2009 (2) TMI 10 - HC - Income Tax

Additions made by AO on account of purchase of acid slurry by the assessee from one Utkarsh Udyog Samiti by treating the transaction as a bogus purchase - Both the CIT(A) and ITAT accepted the explanation of the assessee that the transaction was a bonafide business transaction - despite being given an opportunity, revenue has not been able to bring anything to the contrary there is no perversity in the conclusions arrived at by the authorities below revenue s appeal dismissed

Summary

Issues:
- Appeal by Revenue under Section 260A of the Income Tax Act, 1961 against judgment of the Income Tax Appellate Tribunal pertaining to assessment year 2001-02.
- Addition of Rs 1,45,60,408/- on account of purchase of acid slurry treated as a bogus purchase.
- Consideration of the genuineness of the transaction between the assessee and Utkarsh Udyog Samiti.

Analysis:
1. The appeal before the High Court was brought by the Revenue against a judgment of the Income Tax Appellate Tribunal concerning the assessment year 2001-02. The specific issue under consideration was the addition of Rs 1,45,60,408/- by the Assessing Officer, treating the purchase of acid slurry as a bogus transaction.

2. The transaction in question involved the purchase of acid slurry by the assessee from Utkarsh Udyog Samiti, which had acquired the product from Kanishka Chemicals Pvt Ltd. The department alleged that both Utkarsh Udyog Samiti and Kanishka Chemicals Pvt Ltd had declared losses and not paid taxes on the transaction, leading to suspicions about its authenticity.

3. Upon appeal to the Commissioner of Income Tax (Appeals) [CIT(A)], the addition made by the Assessing Officer was deleted based on a well-reasoned order. Subsequently, the Revenue appealed to the Tribunal, which also ruled in favor of the assessee, accepting the explanation that the transaction was genuine. This decision was supported by the fact that a similar transaction between Utkarsh Udyog Samiti and Kanishka Chemicals Pvt Ltd had been deemed authentic.

4. The High Court, after examining the facts and submissions, found no fault with the judgment of the lower authorities. The court noted that the assessee had disclosed the income generated from the impugned purchase in its tax return, and there was no evidence of any wrongdoing. The court dismissed the appeal, stating that no substantial question of law arose for consideration, and there was no perversity in the reasoning of the authorities.

In conclusion, the High Court upheld the decisions of the CIT(A) and the Tribunal, emphasizing the genuineness of the transaction and the absence of any legal irregularities.