2019 (2) TMI 1468 - AT - Income Tax

Unexplained expenditure u/s 69C - bogus purchases -Admission of additional evidence- HELD THAT - We find that the assessee in this case has submitted all the necessary evidences in support of the impugned transactions and the CIT(A) has drawn a correct conclusion. It is clear that the A.O. has given an extremely short notice, wherein the notices could not be responded. All the necessary details were subsequently available and the same were provided to the A.O. in the remand proceedings. The details have also been made available to us in the paper book. From the same, we find that all the necessary confirmations of the transactions are available. All the payments are through banking channels. No discrepancy in this regard is noted. The other planks made by the assessee are also cogent that the assessee has provided the copies of the bank statements for all the additions proposed to be made u/s.69C of the Act. Hence, the additional unexplained expenditure as mandated in section 69C is not sustainable, as section 69C provides that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. When the assessee has provided all the evidences of the payment and the payments are recorded in the books of account, they are not liable to be added u/s. 69C of the Act. Furthermore, the transaction from some of the parties have also been accepted in the subsequent assessment year. It is also not the case that any sales corresponding to the purchases/transactions has been disallowed or doubted. - Decided in favour of assessee.

Issues Involved:
1. Deletion of addition on account of bogus and non-genuine claim of purchases treated as unexplained expenditure under Section 69C of the Income Tax Act.
2. Ignoring the contention in the remand report regarding the non-availability of confirmations from specific parties.
3. Ignoring the contention in the remand report about the lack of submissions regarding certain sundry creditors.
4. Ignoring the contention in the remand report that additional evidence was insufficient for compliance.
5. Failure to appreciate that the genuineness of the parties was not examined in subsequent assessment years, and the principle of res judicata does not apply.

Detailed Analysis:

1. Deletion of Addition on Account of Bogus and Non-Genuine Claim of Purchases:
The primary issue revolves around the deletion of an addition amounting to ?9,99,50,211/- made by the Assessing Officer (A.O.) under Section 69C of the Income Tax Act, treating certain purchases as unexplained expenditure. The A.O. had issued notices under Section 133(6) to various sundry creditors to verify the genuineness of the purchases. Due to non-receipt or non-service of replies, the A.O. added the amount as unexplained expenditure. However, the Commissioner of Income Tax (Appeals) [CIT(A)] accepted the confirmations from the parties, their ledger accounts, and bank statements for payments, thereby deleting the addition.

2. Ignoring the Contention in the Remand Report Regarding Non-Availability of Confirmations:
The A.O. contended in the remand report that confirmations claimed to have been submitted by Om Industries and Arihant Enterprises were not available on record. The CIT(A) overruled this contention, noting that the assessee had submitted the necessary confirmations from these parties, their ledger accounts, and bank statements for payments. The CIT(A) did not find any reason to reject these confirmations.

3. Ignoring the Contention in the Remand Report About Lack of Submissions Regarding Certain Sundry Creditors:
The A.O. also contended that no submissions had been made by the assessee regarding sundry creditors such as Chetna Oil Trading Co., Shri Shyam Products, and Bhavani Silicate Industries. The CIT(A) noted that the assessee had indeed provided confirmations, ledger accounts, and bank statements for these parties, which were sufficient to prove the genuineness of the transactions.

4. Ignoring the Contention in the Remand Report That Additional Evidence Was Insufficient for Compliance:
The A.O. argued that the submission of only the return of income by Yogi Industries was not sufficient compliance. The CIT(A) overruled this, stating that the assessee had provided the necessary confirmations and other documents to substantiate the transactions. The CIT(A) found no reason to doubt the genuineness of the transactions based on the additional evidence provided.

5. Failure to Appreciate the Genuineness of the Parties in Subsequent Assessment Years:
The A.O. argued that the genuineness of the parties was not examined in subsequent assessment years 2013-14 and 2014-15, and each year is independent. The CIT(A) noted that the A.O. had accepted the transactions with these parties in the subsequent assessment years, emphasizing the principle of consistency. The CIT(A) held that the transactions were genuine, considering the confirmations and other evidence provided.

Conclusion:
The Income Tax Appellate Tribunal (ITAT) upheld the order of the CIT(A), affirming that the assessee had submitted all necessary evidence to support the transactions. The ITAT found that the A.O. had given an extremely short notice, and the necessary details were subsequently provided during the remand proceedings. The ITAT noted that all payments were made through banking channels, and no discrepancies were found. The ITAT concluded that the additional unexplained expenditure under Section 69C was not sustainable, as the assessee had provided sufficient evidence of the payments and recorded them in the books of account. The appeal filed by the Revenue was dismissed.

Order:
The appeal filed by the Revenue stands dismissed. Order pronounced in the open court on 20.02.2019.

← Previous Next →