2023 (6) TMI 215 - AT - Income Tax

Bogus purchases - reason for treating the purchases as non-genuine is the assessee has not produced PAN number, no address proof, no counter-signed ledger account - HELD THAT - The assessee in fact filed copy of TIN of the supplier to prove the identity and existence of business concern. Therefore, in our view simply because the assessee has not filed PAN, copy of ITR, these purchases cannot be treated as non-genuine. In the case of Shri Kalyan Singh the only ground on which the addition was sustained by the ld. CIT (Appeals) was that the assessee has not deducted the TDS, even though the assessee has furnished copy of ledger account in the books of the assessee company, copy of vouchers and bank statements, copy of ledger for the financial year 2010-11, copy of vouchers and ledger details in respect of the work done by the vendors. Non-deduction of TDS cannot be a ground for treating the purchases as non-genuine. Similarly in the case of Sirazuddin Gitti Supplier the addition was sustained by the ld. CIT (Appeals) for the reason that the assessee has not mentioned any TIN, did not file copy of ITR, PAN, confirmation ignoring the copy of bank statement, copy of ledger account in the books of assessee company, copy of invoices, purchase orders. The vendor here had supplied stone dust, a construction material with weigh bridge challans and invoices. Thus there is no justification in sustaining the additions by the ld. CIT (Appeals) in respect of purchases/expenses from the above parties. Thus, we direct the Assessing Officer to delete the addition/disallowance - Decided in favour of assessee. Addition made on the alleged entries in the seized material - assessee has not explained the entries with regular books of accounts and also could not provide the identity of the parties - HELD THAT - To find out whether the entries appearing in the diary reflects either the assessee has received the payments or made the payments. AO did not bring any material or evidence to corroborate that these expenses were incurred by the assessee. AO has not made any effort whatsoever to make any investigation even though names of persons clearly mentioned in the entries made in the loose sheets. There was no statement recorded from the assessee during the course of search vis- -vis the impugned seized material. AO simply added the amounts appearing in the diary as unexplained income of the assessee.AO also did not verify the contention of the assessee that these loose sheets did not pertain to the assessee or it is rough work for the site purposes. Therefore, since the AO has not made any efforts to make any sort of enquiries or investigation on the entries made, we are of the view that this issue has to go back to the AO for further examination and investigation.

Issues Involved:
1. Validity of notice under Section 153A and consequential assessment.
2. Validity of approval under Section 153D.
3. Sustaining additions on account of purchases.
4. Additions based on entries in seized material.
5. Additions based on DVO's report.
6. Disallowance of expenses/purchases.

Summary:

1. Validity of Notice under Section 153A and Consequential Assessment:
The assessee did not press ground Nos. 1 to 1.4, which challenge the notice issued under Section 153A and the consequential assessment made under Section 143(3) read with Section 153A of the Income Tax Act, 1961. Consequently, these grounds were dismissed as not pressed.

2. Validity of Approval under Section 153D:
Similarly, the assessee did not press ground No. 2, which challenged the approval obtained under Section 153D of the Act. This ground was also dismissed as not pressed.

3. Sustaining Additions on Account of Purchases:
Ground Nos. 3 & 5, 4 & 5, and 4 & 5 for the assessment years 2009-10, 2010-11, and 2011-12, respectively, were directed against sustaining the addition of Rs. 1,80,815/-, Rs. 2,45,908/-, and Rs. 35,809/- on account of purchases. The Tribunal observed that the assessee had filed various evidences such as TIN of suppliers, ledger accounts, bank statements, bills, and vouchers. The Tribunal held that simply because the assessee did not file PAN, ITR, or counter-signed ledger accounts, the purchases could not be treated as non-genuine. Therefore, the additions were deleted.

4. Additions Based on Entries in Seized Material:
Ground Nos. 3 & 4 in the appeals for the assessment years 2010-11 and 2011-12 challenged the addition based on alleged entries in seized material. The Tribunal noted that the Assessing Officer did not bring any evidence to corroborate that these expenses were incurred by the appellant. The Tribunal set aside the issue to the file of the Assessing Officer for further examination and investigation, allowing the grounds for statistical purposes.

5. Additions Based on DVO's Report:
Ground Nos. 4 and 4.1 for the assessment year 2008-09 and ground Nos. 6 to 7.1 for the assessment years 2009-10 to 2011-12 challenged the addition based on the DVO's report. The Tribunal followed its earlier decision in the assessee's own case for the assessment years 2006-07 and 2007-08, where it was held that without rejecting the books of accounts, the Assessing Officer could not make an addition based on the DVO's report. Therefore, the grounds of appeal were allowed.

6. Disallowance of Expenses/Purchases:
The issue of disallowance of expenses/purchases made by the Assessing Officer and restricted by the CIT (Appeals) was identical to the issue decided in the preceding paras. The Tribunal deleted the addition sustained by the CIT (Appeals) in respect of purchases/expenses made by the Assessing Officer for the assessment years 2009-10 to 2011-12. The appeal of the Revenue for the assessment year 2010-11 was rejected.

Conclusion:
The appeals of the assessee for the assessment years 2009-10, 2010-11, and 2011-12 were partly allowed, and the appeal of the Revenue for the assessment year 2010-11 was dismissed. The Tribunal directed the Assessing Officer to delete the additions/disallowances sustained by the CIT (Appeals) and remanded certain issues for further examination and investigation.

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