2017 (5) TMI 359 - AT - Income Tax

Reopening of assessment - bogus purchases - CIT(Appeals) in giving relief to the assessee by relying on the additional evidence without giving any opportunity to the Assessing Officer to verify the same - Held that - Keeping in view all the submissions made by the assessee which are duly supported by the copies of submissions made by the assessee during the course of assessment proceedings before the Assessing officer and which are duly acknowledged by the Office of the Assessing Officer, find that the bills of the concerned three parties in support of its claim for purchases made from the said parties were duly produced/filed by the assessee during the course of assessment proceedings before the Assessing Officer and the same did not constitute additional evidence filed by the assessee before the ld. CIT(Appeals) for the first time as alleged by the ld. D.R - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition of alleged bogus purchases based on additional evidence filed by the assessee in violation of Rule 46A(3) of the Income Tax Rules, 1962.

Analysis:
1. The Revenue appealed against the deletion of an addition of ?37,90,732 made by the Assessing Officer on account of alleged bogus purchases. The assessee, a partnership firm in the jewelry business, initially filed its return for the relevant year declaring total income of ?2,92,100. Subsequently, a search operation revealed information about accommodation entries given to the assessee, leading to the reopening of assessment by the Assessing Officer. The purchases claimed by the assessee from certain parties were deemed bogus by the Assessing Officer, who added the amount to the total income of the assessee.

2. The ld. CIT(Appeals) deleted the addition after considering the submissions and evidence provided by the assessee. The assessee argued that purchases were genuine, supported by valid bills and payments made through account payee cheques. The ld. CIT(Appeals) found that the bills were produced, payments were verified, and the sellers were assessed for CST/VAT. Citing relevant case laws, the ld. CIT(Appeals) concluded that the addition should be deleted.

3. The Revenue challenged the decision, arguing that the assessee failed to produce all bills for verification and that the ld. CIT(Appeals) erred in accepting new evidence in violation of Rule 46A(3) of the Income Tax Rules, 1962. The Revenue contended that the additional evidence was never verified by the Assessing Officer.

4. The Tribunal heard arguments from both sides. The Revenue claimed that the ld. CIT(Appeals) wrongly accepted the genuineness of purchases based on unverified bills. In response, the assessee's counsel highlighted that all necessary details and documents were submitted during assessment proceedings, even if there was no personal appearance. The Tribunal found that the bills supporting the purchases were indeed submitted during assessment, dismissing the Revenue's appeal.

5. Consequently, the Tribunal dismissed the Revenue's appeal and the Cross Objection filed by the assessee. The decision was pronounced in an open court on May 5, 2017.