2019 (3) TMI 808 - AT - Income Tax

Bogus purchases - addition made on the basis of alleged concession recorded by the Chartered Accountant - no hawala purchases - pressure on CA of the assessee to agree for the addition and was not given time to consult the assessee before the addition -sworn affidavit of the CA - HELD THAT - A glaring fact that has been brought to our notice is that the assessment order was passed on the very same day after the Chartered Accountant of assessee filed letter agreeing for the addition. The probability of averments in the affidavit being true is quite high in the light of fact that the assessment was completed by Assessing Officer on the same date when the Chartered Accountant of the assessee agreed for addition. The assessee has furnished confirmation letters from the suppliers of material and also furnished various details of the suppliers such as name, address, PAN, etc. of the suppliers to prove the identity and the genuineness of the suppliers. The assessee in an endeavor to prove the genuineness of the transactions and the suppliers has furnished the copies of return of income of the suppliers before the Commissioner of Income Tax (Appeals). As has been observed earlier it is not the case of Revenue that the assessee has made purchases from hawala operators. No infirmity in the order of CIT(Appeals) in deleting the addition - Decided against revenue Addition being differences in liability shown in the case of M/s. Kirti Construction Company - difference between the accounts maintained by the assessee and M/s. Kirti Construction Company - difference was mainly on account of security deposits and wrong entry passed by assessee in respect of VAT payments in the Financial Year 2006-07 - CIT (Appeals) deleted the addition - HELD THAT - DR has failed to controvert the findings of Commissioner of Income Tax (Appeals) on the issue. In the absence of any contrary material brought to our notice we find no reason to interfere with the well reasoned findings of Commissioner of Income Tax (Appeals) in deleting the addition - Decided against revenue

Summary

Issues Involved:
- Addition of bogus purchases
- Addition of differences in liability in the case of M/s. Kirti Construction Company

Analysis:

Issue 1: Addition of Bogus Purchases
The appeal by the Revenue challenged the deletion of an addition of ?77,34,539 made on account of alleged bogus purchases during the assessment year 2011-12. The Assessing Officer based the addition on the concession recorded by the Chartered Accountant of the assessee due to the failure of the assessee to provide sufficient details of purchase and transportation of material. The Revenue contended that once the Chartered Accountant agreed to the addition, the assessee could not challenge it before the appellate forum. However, the assessee argued that relevant documents were provided, including purchase bills, supplier details, payment details, and confirmations from suppliers. The Commissioner of Income Tax (Appeals) deleted the addition after considering all documents and the affidavit from the Chartered Accountant. The Tribunal upheld the Commissioner's decision, noting the lack of evidence showing purchases from hawala dealers and the genuineness of suppliers.

Issue 2: Addition of Differences in Liability
The second ground of appeal concerned the deletion of an addition of ?11,39,194 due to differences in liability with M/s. Kirti Construction Company. The Assessing Officer alleged that the assessee created a bogus liability, but the assessee provided a reconciliation statement explaining the differences, mainly related to security deposits and VAT entries. The Commissioner of Income Tax (Appeals) accepted the reconciliation statement and deleted the addition. The Tribunal found no reason to interfere with the Commissioner's decision, as the Revenue failed to provide any contrary material to challenge the findings. Therefore, the Tribunal dismissed the appeal by the Revenue, upholding the impugned order.

The remaining grounds of appeal, which were argumentative and supportive of the first two grounds, were also dismissed as the primary issues were resolved in favor of the assessee. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal on the 13th day of March, 2019.