2019 (3) TMI 913 - HC - Income Tax

Reopening of assessment u/s 147 - Bogus purchases - ITAT deleted the addition - HELD THAT - The proceedings under sections 147/148 have been initiated against the assessee on the basis of information received from ADIT-3 and statement of Shri Har Narayan Gupta, the Proprietor of M/s Annapurna Trading Company, was recorded to the effect that he has only received commission from the respondent assessee without there being any actual sale. In turn, the purchases shown by the assessee were bogus and only a bogus purchase entry was made to reduce actual tax liabilities. In pursuance of the summons and on cross-examination of Shri Har Narayan Gupta, he has clearly and categorically denied that he indulged in any kind of mal-practice. He also denied to make any statement that he was only getting commission for issuing bills with actual sale to respondent assessee. In view of the categorical findings of fact recorded by the Commissioner of Income Tax in favour of the respondent assessee in appeal and confirmed by the Tribunal vide impugned order, no question of law arises in the present appeal. Moreover, the authorities below have recorded that M/s Annapurna Trading Company has produced its books of account in the reassessment proceedings and the same were verified by the Assessing Authority. The quantity and details, furnished by the respondent assessee, were neither disturbed nor rejected. Moreover, the assessee has shown purchases from 13 parties, including M/s Annapurna Trading Company, and none of the parties, from whom purchases have been shown by the respondent assessee, was found bogus purchases by the Assessing Authority. The payments have been made through cheques and all the entries were duly made in the books of account and the same were verified. In view of the findings of fact recorded in favour assessee, that the purchases were being made from M/s Annapurna Trading Company, no substantial question of law arises in the present appeal.

Summary

Issues:
1. Addition of ?4,19,94,000 made by the Assessing Officer on account of bogus purchases.
2. Justification of the ITAT in deleting the addition without considering all facts and circumstances.

Detailed Analysis:
1. The appeal was filed against the Income Tax Appellate Tribunal's order regarding the addition of ?4,19,94,000 on account of alleged bogus purchases by the respondent for the Assessment Year 2009-10. The respondent, engaged in flour mill and biscuit manufacturing, faced reassessment under sections 147/148 based on information from ADIT-3 regarding alleged bogus purchases from a trading company. The reassessment resulted in the addition of ?4,19,94,000 to the respondent's income, contested before the Commissioner of Income Tax (Appeals) and subsequently before the Tribunal. The Tribunal dismissed the appeal, leading to the current appeal before the High Court.

2. The High Court examined the facts, including the statement of the trading company's proprietor denying any malpractice, the verification of books of account by the Assessing Authority, and the absence of evidence to prove the purchases were bogus. The Court noted that the respondent had made payments through cheques, maintained proper records, and none of the other parties involved were found to have engaged in fraudulent activities. The Commissioner of Income Tax and the Tribunal had both ruled in favor of the respondent, emphasizing the lack of any substantial legal question arising from the case. Consequently, the High Court dismissed the appeal, upholding the findings in favor of the respondent and against the Revenue.

In conclusion, the High Court dismissed the appeal, affirming the lower authorities' findings that the purchases were genuine and not bogus, thereby ruling in favor of the respondent and against the Revenue.