2017 (8) TMI 1426 - HC - Income Tax

Purchases of rice bran as bogus - Held that - CIT (Appeals) on the basis of the material placed before him and on the basis of the statements of two persons namely- Vinay Singh and Rajesh Kumar Ramuka held that the rice bran was supplied by the aforesaid two persons in the name of their firms M/s. Om Sai Enterprises, M/s. Om Shiv Enterprises, M/s. Mahadev Enterprises and M/s. Nisha Enterprises and that the payments were received by them in the individual capacity as the bank accounts were in their names and in the name of one of the firm M/s. Nisha Enterprises.The Assessing Officer is not correct in holding that the aforesaid purchases were bogus inasmuch as the supplies were made by Party (A) and payments were made to Party (B). In fact the supply and payment were made to the same parties but with different names. The findings of CIT (A) have been accepted by the tribunal and it has been held that the purchases are not bogus at all. The question whether in the facts and circumstances of the case, the ITAT was justified in accepting the purchases to be genuine and not bogus is a matter of fact only. No question of law in this regard arises in this appeal.

Summary

Issues involved:
1. Whether the purchases of rice bran by the respondent-assessee are bogus in nature under the facts and circumstances of the case.
2. Disallowance of travelling expenses and other issues.

Analysis:

Issue 1: Purchases of rice bran
The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal regarding the genuineness of the purchases of rice bran by the respondent-assessee. The revenue contended that the purchases were bogus due to the absence of bills and vouchers during a search, with documents only produced at the appeal stage. However, the CIT (Appeals) found that the rice bran was supplied by specific individuals through their firms and payments were made to them individually, not to the firms directly. The tribunal upheld this finding, concluding that the purchases were not bogus but legitimate. The court emphasized that the ITAT's decision on the genuineness of the purchases was a matter of fact, and no legal question arose in this regard. Therefore, the appeal on this issue was dismissed.

Issue 2: Disallowance of travelling expenses
Other questions raised in the appeal related to the disallowance of travelling expenses, among other issues. However, the tax incidence for these matters fell below the monetary limit of ?20,00,000 prescribed for filing appeals before the High Court as per CBDT's Circular No. 21 of 2015. Consequently, the court held that the department could not file an appeal on these other questions due to the monetary threshold not being met. As a result, the appeal was dismissed on these grounds as well.

In conclusion, the High Court dismissed the appeal by the revenue concerning the purchases of rice bran, as the tribunal had found them to be genuine. Additionally, the court noted that other issues raised did not meet the monetary threshold for filing an appeal, leading to the dismissal of the appeal on those grounds.