2019 (2) TMI 729 - HC - Income Tax

Reopening of assessment - bogus purchases - Revenue relied upon the survey proceedings under Section 133 as well as the statements made under Section 133A - CIT set aside the final reassessment order which had disallowed the expenditure also confirmed by ITAT - Held that - This Court is of the opinion that the assessee did not rely merely upon the deposit of the amount but rather movement of the goods, which is borne out by the VAT authorities stamp on transit challan i.e. chungi, at the border. Other evidence such as the stock register, factory certifying the receipt of the goods as and when they were moved into the premises; clearly recorded in the statutory central excise registers RG-1 etc., were sufficient proof to show that the purchases were not bogus. Moreover, the CIT(A) re-apprised all the evidence, unlike the AO, who was largely influenced by the so-called credit entry providers. This Court is of the opinion that having regard to the detailed analysis of the CIT(A), with which the ITAT s finding concurred, no question of law arises. - Decided against revenue

Summary

Issues:
Revenue's appeal against ITAT's order affirming the CIT(A)'s decision setting aside a reassessment order based on alleged bogus purchases made by the assessee for AY 2006-07 & 2007-08.

Analysis:
1. The Revenue challenged the lower appellate authorities' findings on the genuineness of purchases made by the assessee from M/s Om Industrial Corporation and M/s Techno Enterprises. The AO disallowed expenditures based on survey proceedings under Section 133 and statements under Section 133A. However, the CIT(A) found that all purchases were supported by documentary evidence like VAT deposit forms, transit challans, stock registers, and excise records. The CIT(A) concluded that while reassessment initiation was justified, the disallowance made was not justified.

2. The Revenue contended that the AO's findings were disregarded without credence to Section 133A statements and argued that mere deposit to D-3 challan did not prove actual purchases. However, the Court noted that the assessee substantiated purchases not only through deposits but also with evidence of goods movement verified by VAT authorities at the border.

3. The Court emphasized that evidence like stock registers, factory receipts, and excise records adequately demonstrated the genuineness of purchases. It highlighted that the CIT(A) thoroughly re-evaluated all evidence, unlike the AO who heavily relied on credit entry providers' statements.

4. Ultimately, the Court upheld the ITAT's decision concurring with the CIT(A)'s detailed analysis, finding no legal question to consider. The appeal was dismissed, affirming the genuineness of the assessee's purchases and rejecting the Revenue's challenge based on alleged bogus transactions.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the Court's reasoning leading to the dismissal of the Revenue's appeal.