2022 (3) TMI 1043 - HC - Income Tax

Unexplained expenditure u/s 69C - ITAT has erred in upholding the decision passed by CIT(A), whereby it has deleted the additionHELD THAT - This Court finds that in the questions of law framed by appellant the emphasis is on the factum that the entities from whom the purchases had been shown to have been made by the respondent-assessee were bogus and non-existent, on the ground that such entities were not found existing during the search and post search proceeding. Both, CIT(A) as well as ITAT, have given concurrent findings of fact that purchases made by the respondent-assessee were genuine and the Assessing Officer had neither doubted the receipt of goods by the appellant nor the payment made for the same through banking channels. Since the assessee has shown the purchases and the quantification is based on the evidences/documents placed on record. CIT(A) was right in deleting the protective assessment as in both the years, the purchases cannot be held unexplained u/s 69C in light of the observations made hereinabove para while giving finding to A.Y. 2011-12 by us. This Court is of the opinion that no question of law arises for consideration in the present appeal and the same is dismissed.

Summary

Issues:
Challenge to ITAT order upholding CIT(A)'s decision on unexplained expenditure addition for Assessment Year 2011-12.

Analysis:
The appellant challenged the ITAT's decision upholding the CIT(A)'s deletion of the addition made by the Assessing Officer as 'unexplained expenditure' for the Assessment Year 2011-12. The appellant argued that the ITAT erred by disregarding the system of accounting and applicable accounting standards. The main contention was the genuineness of purchases made by the respondent-assessee from entities alleged to be bogus and non-existent. Both the CIT(A) and ITAT found the purchases to be genuine, with goods delivered and payments made through banking channels. The absence of sellers at given addresses was not sufficient to disallow the purchases as unexplained under section 69C. The search operation in the same financial year as the purchases did not yield evidence of unaccounted assets or cash payments, leading to the conclusion that the addition made by the Assessing Officer was based on conjectures and surmises.

For the Assessment Year 2012-13, the appellant showed purchases based on evidence and documents, leading to the deletion of protective assessment by the CIT(A) as purchases in both years could not be deemed unexplained under section 69C. The ITAT upheld the CIT(A)'s decision, emphasizing that the purchases were genuine and reflected in subsequent years, with no incriminating documents found during the search. Consequently, the Revenue's appeal for the Assessment Year 2012-13 was also dismissed. The High Court, considering the concurrent findings of fact, concluded that no question of law arose for consideration in the appeal and thus dismissed the appeal.

In summary, the High Court upheld the decisions of the CIT(A) and ITAT, finding the purchases to be genuine and made through proper channels, dismissing the Revenue's appeals for both Assessment Years 2011-12 and 2012-13 based on the lack of legal issues warranting consideration.