9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 638 - AT - Income TaxBogus purchases - deemed income u/s 41(1) - Held that - AO did not brought any evidence on record to hold that such liability has ceased to exist or remitted by the creditor; that the said liability is being shown as payable by the assessee in his balance sheet reflects that this liability is payable by the assessee and that the confirmation from M/s Hindustan Trading Company which was duly signed by the said party further goes to prove that such sum has not been remitted by the creditor. The entire disallowance on account of bogus liability is bad in law in the absence factual material on record. As such, we find no error in finding of CIT(A) on this issue and accordingly confirm finding of CIT(A) on this issue. All the grounds pertaining to bogus liability are rejected.
Issues Involved:
1. Bogus purchases of ?1,33,56,101/- 2. Bogus liability of ?14,43,239/- Issue-wise Detailed Analysis: 1. Bogus Purchases of ?1,33,56,101/-: The Revenue challenged the deletion of an addition of ?1,33,56,101/- made by the Assessing Officer (AO) on account of bogus purchases. The AO argued that the assessee failed to prove the identity of the alleged suppliers and the genuineness of the transactions, as no copies of Goods Receipts (GRs), challans, or purchase bills were furnished. The AO relied on an Inspector’s report and the statement of Shri Vinod Goyal, which were not confronted to the assessee. The CIT(A) deleted the addition, stating that the AO did not discharge the onus of proving the purchases as bogus under Section 69. The CIT(A) noted that the sales were accepted by the AO, which implied that purchases must have occurred. The CIT(A) criticized the AO for not invoking any specific section of the Income Tax Act to disallow the purchases. The Tribunal found that the AO’s reliance on the Inspector’s report and Vinod Goyal’s statement, which were not confronted to the assessee, was flawed. The Tribunal restored the issue to the CIT(A) for fresh consideration, instructing the CIT(A) to examine the statement of Vinod Goyal and the Inspector’s report, confront the assessee with the same, and call for a remand report from the AO. 2. Bogus Liability of ?14,43,239/-: The AO added ?14,43,239/- to the assessee’s income, treating it as a bogus liability from M/s Hindustan Trading Company. The AO argued that the liability was non-existent and should be taxed as deemed income under Section 41(1) of the Income Tax Act. The CIT(A) deleted the addition, stating that the liability was an opening balance carried forward from earlier years, and the AO did not provide evidence that the liability had ceased to exist. The CIT(A) emphasized that merely because the creditor was not traceable, it could not be treated as a cessation of liability. The Tribunal upheld the CIT(A)’s decision, noting that the AO did not establish the non-genuineness of the liability. The Tribunal cited various judicial decisions supporting the view that an opening balance cannot be treated as ceased liability under Section 41(1) without concrete evidence. The Tribunal confirmed the CIT(A)’s finding and rejected the grounds pertaining to the bogus liability. Conclusion: The appeal was partly allowed for statistical purposes. The Tribunal restored the issue of bogus purchases to the CIT(A) for fresh adjudication, while it upheld the deletion of the addition on account of bogus liability. The Tribunal emphasized the need for proper confrontation of evidence and adherence to legal procedures in making additions to the assessee’s income.
|
