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2022 (11) TMI 876 - AT - Income TaxBogus purchases - Certain parties did not respond to the enquiries made by the A.O. u/s 133(6) - HELD THAT - We find that in respect of the purchases made and to prove the genuineness of the purchases, assessee had placed on record copy of the bill which shows the bill number, vehicle number through which it was transported and it also bears the stamp of the check post. The assessee has also placed on record copy of the Certificate issued by the Commercial Taxes Department, Bhiwadi, Government of Rajasthan which evidences the purchases made by the assessee company. The conclusion of the A.O. that the Certificate issued by Commercial Tax Department evidencing the purchase of goods by the assessee is not based on any cogent evidence. No enquiry has been made by the A.O. to justify his conclusion that the bills are not genuine. When the bills were available with the A.O, he could have made necessary enquiries. We, therefore, find that the disallowance of purchases being not genuine as it is an accommodation entry, is not supported by any cogent reasons and is more in the nature of surmises and conjectures. We find the Coordinate Bench of Delhi Tribunal in the case of M/s. Varun Beverages Ltd., New Delhi 2019 (9) TMI 1673 - ITAT DELHI after relying on the decision of GP International Ltd. 2009 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT held that mere fact that certain parties did not respond to the enquiries made by the A.O. under section 133(6) would not by itself be sufficient to warrant addition of expenses in connection with which the enquiries were made under section 133(6). - Considering all we are of the view that A.O. was not justified in making the impugned addition. We, therefore, direct the A.O. to delete the addition made by him. Appeal of assessee allowed.
Issues:
Validity of assessment order under section 143(3) read with section 147 of IT Act, 1961 Genuineness of alleged accommodation entries from specific trading companies Applicability of notices issued under section 148 to the appellant company and an amalgamating company Validity of assessment order based on satisfaction of conditions for assuming jurisdiction under section 147 Addition of amounts on account of alleged accommodation entries from specific trading companies Validity of assessment order under section 143(3) read with section 147 of IT Act, 1961: The appeal was filed against the order of the Ld. CIT(A) dated 01.12.2016 related to the A.Y. 2006-07. The original return of income was filed by the assessee company, engaged in manufacturing and trading, declaring total income. The assessment was framed under section 143(3) determining the total income. Subsequently, a notice under section 148 was issued, and after scrutiny, the assessment was completed under section 143(3) read with section 147, determining the total income. The Ld. CIT(A) granted partial relief to the assessee, leading to the appeal before the Tribunal challenging the order of the Ld. CIT(A) on various grounds related to the validity of the assessment order. Genuineness of alleged accommodation entries from specific trading companies: The A.O. noted alleged purchases made by the assessee company from specific trading companies, which were considered not genuine, resulting in additions to the total income. The assessee company disputed these additions, presenting evidence such as bills, bank statements, and certificates from the Commercial Taxes Department to prove the genuineness of the purchases. The Tribunal found that the A.O. did not provide sufficient evidence to support the disallowance of the purchases as bogus, relying on surmises and conjectures. The Tribunal also considered the turnover of the assessee company and the lack of substantial gain from entering into such alleged bogus purchases, ultimately directing the A.O. to delete the addition made. Applicability of notices issued under section 148 to the appellant company and an amalgamating company: The appellant challenged the validity of the assessment order based on the issuance of notices under section 148 to both the appellant company and an amalgamating company. The Tribunal did not adjudicate on these grounds as they were considered academic, given the decision on the merits of the issue pertaining to the addition of disallowed purchases in favor of the assessee company. Validity of assessment order based on satisfaction of conditions for assuming jurisdiction under section 147: The appellant raised multiple grounds challenging the validity of the assessment order under section 147, citing issues with notices issued, lack of disclosure of material facts, and the basis for reopening the assessment. The Tribunal did not adjudicate on these grounds as they were considered academic, given the decision on the merits of the issue related to the addition of disallowed purchases. Addition of amounts on account of alleged accommodation entries from specific trading companies: The Tribunal allowed the appeal of the assessee, directing the A.O. to delete the addition made on account of alleged accommodation entries from specific trading companies, as the disallowance was not supported by sufficient evidence and was deemed unjustified.
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