2020 (4) TMI 751 - AT - Income Tax

Bogus purchases - onus to establish the genuineness of such purchases by providing documentary evidence - CIT-A deleted the addition - HELD THAT - CIT(A) after considering the submissions of the assessee concluded that the assessing officer allowed purchases from both the parties in the assessment order passed under section 143/147 dated 29.01.2019 and 20.10.2016. Moreover the requirement of producing the proprietor of Girnar Sales Corporation and Jainam Enterprises is impossible, accordingly ld CIT(A) directed the assessing officer to allow the purchases from both the parties. CIT(A) has taken a correct view and directed the Assessing officer to allow the purchases. We are also of the view that the assessing officer must follow the consistency on same set of facts. - Decided against revenue.

Summary

Issues:
- Addition of amount on account of bogus purchases
- Failure to discharge onus of proving genuineness of purchases
- Disallowance of purchases from certain parties as non-genuine
- Appeal against the order of the ld. CIT(A)
- Consideration of consistency in allowing purchases from specific parties

Analysis:

1. The appeal by revenue under section 253 of Income-tax Act was against the order of ld. Commissioner of Income-tax (Appeals)-26, Mumbai for Assessment Year 2009-10. The case involved the addition of an amount on account of bogus purchases made by the assessee, with the main issue being the failure to discharge the onus of proving the genuineness of such purchases. The assessment was re-opened under section 147 based on information regarding hawala operators providing accommodation bills without actual goods delivery, leading to suspicions about the assessee's purchases from such dealers.

2. The Assessing Officer issued notices under section 133(6) to verify the transactions with the parties, but most notices were returned unserved. The assessee failed to produce the parties for verification, leading to the conclusion that the onus to prove the genuineness of purchases was not met. The Assessing Officer disallowed a portion of the purchases as non-genuine based on lack of evidence, following a decision of the Gujarat High Court.

3. On appeal before the ld. CIT(A), the addition on account of purchases from certain parties was deleted, considering the assessing officer's allowance of similar purchases in subsequent years. The revenue appealed this decision, arguing that the Assessing Officer reasonably estimated the disallowances and had tangible reasons for re-opening the assessment.

4. The arguments presented by both parties focused on the consistency of allowing purchases from specific parties and the reasons behind the disallowances. The ld. CIT(A) directed the Assessing Officer to allow the purchases based on past assessments and the impossibility of producing the proprietors of the concerned parties. The Tribunal affirmed the ld. CIT(A)'s decision, emphasizing the importance of consistency in treatment based on similar facts.

5. Ultimately, the Tribunal dismissed the appeal of the revenue, upholding the order of the ld. CIT(A) and emphasizing the importance of maintaining consistency in decisions based on the same set of facts. The judgment was pronounced on 19/02/2020.