2023 (8) TMI 1270 - AT - Income Tax

Reopening of assessment - Addition u/s 69C - value of asset bought from the vendor who is alleged to be a suspicious dealer - disallowance of depreciation on the asset above - HELD THAT - As case of the assessee is reopened based on the information received from Sales Tax Department Government of Maharashtra as per which the supplier is declared as non-genuine supplier. Accordingly the case of the assessee was reopened and the value of the machinery declared by the assessee is disallowed and also the respective depreciation claimed by the assessee is also disallowed. In our considered view the AO cannot disallow the total value of the asset and also simultaneously disallow the depreciation claimed by the assessee. The disallowance can only be made to the extent of the benefit claimed by the assessee under the Act. In the given case the assessee has claimed benefit only to the extent of depreciation. As relying on Sashai Natwar Waghela 2020 (11) TMI 595 - ITAT MUMBAI we direct the AO to delete the additions made. Accordingly the appeal filed by the assessee is allowed.

Summary

Issues involved:
The appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) for the A.Y. 2011-12.

Details of the case:
The return of income was filed by the assessee declaring total income. The case was reopened due to information received regarding bogus purchases. Notices were issued to the assessee based on the information received. The Assessing Officer requested various documents to verify the genuineness of the purchases. The assessee submitted explanations and documents in response to the notices.

The Assessing Officer rejected the submissions of the assessee, concluding that the purchases were bogus. The AO stated that the burden of proof lay on the assessee to establish the genuineness of the transactions. The AO found discrepancies in the explanations provided by the assessee and initiated penalty proceedings.

The assessee appealed before the Ld. CIT(A), who dismissed the appeal. The assessee then appealed before the Appellate Tribunal, challenging the addition made under Section 69C and the disallowance of depreciation. The assessee argued that the transaction was genuine and provided evidence to support their claim.

After considering the submissions, the Tribunal observed that the case was reopened based on information from the Sales Tax Department declaring the supplier as non-genuine. The Tribunal held that the Assessing Officer cannot disallow the total value of the asset and depreciation simultaneously. Referring to a similar case, the Tribunal directed the AO to delete the additions made, thereby allowing the appeal filed by the assessee.

Conclusion:
The Appellate Tribunal directed the Assessing Officer to delete the additions made, allowing the appeal filed by the assessee against the order of the Ld. CIT(A) for the A.Y. 2011-12.