2020 (10) TMI 191 - AT - Income Tax

Bogus purchases - additions were made on the findings of survey action conducted by the Income Tax Investigation Wing on Sh. Sanjay Chowdhary and his concerns - CIT-A deleted the addition - HELD THAT - Once Revenue has accepted the transaction with Sh. Sanjay Chauhary to be genuine in group case of the assessee, the same cannot be agitated or doubted in the assessee s case and, therefore, it is our considered opinion that the learned CIT (A) has rightly deleted the addition by placing reliance on the assessment order in the case of group concern namely M/s Khanna Jewellers Pvt. Ltd. On going through the order of lower authorities, an important fact that emerges is that a similar allegation was also made in the case of the assessee, among other allegations, in the earlier assessment years when it had made purchase from M/s Nazar Impex (P) Ltd. (a concern said to have been controlled by Shri Sanjay Chaudhary) and the assessee had approached ITSC for settlement of its case and the ITSC has held the said transactions to be genuine. While upholding the order passed by the learned CIT (A), we rely on the judgment of the Hon ble Jurisdictional High Court in the case of CIT vs. M/s Surendra Buildtech Pvt. Ltd 2012 (5) TMI 629 - DELHI HIGH COURT wherein the Hon ble Court held that where the Revenue failed to rebut the findings recorded by the learned CIT (A) by bringing any contrary material on record, the finding recorded by the lower authority based on documentary evidences needs to be upheld. - Decided against revenue.

Summary

Issues:

1. Addition on account of bogus purchases
2. Reliance on retraction of statement by Shri Sanjay Chaudhary
3. Comparison with similar cases
4. Evidence of genuine transactions

Analysis:

Issue 1: Addition on account of bogus purchases
The department challenged the deletion of an addition of &8377; 3,12,42,835/- on account of bogus purchases made by the assessee from specific concerns. The AO relied on a survey conducted by the DGIT (Inv) on Shri Sanjay Chaudhary and his concerns. The department argued that Shri Chaudhary admitted to providing accommodation entries and that the retraction of his statement was not filed before the Income Tax Investigation Wing. However, the AR contended that similar allegations in previous years were resolved in favor of the assessee by the ITSC. The CIT (A) deleted the addition based on positive documentary evidence provided by the assessee, which the department failed to rebut with concrete evidence.

Issue 2: Reliance on retraction of statement by Shri Sanjay Chaudhary
The Tribunal noted that Shri Chaudhary retracted his earlier statement before the AO and backed it with an affidavit, which remained uncontroverted. The basis of the addition made by the Revenue Authorities did not survive due to this retraction. The CIT (A) rightly deleted the addition by relying on this retraction and the lack of contrary evidence from the department.

Issue 3: Comparison with similar cases
The Tribunal considered a similar case involving M/s Khanna Jewellers Pvt. Ltd, where the department accepted Shri Chaudhary's retraction. The CIT (A) noted this fact while providing relief in the current case. The Tribunal held that once the Revenue accepted the transactions as genuine in a group case, the same could not be doubted in the assessee's case, leading to the deletion of the addition.

Issue 4: Evidence of genuine transactions
The Tribunal highlighted that in earlier assessment years, similar allegations were made against the assessee, but the ITSC found the transactions to be genuine based on documentary evidence provided by the assessee. The Tribunal upheld the CIT (A)'s order based on this evidence and the lack of contradictory material from the department. The Tribunal also cited a judgment by the Hon'ble Jurisdictional High Court emphasizing the need for the Revenue to rebut findings with contrary evidence.

In conclusion, the Tribunal dismissed the department's appeal, upholding the CIT (A)'s decision based on the documentary evidence provided by the assessee and the lack of rebuttal from the department.