2017 (2) TMI 1390 - AT - Income Tax

Unexplained expenditure u/s 69C - bogus purchases - Held that - Books of account was duly audited and payments were made from undisclosed source/disclosed bank account and all the payments are account payee cheque and no region to doubt the purchases. AO was not rejected the books of account. The assessee further filed the letter of confirmation of the supplier copy of bank statement showing the entries of cement and stock reconciliation statement, further the sale and purchase were not doubted by the AO, the substantial amount of sale by the assessee was to the government Department. Commissioner (Appeals) allowed the appeal of the assessee on the basis of principle of consistency as the similar addition/disallowance was deleted from the assessment of subsequent year. The ld DR could not differentiate as to how the facts for the year under consideration was different for the assessment year 2010-11. Hence, we do not find any ground to interfere in the finding of ld Commissioner (Appeals). - Decided against revenue

Summary

Issues:

1. Whether the Commissioner (Appeals) erred in deleting unexplained expenditure under section 69C of the Income Tax Act on account of bogus purchases.

Analysis:

1. The appeal by Revenue was against the Commissioner (Appeals) order for Assessment Year 2009-10, focusing on the deletion of unexplained expenditure of ?56,24,792 under section 69C of the Act due to bogus purchases. The assessment was reopened based on information regarding purchases from dealers providing bogus bills. The AO made the addition during reassessment, stating the onus was on the assessee to prove the genuineness of the expenditure. The assessee contended that purchases were genuine, recorded in books, and payments made through account payee cheques. The AO, however, did not accept these explanations.

2. The AO issued notices under section 133(6) to parties from whom purchases were made, but the notices were returned reserved. The assessee's reply was not accepted, leading to the addition of ?56,24,792 in the assessment order. On appeal, the Commissioner (Appeals) deleted the entire addition, citing a similar addition made for the assessment year 2010-11, which was also deleted on appeal. The Commissioner (Appeals) allowed the appeal based on the principle of consistency, as the facts and circumstances were similar to the previous year.

3. The Revenue argued that the assessee failed to produce all parties for verification of purchases, and the onus to prove the purchases' genuineness was on the assessee. The Revenue prayed for restoring the AO's order by setting aside the Commissioner (Appeals) decision. However, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the principle of consistency and lack of differentiation in facts for the assessment year 2010-11. Therefore, the appeal filed by Revenue was dismissed, and the order was pronounced on 08-02-2017.