the confirmation of transactions by vendors, leading to the decision to recall the Tribunal's order for a fresh hearing.