2009 (1) TMI 104 - HC - Income Tax

Additions on account of bogus purchases - no material on record to show that the purchases shown by the assessee from the parties were not genuine - disallowance made by the Revenue mere on the basis of surmises and conjectures without any positive material on record - no material on the basis of which it can be alleged that the parties admitted that the bills raised by them against the assessee were merely accommodation bills tribunal is justified in deleting additions

Summary

Issues:
Challenge to deletion of addition on account of bogus purchases.

Analysis:
The appellant-revenue challenged the order of the Income Tax Appellate Tribunal which deleted an addition of Rs.7,21,000 on account of alleged bogus purchases made by the respondent-assessee. The dispute revolved around purchases amounting to Rs.7,21,950 made by the assessee from three parties during the accounting period 2002-03. The Assessing Officer contended that these purchases were part of a hawala market involving fake bills. The Commissioner (Appeals) upheld this view, stating that the assessee did not dispute the association of the purchases with Rohit Panwala and failed to cross-examine him. The appellant argued that the Tribunal's deletion of the addition was perverse and raised a substantial question of law.

The Tribunal, after examining the evidence, found that a search operation on Rohit Panwala revealed that he provided accommodation/fake bills to parties upon request. However, the Revenue failed to provide material showing that the purchases from the three parties were not genuine or involved accommodation/fake bills. The Tribunal noted that no statements from the three parties were brought on record and that the payments were made via account payee cheques against goods receipts. Consequently, the Tribunal concluded that the disallowance made by the Revenue lacked a basis and was unsustainable, leading to the deletion of the addition.

The High Court upheld the Tribunal's decision, emphasizing that the Tribunal's findings were based on a thorough evaluation of the evidence. The Court noted that the Assessing Officer's inference from Panwala's general statement lacked concrete evidence linking the purchases to accommodation bills. As the Tribunal had correctly pointed out the absence of material indicating that the purchases were not genuine, the Court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's order. The appellant's contention of perversity in the Tribunal's decision was rejected based on the factual findings and evidence evaluation conducted by the Tribunal.