2022 (5) TMI 223 - AT - Income Tax

Bogus purchases - HELD THAT - AO has raised categorical point that the suppliers of the goods M/s Neelanchal Sales Suppliers Pvt. Ltd. did not have any godown. We find that in all the invoices, delivery is shown from La Trendz Fabrica Private Ltd., Kolhapur to Banbury Export at Tarapur. Thus, the goods were delivered to the assessee from the party who sold goods to Neelanchal Sales Suppliers Pvt Ltd. Therefore, not having any godown facility by M/s Neelanchal Sales Suppliers Pvt. Ltd. cannot make sales to assessee bogus . Further, during the course of hearing before us, the learned Departmental Representative could not produce any other evidence to show that purchases are not genuine. - Decided against revenue.

Summary

Issues Involved:
Appeal against deletion of addition of ?5,10,43,140 made on account of bogus purchases from M/s Neelanchal Sales & Suppliers Pvt. Ltd.

Detailed Analysis:

Issue 1: Addition of Bogus Purchases
- The appeal was filed by the Dy. Commissioner of income-tax against the deletion of the addition made by the Assessing Officer on account of alleged bogus purchases.
- The Assessing Officer found discrepancies in the purchases made by the assessee from M/s Neelanchal Sales & Suppliers Pvt. Ltd., suspecting them to be accommodation entries.
- The Assessing Officer disallowed the total purchase amount of ?5,10,43,140, leading to an increased total income assessment.
- The CIT(A) deleted the addition based on documentary evidence provided by the assessee, including invoices, delivery challans, transportation bills, and payment proofs.
- The CIT(A) highlighted that the evidence presented by the assessee was not properly examined by the Assessing Officer, who relied on conjectures rather than concrete proof.
- The CIT(A) emphasized that the purchases were supported by genuine documentation and that no evidence was found during the search to prove the purchases were non-genuine.
- The CIT(A) pointed out that the Assessing Officer's addition was based on guesswork and surmises, lacking substantial evidence to prove the purchases were bogus.

Issue 2: Lack of Godown Facility
- The Departmental Representative argued that M/s Neelanchal Sales & Suppliers Pvt. Ltd. did not have a godown for fabric storage, questioning the legitimacy of the purchases.
- The Tribunal noted that the goods were delivered directly from La Trendz Fabrica Private Ltd. to the assessee, bypassing the need for M/s Neelanchal Sales & Suppliers Pvt. Ltd. to have a godown.
- The lack of a godown facility by the supplier did not automatically render the sales to the assessee as bogus, as the goods were physically delivered from the original seller to the assessee.

Conclusion:
- The Tribunal upheld the CIT(A)'s decision to delete the addition, emphasizing the authenticity of the purchases supported by proper documentation.
- The lack of concrete evidence to prove the purchases were bogus and the direct delivery of goods from the original seller to the assessee led to the dismissal of the Assessing Officer's appeal.
- The Tribunal confirmed the CIT(A)'s order, dismissing the appeal of the Assessing Officer.

This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key arguments and decisions made by the authorities involved.