2019 (7) TMI 305 - HC - Income Tax

Unexplained purchase - alleged that purchase is not genuine and made from bogus biller/ accommodation entry provider - seller was declared defaulter by the Sales tax department - source of expenditure in purchasing the goods was explained - HELD THAT - It can, thus, be seen that the Commissioner (Appeals) and the Tribunal concurrently came to the factual finding that the Department has no independent material to come to the conclusion that the purchases made by the assessee of gold and silver were either nongenuine or that the same were made out of assessee s known source. As noted by the Commissioner (Appeals), the purchases were made through banking channel. The Assessing Officer had not rejected the books of accounts of the assessee. - Being a pure question of fact, no question of law arises.

Summary

Issues:
1. Challenge to Tribunal's judgment on addition of sum under section 69C of the Income Tax Act.
2. Justification for not upholding Assessing Officer's order on addition related to purchases from a specific entity.
3. Perversity of Tribunal's order as per the evidence on record.

Analysis:
1. The appellant, Revenue, challenged the Tribunal's judgment regarding the addition of a sum under section 69C of the Income Tax Act. The respondent-assessee, engaged in the trade of gold and silver jewellery, faced additions by the Assessing Officer, which were later deleted by the Commissioner of Income Tax (Appeals) and the Tribunal. The Tribunal, in its judgment, emphasized that the default by a party under the MVAT Act cannot be the sole basis for making additions under the Income Tax Act without concrete documentary evidence proving the transaction's genuineness. The Tribunal highlighted the importance of independent inquiry and reliable evidence, stating that the AO had not conducted a thorough investigation before making the addition under section 69C of the Act.

2. The Tribunal's decision was based on the fact that the purchases were made through the banking channel, and the appellant had provided substantial evidence, including tax invoices, bank statements, and stock registers, to support the legitimacy of the transactions. The Commissioner (Appeals) also noted that the purchases were made through account payee cheques, duly reflected in the bank statements, and the source of acquisition was adequately explained. The AO's failure to counter the evidence presented by the appellant and the absence of any discrepancies in the books of accounts further supported the decision to delete the additions made by the Assessing Officer.

3. The Commissioner (Appeals) and the Tribunal arrived at concurrent factual findings that the Department lacked independent material to deem the purchases as non-genuine or unexplained. The purchases were made through legitimate channels, and no evidence suggested otherwise. The Tribunal dismissed the income tax appeal, emphasizing that the findings were based on a thorough consideration of the evidence on record. The dismissal was supported by the absence of any legal issues arising from the factual findings, thereby upholding the decision to delete the additions made by the Assessing Officer.