2024 (11) TMI 1257 - AT - Income Tax

Additions u/s 69C - Bogus transaction - AO concluded that the bills are nothing but a mode to create a paper trail just to camouflage the actual transaction - HELD THAT - Transporter not only provided the consignment no. but also provided the bill no. as well as the quantity of the consignment. We find that apart from making a general allegation that the bills look non-genuine since most of them are the same, the lower authorities did not point out any infirmity in the detailed documents, as noted above, submitted by the assessee during the assessment proceedings. Having carefully perused all the details filed by the assessee during the assessment proceedings, which form part of the record, we are of the considered view that the assessee has duly explained the nature of transactions of purchase made from M/s Mint Agro Tech Pvt. Ltd. during the year under consideration. Accordingly, we are of the considered view that the addition made by the AO and upheld by the learned CIT(A) is unsustainable, and thus the same is directed to be deleted. As a result, the impugned order on this issue is set aside and ground no.2 raised by the assessee is allowed.

Issues Involved:
1. Legality of Reopening/Reassessment Proceedings under Section 147 of the Income Tax Act, 1961.
2. Justification of Additions under Section 69C of the Income Tax Act, 1961.
3. Alleged Violation of Principles of Natural Justice and Denial of Opportunity to be Heard.
4. Discrepancies in the Amounts Highlighted in the Assessment Order.

Issue-wise Detailed Analysis:

1. Legality of Reopening/Reassessment Proceedings under Section 147:

The assessee challenged the reopening of the assessment under Section 147 of the Income Tax Act, asserting that it was based on incorrect facts and lacked independent application of mind by the Assessing Officer (AO). The reassessment was initiated based on information from the DDIT (Inv.)-5(1), Delhi, regarding unexplained transactions with M/s Mint Agro Tech Pvt. Ltd. The assessee argued that the transactions were duly recorded in their books, and the reopening was based on a "change of opinion" without new tangible material. The Tribunal noted that the AO followed due procedure by recording reasons and obtaining necessary approvals before issuing the notice under Section 148. However, since the Tribunal found the addition under Section 69C unsustainable, it left the issue of reopening open without a definitive ruling.

2. Justification of Additions under Section 69C:

The AO added INR 5,30,00,000 under Section 69C, considering the transactions with M/s Mint Agro Tech Pvt. Ltd. as non-genuine. The AO found the bills submitted by the assessee to be repetitive and lacking specific details, suggesting they were created to inflate expenses artificially. The assessee provided detailed documentation, including purchase invoices, transport receipts, and confirmations from the supplier and transporter, to substantiate the genuineness of the transactions. The Tribunal, upon reviewing the detailed evidence provided by the assessee, concluded that the transactions were genuine and the addition under Section 69C was unsustainable. Consequently, it directed the deletion of the addition and allowed the appeal on this ground.

3. Alleged Violation of Principles of Natural Justice:

The assessee contended that the CIT(A) and AO violated the principles of natural justice by not providing a reasonable opportunity to present their case and failing to allow cross-examination of statements recorded against them. The Tribunal found that multiple notices were issued, and the assessee had opportunities to respond. The AO considered the assessee's submissions, and the records did not support the claim of inadequate opportunity. However, since the primary addition under Section 69C was deleted, this issue required no separate adjudication.

4. Discrepancies in the Amounts Highlighted:

The assessee pointed out discrepancies in the amounts mentioned in the assessment order and the reasons for reopening. The assessment order highlighted transactions aggregating INR 3,50,00,000, whereas the addition made was INR 5,30,00,000. The Tribunal did not specifically address this issue, as the main addition under Section 69C was deleted, rendering this point moot.

Conclusion:

The Tribunal allowed the appeal by the assessee, directing the deletion of the addition under Section 69C due to the genuineness of the transactions being satisfactorily explained. The issue of reopening the assessment was left open, and other grounds related to natural justice and discrepancies were not separately adjudicated due to the resolution of the primary issue.

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