2021 (2) TMI 355 - AT - Income Tax

Estimation of income - bogus purchases - assessee neither could produce the concerned parties nor could furnish transportation bills, weighment bills, etc. - Commissioner (Appeals) restricted the addition to 12.5% of the alleged non-genuine purchases - HELD THAT - The very fact that the Assessing Officer did not disallow the entire purchase but has restricted the disallowance to 15% of the alleged non-genuine purchases indicates that the Assessing Officer also believes that the assessee had purchased the goods, though, may not be from the declared source. Therefore, he has proceeded to add the profit element embedded in such purchases. Considering the nature of business carried on by the assessee and keeping in view the decision of the Tribunal in similar nature of cases, learned Commissioner (Appeals) decision to restrict the disallowance to 12.5% of the alleged non genuine purchases is fair and reasonable. Therefore, the order of learned Commissioner (Appeals) is upheld by dismissing the grounds raised by the Revenue.

Summary

Issues involved:
Challenge to consolidated order of Commissioner of Income Tax (Appeals) for assessment years 2009-10, 2010-11, and 2011-12; Concern limited to Assessment Year 2009-10; Dispute over partial relief granted on non-genuine purchases by Assessing Officer; Appeal filed by Revenue.

Analysis:
The appeal was filed by the Revenue challenging a consolidated order dated 3rd April 2019 by the Commissioner of Income Tax (Appeals) for the assessment years 2009-10, 2010-11, and 2011-12. However, the focus of the current judgment was on the appeal related to Assessment Year 2009-10. During the hearing, no representative from the respondent assessee appeared, and no adjournment request was made. Consequently, the appeal was disposed of ex-parte after hearing the Departmental Representative and reviewing the available material.

The dispute in the appeal centered around the partial relief granted by the Commissioner (Appeals) concerning the addition made by the Assessing Officer regarding non-genuine purchases. The assessee, a partnership firm engaged in trading, had filed its income tax return for the year, initially processed under section 143(1) of the Act. Subsequently, the Assessing Officer re-opened the assessment under section 147 based on information from the Sales Tax Department, identifying certain purchases as non-genuine. The Assessing Officer disallowed 15% of the purchases, amounting to a specific sum, which was added back to the assessee's income. The assessee contested this addition before the Commissioner (Appeals).

After reviewing the submissions and evidence, the Commissioner (Appeals) reduced the addition to 12.5% of the alleged non-genuine purchases. The Tribunal noted that doubts on the purchases' genuineness arose from information received from the Sales Tax Department. While the assessee provided some evidence supporting the purchases, the Assessing Officer was not fully convinced due to missing documentation. However, the fact that only a portion of the purchases was disallowed indicated acknowledgment that the goods were purchased, albeit potentially from undisclosed sources. Considering the business nature and precedents, the Tribunal found the Commissioner (Appeals) decision reasonable and upheld it, dismissing the Revenue's grounds.

In conclusion, the Tribunal dismissed the appeal, affirming the Commissioner (Appeals) order. The judgment was pronounced on 28/01/2021.