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2023 (1) TMI 493 - HC - Income TaxNon-genuine purchases u/s 69C - Sales tax department had provided evidence of the fact that these parties did not undertake the sale of any material but only provided bills at a commission - Assessment Officer identified 21 dealers from that list, who according to him, were termed as suspicious dealers indulging in issuing fictitious bills without actual supply of goods or material, for a commission, as was put up on the official websites of the Sales Tax Department, Government of Maharashtra - ITAT upholding the orders of the CIT(A) deleting the addition - HELD THAT - Appellate Tribunal was right in applying the ratio of the judgment of M/s . Nikunj Eximp Enterprises Pvt. Ltd. 2013 (1) TMI 88 - BOMBAY HIGH COURT to the facts of the present case. There are concurrent findings arrived at by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, on the fact that the Respondent had satisfactorily discharged the initial burden of proving the genuineness of the transactions. We are of the considered opinion that this is not a fit case for consideration in appeal as the substantial questions of law proposed by the revenue would not arise.
Issues Involved:
1. Justification of Tribunal's decision on non-genuine purchases. 2. Consideration of evidence from Sales Tax Department. Issue-Wise Detailed Analysis: 1. Justification of Tribunal's Decision on Non-Genuine Purchases: The appeal under Section 260A of the Income Tax Act, 1961 challenges the order dated 31.03.2017 by the Income Tax Appellate Tribunal, Mumbai, which upheld the deletion of disallowance amounting to Rs.4,99,27,664/- under Section 69C of the Act. The central question was whether the Tribunal was justified in upholding the deletion of the addition made on account of non-genuine purchases. The Respondent, a civil contractor, had filed his return for the Assessment Year 2010-11, declaring a total income of Rs.37,60,430/-. During scrutiny, the Assessing Officer identified 21 dealers as "suspicious" and issued a show cause notice to the Respondent. The Respondent failed to provide evidence of actual delivery of materials from these suppliers. Consequently, the Assessing Officer treated the entire amount as unexplained expenditure under Section 69C and added it to the Respondent's income, also initiating penalty proceedings. The Commissioner of Income Tax (Appeals) overturned this decision, noting that the Respondent had provided books of accounts, bank statements, and proof of payments through proper banking channels. The Tribunal upheld this view, stating that the Respondent had shown gross and net profits accepted by the Assessing Officer, and without rejecting the book entries, such additions were untenable. The Tribunal further noted that the Assessing Officer had not issued summons to the suppliers or provided the Respondent with the statements recorded by the Sales Tax Department, thus violating procedural fairness. The Tribunal concluded that the Respondent had sufficiently discharged the burden of proving the transactions. 2. Consideration of Evidence from Sales Tax Department: The Appellant argued that the Tribunal and the Commissioner (Appeals) erred by not considering evidence from the Sales Tax Department, which indicated that the suppliers provided only accommodation bills. The Appellant cited the Supreme Court judgment in Principal Commissioner of Income-Tax (Central)-1 vs. NRA Iron and Steel (P.) Ltd., arguing that the burden of proving the transactions was on the Respondent. However, the Tribunal found that the Respondent had provided sufficient documentary evidence, and the Assessing Officer had not discredited this evidence. The Tribunal held that merely being listed as suspicious on the Sales Tax Department's website was insufficient to prove the transactions were bogus. The Tribunal also referred to the Bombay High Court judgment in The Commissioner of Income Tax-1, Mumbai vs. M/s. Nikunj Eximp Enterprises Pvt. Ltd., which held that producing books of accounts, invoices, and bank statements sufficed to prove genuine purchases, even if the suppliers did not appear before the Assessing Officer. Conclusion: The Tribunal and the Commissioner (Appeals) both found that the Respondent had satisfactorily discharged the initial burden of proving the genuineness of the transactions. The Tribunal's application of the ratio in The Commissioner of Income Tax-1, Mumbai vs. M/s. Nikunj Eximp Enterprises Pvt. Ltd. was deemed appropriate. The High Court concluded that the substantial questions of law proposed by the revenue did not arise and dismissed the appeal with no order as to costs.
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