2011 (6) TMI 1022 - AT - Income Tax

Summary

Issues involved: Disallowance of purchases made from M/s. Venus Lubricants as bogus purchases.

Contested Issue: Disallowance of Purchases

The Assessing Officer disallowed purchases made from M/s. Venus Lubricants amounting to Rs. 1,18,130 on the ground of lack of established identity of the party. The CIT(A) upheld this disallowance, stating that the appellant failed to identify the party and thus could not prove the genuineness of the transaction. The appellant argued that it made payments through account payee cheques and provided addresses of the party in good faith. The appellant further submitted evidence including ledger account copies, bills, invoices, and bank statements. The appellant contended that non-response to a notice does not imply non-existence of the party, especially when other evidence is available. The appellant also highlighted the significant amount of total purchases made during the year. The Tribunal held that the appellant had provided sufficient evidence, such as sales tax numbers and payment records, to establish the genuineness of the purchases. The Tribunal criticized the Assessing Officer for not verifying the existence of M/s. Venus Lubricants through other means before concluding that the purchases were bogus. The Tribunal concluded that the burden of proof had been discharged by the appellant, shifting the onus to the revenue to prove otherwise. Consequently, the disallowance of Rs. 1,18,130 as bogus purchases was deleted, and the appeal was allowed in part.