2017 (10) TMI 165 - AT - Income Tax

Bogus purchases - addition at 12.5% of the purchases made from M/s. Foram Traders/Apple Industries and M/s. VSK Enterprises - assessments were reopened after an enquiry conducted u/s. 131 - Held that - The assessments were completed on 11.03.2015 by the Assessing Officer. Obviously there is no reference of these details provided by the dealers in the Assessment Orders. These confirmations also appear to have been filed before the Ld.CIT(A). The evidences on record have not been appropriately appreciated by the learned Assessing Officer. The confirmations from parties were not before him at the time of completion of assessments. It is the finding of the learned Assessing Officer that assessee could not produce the purchase bills, transport receipts, details of Octroi Payment, details of goods receipt note and details of storage of goods. Assessee is a whole sale trader of paper and iron and it is not a manufacturer. The matter has to be examined thoroughly by the Assessing Officer afresh in the light of the confirmations filed by the dealers supporting the sales made by them to the assessee. Thus, this matter is restored to the file of the Assessing Officer for denovo adjudication in accordance with law after obtaining necessary information from the assessee. The assessee shall provide all the details including the confirmations from the dealers, stock register, purchase register etc., in support of its contentions and to prove the genuineness of the purchases from these two dealers. Appeals of the assessee are partly allowed for statistical purposes.

Summary

Issues:
1. Reopening of assessments u/s.147 without providing necessary information to the assessee.
2. Sustaining additions made by the Assessing Officer towards bogus purchases from specific dealers.

Issue 1 - Reopening of assessments u/s.147:
The assessee challenged the reopening of assessments u/s.147, contending that it was done solely based on information from the Sales Tax Department without providing essential details. The Assessing Officer reopened the assessments after an inquiry under u/s.131 of the Act and obtaining information that the dealers provided accommodation bills without delivering goods. The ITAT upheld the reopening, citing the decision of the Delhi High Court, stating that the appellant failed to disclose primary facts, justifying the Assessing Officer's actions.

Issue 2 - Sustaining additions towards bogus purchases:
The Assessing Officer estimated profit from purchases made from specific dealers at 12.5% due to lack of evidence proving the genuineness of the transactions. The assessee provided ledger accounts, invoices, delivery challans, and affidavits from dealers, but the Assessing Officer disbelieved the affidavits. The ITAT found that delivery challans supported purchases, and dealers confirmed sales through letters and affidavits sent to the Assessing Officer. However, these details were not considered during assessment completion. The ITAT concluded that the matter needed thorough examination, directing the Assessing Officer to reevaluate the case considering the confirmations from dealers and all relevant supporting documents provided by the assessee.

In conclusion, the ITAT partly allowed the assessee's appeals for statistical purposes, emphasizing the importance of a comprehensive review of all evidence and confirmations before making additions based on alleged bogus purchases.