2019 (8) TMI 1329 - AT - Income Tax

Rectification u/s 254 - bogus purchases - HELD THAT - We find that the Tribunal has deliberated at length on the issue involved in these appeals, in respect of additions made by the AO towards alleged bogus purchases from certain hawala dealers/suspicious dealers, in light of facts brought out by the AO, during assessment proceedings and also arguments advanced by the assessee. Tribunal had given categorical finding, in respect of purchases claims to have made from certain parties, in light of admission of the assessee counsel before the AO and came to the conclusion that when, the assessee has surrendered the income before the AO on being confronted with the result of enquiries conducted, during the course of assessment proceedings, which clearly established the fact that the purchases from the above parties are bogus and this fact was further, supported by the report of investigation wing, which is once again based on information received from sales tax department. In the light of above observations of the Tribunal, if we examine the contents of miscellaneous application filed by the assessee, we find that the assessee has failed to make out a case of prima-facie mistake apparent on record from the order of the Tribunal, which could be rectified u/s 254(2) - miscellaneous application filed by the assessee for AY 2009-10, 2010-11 and 2011-12 are dismissed.

Summary

Issues:
Challenging consolidated order on alleged bogus purchases for AY 2009-10 to 2011-12.

Analysis:
The judgment pertains to three miscellaneous applications filed by the assessee under section 254(2) of the Income Tax Act, 1961, against a consolidated order issued by the Tribunal for assessment years 2009-10 to 2011-12. The primary contention revolved around the disallowance of alleged bogus purchases amounting to ?4,39,887 for AY 2009-10. The assessee contested the 100% disallowance, emphasizing the submission of documentary evidence and withdrawal of the offer of surrender without penalty. The appellant highlighted the submission of a paper book with supporting evidence before the ITAT, indicating a lack of opportunity to present arguments on the merit of the case. The appellant also pointed out factual inaccuracies in the Tribunal's order regarding the submission of purchase bills and the withdrawal of the surrender offer. Additionally, the appellant relied on a High Court decision and other bench rulings to support the contention that additions in bogus purchase cases should be limited to the gross profit. The appellant requested the Tribunal to recall the order and provide a fair hearing.

The Tribunal, comprising Shri Mahavir Singh and Shri G Manjunatha, thoroughly examined the arguments presented by both parties. The Tribunal noted the AO's additions towards alleged bogus purchases from certain dealers and the assessee's surrender of income during assessment proceedings. The Tribunal emphasized the admission by the assessee's counsel and the investigation wing's report supporting the conclusion that the purchases were bogus. Despite the appellant's contentions, the Tribunal found no prima facie mistake apparent on record that warranted rectification under section 254(2) of the IT Act, 1961. Consequently, the Tribunal dismissed the miscellaneous applications for AY 2009-10, 2010-11, and 2011-12, upholding the original consolidated order. The judgment was pronounced on 28.08.2019, and all miscellaneous applications were dismissed.