2020 (10) TMI 192 - AT - Income Tax

Bogus purchases - purchases were made from a Firm whose registration was cancelled - HELD THAT - HELD THAT - As decided in VIJAY KUMAR GOEL 2015 (11) TMI 1821 - ALLAHABAD HIGH COURT sales made by the assessee had been accepted by the assessing officer. We are of the opinion that the once the sales have been accepted, it necessary falls that the assessee had also made purchases and it cannot, therefore, be held that bogus purchases were made. Consequently, the mere fact that purchases were made from a Firm whose registration was cancelled does not mean that bogus purchase were made by the assessee or that the Firm was a non-existing Firm. - Decided in favour of assessee.

Summary

Issues Involved:
Appeal against deletion of addition for payments towards bogus purchase for assessment year 2009-10.

Detailed Analysis:

Issue 1: Deletion of Addition for Bogus Purchase
- The Revenue appealed against the deletion of additions totaling &8377; 7,05,00,000 and &8377; 7,03,99,160 made by the AO for payments towards bogus purchase.
- The CIT(A) deleted the additions based on the decision of ITAT in the case of Vijay Kumar Goel, upheld by the Allahabad High Court, where similar facts were considered.
- The ITAT found that the AO did not conduct an independent inquiry to establish the alleged bogus purchases, and the CIT(A) noted discrepancies in the AO's approach, lack of cross-examination opportunity, and acceptance of the assessee's sales and accounting methods.
- The High Court further upheld the CIT(A)'s decision, emphasizing that once sales were accepted, it was logical to assume genuine purchases were made, even if from a firm with canceled registration.
- The ITAT and High Court decisions were cited to support the deletion of the additions, as the issue had already been conclusively settled in a similar case.

Conclusion:
- The ITAT, following the High Court's findings, dismissed the Revenue's appeals as the issue was already decided in favor of the assessee.
- The Cross Objections by the Assessee were also dismissed as not pressed during the hearing.
- The decision to delete the addition for bogus purchases was based on the lack of concrete evidence and discrepancies in the AO's approach, as highlighted in the previous judicial decisions cited in the case.

This detailed analysis outlines the key aspects of the judgment, focusing on the issues raised, the arguments presented, and the legal basis for the decisions made by the ITAT Delhi.