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2020 (11) TMI 373 - AT - Income TaxBogus purchases - burden of proof - HELD THAT - As assessee has duly discharged the burden to prove the genuineness of purchases. On the contrary, the AO has simply relied upon the report given by the investigation wing. In this view of the matter, we are of the view that no addition is called for on account of alleged bogus purchases. Since there is an order of ITAT in the assessee s own case 2017 (8) TMI 1302 - ITAT MUMBAI DR has not been able to rebut this, we follow the co-ordinate bench decision in the assessee s own case and decide the issue in favour of the assessee. We find that facts in the present case are identical. Further sales have not been doubted. Rather in the present case as noted by the ld. CIT(A) all the details are on record and hence the ld. CIT(A) held that there was not any need of issuing notice to the impugned supplier. - Decided against revenue.
Issues Involved:
1. Sustaining of addition for bogus purchase at 8% by the CIT(A) versus 9% by the Assessing Officer (A.O.). 2. Validity of reopening the assessment. 3. Refusal by CIT(A) to admit additional evidence. Detailed Analysis: 1. Sustaining of Addition for Bogus Purchase: The primary issue is the addition for bogus purchases. The A.O. originally made a 9% addition based on information from the DCIT (Investigation) regarding accommodation entries in bogus purchases. The A.O. argued that the assessee did not make genuine purchases from certain dealers, as evidenced by failed cross-examinations and admissions by the dealers. The A.O. concluded that the assessee inflated purchases to benefit from lower rates in the grey market, thus estimating a 9% profit margin on these transactions. Upon appeal, the CIT(A) reduced the addition to 8%, noting that the assessee provided various details, including purchase bills, account confirmations, and bank statements. The CIT(A) acknowledged that the assessee had furnished all possible information, and there was no need for further notices to suppliers. Consequently, the CIT(A) sustained the addition at 8% for various assessment years, granting partial relief to the assessee. 2. Validity of Reopening the Assessment: The assessee challenged the reopening of the assessment. The ITAT referenced its decision in the assessee's case for A.Y. 2007-08, where it was held that the A.O. could not specify the manner of failure by the assessee to disclose all material facts necessary for assessment. The ITAT noted that the assessee had provided affidavits and confirmations from suppliers, and the A.O. did not bring any material to contradict these documents. Hence, the ITAT found the reopening of the assessment invalid. 3. Refusal by CIT(A) to Admit Additional Evidence: The assessee also contested the CIT(A)'s refusal to admit additional evidence. The CIT(A) had rejected the need for cross-examination of suppliers, distinguishing it from the ITAT decision in the assessee's case by noting that the A.O. had conducted further examinations. However, the ITAT found that all necessary details were on record, and the CIT(A) did not need to issue additional notices to suppliers. ITAT's Decision: The ITAT followed its prior decision in the assessee's case for A.Y. 2007-08, where it was held that the assessee had discharged the burden of proving the genuineness of purchases. The ITAT noted that the A.O. relied solely on the investigation wing's report without bringing any contrary material on record. Consequently, the ITAT directed the deletion of the addition for alleged bogus purchases. Revenue's Appeals: The ITAT dismissed the Revenue's appeals, noting that the tax effect was below the limit specified by the CBDT for filing appeals before the ITAT. The reliefs granted by the CIT(A) in various assessment years were below ?50 lakhs, making the appeals non-maintainable. Conclusion: The ITAT allowed the assessee's appeals, directing the deletion of additions for bogus purchases and dismissing the Revenue's appeals due to the low tax effect. The ITAT's decision was pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, on 09.11.2020.
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