2022 (3) TMI 613 - AT - Income Tax

Unexplained purchases - statement recorded u/s 133A relied upon - Assessee argued purchases were made before the date of survey i.e. on 14/03/2017 and has stated in the statement recorded u/sec. 131 of the Act, the books were not updated and hence, there was an excess stock as on the date of survey - CIT-A deleted the addition - HELD THAT - CIT(A) has observed that the AO did not find any defect and has also not disproved the genuineness of the bills. CIT(A) also observed that the suppliers are registered VAT dealers and has raised Tax Invoice. We, therefore concur with the findings of the ld.CIT(A), and find no infirmity in the order passed by the ld.CIT(A) and no interference is required on these issues. Statement recorded u/sec. 131A has no evidentiary value and cannot be taken as basis for addition - See case of Khader Khan Son 2013 (6) TMI 305 - SC ORDER Purchases and sales were not matching with VAT returns - CIT(A) noted that the assessee has submitted VAT returns where the 6A purchases were reported by the assessee. We therefore find that the assessee has satisfactorily explained the purchases and concur with the findings of the ld.CIT(A). We find no infirmity in the order passed by the ld.CIT(A) and no interference is required. Thus, the grounds raised by the Revenue is dismissed.

Summary

Issues Involved:
Revenue's appeal against CIT(A)'s order deleting additions for unexplained purchases, non-concurrence of 6A purchases with VAT returns, and alleged submission of fabricated evidence.

Analysis:
1. The appeal involved the Revenue challenging the CIT(A)'s decision to delete additions made by the Assessing Officer (AO) for unexplained purchases. The Revenue contended that the AO established the bogus nature of the bills from Giriraj Jewellers and UV Jewellers. However, the CIT(A) observed that the AO failed to examine the genuineness of the bills and disregarded valid evidence submitted by the assessee. The CIT(A) ruled in favor of the assessee, directing the deletion of the additions totaling ?67,26,899.

2. The issue of non-concurrence between the 6A purchases reported by the assessee and VAT returns was also raised. The assessee argued that 6A purchases were part of their business practice and were disclosed in VAT returns. The CIT(A) found the explanation satisfactory and upheld the assessee's position, leading to the dismissal of the Revenue's grounds related to this issue.

3. The AO also made additions on account of loans, interest, and partner capital, which were contested in the appeal. The CIT(A) partially allowed the appeal, relying on legal precedents to establish that a statement recorded under section 133A of the Income Tax Act lacked evidentiary value. This led to the deletion of certain additions, as the basis for those additions was the statement obtained during the survey.

4. The cross objection filed by the assessee supported the CIT(A)'s order. As there were no grievances against the CIT(A)'s decision, the cross objection was partly allowed. The final judgment pronounced on March 9, 2022, dismissed the Revenue's appeal and partially allowed the cross objection filed by the assessee.

In conclusion, the judgment by the ITAT Visakhapatnam addressed various issues raised by the Revenue regarding additions made by the AO for unexplained purchases, discrepancies in 6A purchases, and other financial matters. The CIT(A) decision to delete certain additions was upheld based on the lack of proper examination of evidence by the AO and legal precedents regarding the evidentiary value of statements recorded under section 133A of the Income Tax Act.