2019 (11) TMI 1420 - HC - Income Tax

Bogus purchases - CIT-A restricted addition to 25% of total addition - HELD THAT - In the light of the concurrent findings of fact recorded by the Tribunal that the sales had not been disputed by the revenue authorities, no infirmity can be found in the approach adopted by the Commissioner (Appeals) as well as the Tribunal in restricting the addition made on account of bogus purchases to 25% - No question of law. Undisclosed income admitted during the course of survey proceedings - HELD THAT - Commissioner (Appeals) has found that the assessee had accepted taking bills from Vishal Traders. The addition made on account of bogus purchases came to ₹ 1,41,87,441/- whereas the addition on account of undisclosed income was to the extent of ₹ 1,13,84,071/-. Commissioner (Appeals) has found that this amount would get telescoped in the addition of ₹ 1,41,87,441/- sustained on account of bogus purchases. In the opinion of this court, there is no infirmity in the approach adopted by the Commissioner (Appeals). While it is true that the Tribunal has not given any categorical finding on this issue, nevertheless having regard to the approach adopted by the Commissioner (Appeals), no question of law arises.

Summary

Issues:
1. Addition on account of bogus purchases
2. Deletion of addition on account of undisclosed income

Analysis:
Issue 1: Addition on account of bogus purchases
The appellant revenue challenged the order of the Income Tax Appellate Tribunal regarding the addition made on account of bogus purchases from M/s. Vishal Traders. It was found during search/survey action that the purchases shown by the assessee were bogus, as admitted by the proprietor of M/s. Vishal Traders. The Assessing Officer made an addition of the entire claimed amount as bogus purchases, but the Commissioner (Appeals) restricted the addition to 25% of the alleged bogus purchases. The Tribunal upheld the Commissioner's decision. The appellant contended that the assessee failed to provide evidence to substantiate the purchases, and the Tribunal erred in confirming the Commissioner's order. However, the Commissioner found that the purchases were not actual, only bills were obtained, and the goods were purchased from farmers. The Tribunal concurred with the Commissioner's findings, stating that the sales were not disputed by the revenue authorities. The High Court held that no legal infirmity was found in the approach adopted by the Commissioner and the Tribunal, dismissing the appeal.

Issue 2: Deletion of addition on account of undisclosed income
Regarding the deletion of addition on account of undisclosed income, the partner of the assessee admitted to undisclosed income during a survey but did not include it in the return. The Commissioner (Appeals) deleted the addition, stating that it gets telescoped in the addition sustained on account of bogus purchases. The High Court found no infirmity in the Commissioner's approach, even though the Tribunal did not give a specific finding on this issue. The Court concluded that no question of law arose in this matter, warranting interference. Consequently, the Court dismissed the appeal, finding no legal infirmity in the Tribunal's order.