2023 (7) TMI 1449 - AT - Income Tax

Unexplained purchases from specific parties - HELD THAT - The undisputed fact is that M/s Mohit Trading Co. and M/s Surana Bros of whom Shri Chagganlal Jain was proprietor were never found at the given addresses, assuming that the business was closed, even though the assessee could have confirmed the transactions from the books of account of the said two parties. The documentary evidences which have been referred by the ld. counsel for the assessee were very much there in the first round of litigation and could not find any support from the decision of the Hon'ble High Court when the Hon'ble High Court wanted the verification done through the Income tax returns of the two parties. Considering the report/order of the AO we are of the considered view that the assessee grossly failed in proving the genuineness of the transaction with M/s Mohit Trading Co. and M/s Surana Bros. Reliance placed on various judicial decisions will not do any good to the assessee as all the decisions are facts specific and the facts of the case in hand have been explained hereinabove, which are clearly distinguishable from the facts of the case relied upon by the ld. counsel for the assessee. Assessment order is upheld on the issue remanded back to us, thereby the appeal of the Revenue is allowed and that of the assessee is dismissed.

Summary

Issues:
Cross appeals by Revenue and assessee against CIT(A) order for AY 2009-10. Whether purchases from specific parties were genuine. Tribunal's consideration of facts and law.

Analysis:
The judgment pertains to cross appeals by the Revenue and the assessee against the order of the ld. CIT(A) for Assessment Year 2009-10. The Hon'ble High Court remanded the matter to the Tribunal to rehear the case and decide on merits. The High Court noted that the Tribunal had set aside the direction of the CIT(A) to conduct an inquiry regarding certain purchases made by the assessee. The CIT(A) had directed the Assessing Officer to verify if the parties from whom purchases were made had filed income tax returns. The Tribunal was criticized for not considering the non-filing of returns by the parties and for striking down the CIT(A)'s directions. The High Court directed the Tribunal to re-hear the matter and decide in favor of the Revenue if no returns were filed.

The Assessing Officer, in compliance with the CIT(A)'s order, conducted an inquiry and found that the parties in question had not filed income tax returns. The ld. DR argued that this lack of returns indicated the non-genuineness of the transactions. The assessee's counsel argued that confirmations were filed and the burden of proof had shifted to the Assessing Officer, who failed to provide evidence to disprove the confirmations. However, the Tribunal found that the parties did not file returns, and confirmations were only from the assessee's side, not the parties' books of account. The Tribunal upheld the assessment order, dismissing the assessee's appeal and allowing the Revenue's appeal.

In conclusion, the Tribunal upheld the assessment order based on the non-filing of income tax returns by the parties in question. The appeals were decided in favor of the Revenue and against the assessee. The judgment highlights the importance of verifying transactions through relevant documentation and the burden of proof in tax assessments.