2015 (12) TMI 1850 - AT - Income Tax

Unexplained expenditure under section 69C relating to the purchase of goods - addition based on name of the two suppliers figured in the list of suspicious dealers in the website of sales Tax department - eligible proof that the assessee has indulged in the bogus purchases - CIT(A) deleted the additions - HELD THAT - When the AO himself has not doubted the purchase and sale transaction and all the expenditure has been duly accounted in the books of account, then it can not be said to be a case of unexplained expenditure. It is not the case of the AO that the goods were purchased by the assessee at a lesser rate or that someone has supplied the goods to the assessee for free or that the assessee has booked a bogus expenditure. When it is not so, solely on the basis of unconfronted and general statements of alleged suppliers made before sales tax authorities, addition u/s 69C under the circumstances on account of purchases are not warranted at all. Assessee has relied upon the decision of Nikunj Enterprises (P.) Ltd. 2013 (1) TMI 88 - BOMBAY HIGH COURT wherein the Hon ble Bombay High Court has upheld the findings of the tribunal that where the assessee filed letters of confirmation of suppliers, copies of bank statement showing entries of payment through account payee cheques to suppliers and stock reconciliation statements, sale of purchased goods was not doubted, the transactions were supported with evidences and confirmations, in such an event merely because the suppliers have not appeared before the AO or the Ld. CIT(A), one can not conclude that the purchases were not genuine.- Decided in favour of assessee.

Summary

Issues Involved:
Appeal against deletion of addition of unexplained expenditure under section 69C for purchase of goods.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the addition of unexplained expenditure made by the Assessing Officer on account of purchases of goods.
2. The Assessing Officer relied on information from the Sales Tax Department to conclude that the purchases made by the assessee were bogus, adding the amount to the assessee's income.
3. The Commissioner of Income Tax (Appeals) deleted the addition after considering the evidence furnished by the assessee, leading to the Revenue's appeal.
4. The assessee argued that no statement was recorded by the Income Tax Authorities, they were not given a chance to cross-examine, and all payments were made through cheques with supporting documentation provided.
5. The Revenue supported the findings of the lower authorities.
6. The tribunal found that the purchases were not proven to be bogus, as the Assessing Officer himself admitted the genuineness of the transactions and all expenditures were accounted for. The tribunal emphasized that without concrete evidence, additions under section 69C were unwarranted.
7. Legal precedents were cited to support the argument that without implicating evidence or confirmation of bogus transactions, additions for purchase of goods could not be justified.
8. Ultimately, the tribunal dismissed the Revenue's appeal, stating that there was no merit in the case based on the lack of concrete evidence to support the addition of unexplained expenditure.

This detailed analysis of the judgment highlights the key arguments, evidence presented, legal precedents cited, and the ultimate decision reached by the tribunal in dismissing the Revenue's appeal.