2024 (8) TMI 274 - AT - Income Tax

Bogus purchases - HELD THAT - The assessee has made the purchases from M/s. Kasturi Commodities Pvt. Ltd, therefore, the examination of the creditworthiness of M/s. Kasturi Commodities Pvt. Ltd is of no relevance. On the other hand, the assessee has furnished sufficient documents to prove its financial creditworthiness which has not been disputed by the Revenue. The present case, apart from placing reliance on the information received from the Investigation Wing, the Revenue has not brought any material on record, not even an iota of aforesaid information, to disprove the genuineness of the transaction between the assessee and M/s. Kasturi Commodities Pvt. Ltd., which is continuing from the preceding year. Therefore, no infirmity in the impugned order passed by the CIT(A) deleting the addition made by the AO. As a result, the sole ground raised by the Revenue is dismissed.

Summary

Issues:
Challenge to deletion of addition on account of bogus purchases made by the assessee.

Analysis:
The Revenue challenged an order passed by the Commissioner of Income Tax (Appeals) regarding the deletion of an addition made on account of alleged bogus purchases by the assessee for the assessment year 2016-17. The Revenue contended that the assessee failed to prove the genuineness and creditworthiness of purchases from M/s. Kasturi Commodities Pvt. Ltd. The brief facts revealed that the assessee, engaged in trading and distribution of Iron and Steel Products, received funds from M/s. Kasturi Commodities Pvt. Ltd. The Assessing Officer held that the transactions were sham, leading to an addition of Rs. 29,98,22,000 to inflate costs and reduce profits.

The Commissioner of Income Tax (Appeals) allowed the appeal filed by the assessee, deleting the addition. The Commissioner noted that the Assessing Officer did not refute the documents submitted by the assessee and that M/s. Kasturi Commodities Pvt. Ltd had sufficient creditworthiness. The Revenue disputed only the purchases from M/s. Kasturi Commodities Pvt. Ltd as bogus, without contesting other sales made by the assessee. During the hearing, the Departmental Representative emphasized the lack of documents proving purchases. In contrast, the Authorized Representative highlighted the financial strength of M/s. Kasturi Commodities Pvt. Ltd through its financial statements and ledger confirmation.

Upon reviewing the submissions and records, it was revealed that the assessee had regular transactions with M/s. Kasturi Commodities Pvt. Ltd for trading in Iron and Steel. The Tribunal agreed with the Commissioner that the Assessing Officer failed to disprove the genuineness of the transactions. The Revenue did not provide any material to challenge the creditworthiness of M/s. Kasturi Commodities Pvt. Ltd, and the documents submitted by the assessee remained unchallenged. As a result, the Tribunal upheld the decision of the Commissioner, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the addition related to alleged bogus purchases by the assessee for the assessment year 2016-17.