2024 (3) TMI 1114 - AT - Income Tax

Bogus purchases - Burden of proof - purchase of pulses made by the assessee from one supplier as bogus on the basis of information received from the Income Tax Investigation Wing, New Delhi - CIT(A) deleted the additions - HELD THAT - We find that the assessee in the instant case had duly discharged its burden by furnishing all the necessary documents to prove the veracity of the purchases from Supplier/Kamal Kishore Mukesh Kumar - goods purchased had been duly reflected in the stock registers maintained by the assessee and the same were sold by the assessee to two parties by making due reduction in the stock register to the extent of sales. Hence the purchases and corresponding sales were duly matched by the assessee in the instant case. Sales made by the assessee is not doubted by the revenue and naturally the purchase made by the assessee cannot be doubted. The purchase made by the assessee from the said supplier had been duly reflected in the books of accounts and payments made for the same through account payee cheques out of disclosed sources of income. Also ledger account of Supplier as appearing in the books of the assessee company for the period 1.4.2011 to 31.3.2012, wherein it could be seen that total purchases made during the year by the assessee from the said supplier was Rs 2,62,54,071.60 , out of this, the ld. AO is disputing the purchase made from this very same supplier only for the sum of Rs 2,16,83,820/-. How can the said supplier be genuine for the remaining supplies and be ingenuine only for the disputed supplies of Rs 2,16,83,820/-. Hence the entire case of the revenue falls flat - Decided in favour of assessee.

Summary

Issues Involved:
1. Whether the CIT(A) was justified in deleting the disallowance made on account of alleged bogus purchases amounting to Rs 2,16,83,820/-.

Summary:

Issue 1: Justification of CIT(A) in Deleting Disallowance of Alleged Bogus Purchases

The appeal concerns the deletion of disallowance of Rs 2,16,83,820/- made by the Assessing Officer (AO) on account of alleged bogus purchases. The assessee, engaged in the import and wholesale of items like pulses and edible oils, was subjected to a search and seizure action. The AO questioned the genuineness of purchases from M/s Kamal Kishore Mukesh Kumar, citing a statement from Kamal Kishore admitting his firm provided only accommodation bills.

The assessee countered by providing detailed records, including stock registers, purchase bills, and confirmation of accounts, showing that the purchases were genuine and payments were made through account payee cheques. The assessee also demonstrated that the goods were sold in the normal course of business, with corresponding sales recorded in the books.

The CIT(A) observed that the AO's findings were based on a preliminary investigation report without substantial evidence. The CIT(A) noted that the assessee maintained comprehensive records and that the purchases were duly recorded and sold. The CIT(A) also highlighted that the AO did not provide the statement of Kamal Kishore to the assessee for rebuttal or cross-examination, violating principles of natural justice.

The Tribunal upheld the CIT(A)'s decision, noting that the assessee had discharged its burden of proof by providing necessary documentation. The Tribunal found that the purchases were reflected in the stock registers and matched with corresponding sales. The Tribunal also pointed out the inconsistency in the AO's approach, as only a portion of the purchases from the same supplier was disputed.

The Tribunal concluded that the revenue failed to provide cogent evidence to counter the CIT(A)'s findings and dismissed the appeal, affirming the deletion of the disallowance.

Conclusion:
The appeal of the revenue was dismissed, and the order of the CIT(A) granting relief to the assessee was upheld.