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2024 (10) TMI 1477 - AT - Income TaxBogus purchases - information received from the Sales Tax Department, Maharashtra - CIT(A) deleted part addition - HELD THAT - As regards the submission of the DR that the amount continues to represent unsubstantiated and non-genuine purchases which remain unexplained and unverifiable, it is pertinent to note that the assessee furnished detailed documents, as noted in the foregoing paragraph and also taken note of by CIT(A) of its order, which as evident from the record were neither been controverted by the AO nor stated to be false and bogus. The fact that the assessee failed to furnish the information in the format required by the AO cannot be the sole basis for treating the purchases as bogus. We agree with the findings of the CIT(A) in deleting the addition of the balance amount. As a result, the impugned order on the issue under consideration in the present appeal before us is upheld and the ground raised by the Revenue is dismissed.
Issues Involved:
1. Deletion of disallowance of purchases from non-existent vendors. 2. Validity of reassessment proceedings under section 147 of the Income Tax Act. 3. Adequacy of evidence provided by the assessee to substantiate purchases. 4. Prevention of double taxation for the same amount in different assessment years. Issue-wise Detailed Analysis: 1. Deletion of Disallowance of Purchases from Non-existent Vendors: The Revenue challenged the decision of the CIT(A) to delete the disallowance of Rs. 4,68,796 in purchases from non-existent vendors. The CIT(A) had previously enhanced the disallowance to Rs. 2,48,49,832 based on information from the Sales Tax Department, Maharashtra, which indicated that the purchases were from blacklisted parties. However, the Tribunal restored the issue for de novo adjudication, allowing the assessee to provide quantitative details of purchases and consumption. The CIT(A) found that the format requested by the AO for these details was unsuitable for a construction contractor and agreed with the assessee's submissions, leading to the deletion of the disallowance. 2. Validity of Reassessment Proceedings under Section 147: The Tribunal upheld the validity of the reassessment proceedings initiated by the AO under section 147 of the Act. The AO had sufficient tangible material indicating that the assessee availed accommodation entries through bogus purchase bills. The Tribunal noted that the reopening of assessment was valid as the AO had reason to believe that income chargeable to tax had escaped assessment. 3. Adequacy of Evidence Provided by the Assessee to Substantiate Purchases: In the second round of assessment, the assessee provided various documents, including audited accounts, purchase ledgers, and bank statements, to substantiate the purchases. The AO, however, required the information in a specific format, which the CIT(A) deemed unsuitable for a construction contractor. The CIT(A) found that the documents provided by the assessee were not controverted by the AO and were neither false nor bogus, leading to the conclusion that the disallowance of Rs. 4,68,796 was not justified. 4. Prevention of Double Taxation for the Same Amount in Different Assessment Years: The CIT(A) directed the deletion of Rs. 2,43,81,036 from the disallowed amount to prevent double taxation, as the same amount was already added to the income for the assessment year 2012-13. The Revenue's appeal focused on the deletion of the remaining Rs. 4,68,796, arguing it was not included as a liability in the next assessment year. However, the Tribunal found no merit in this argument, as the deletion was based on the adequacy of the evidence provided by the assessee. In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 4,68,796, dismissing the Revenue's appeal. The Tribunal emphasized that the failure to provide information in the AO's required format should not be the sole basis for treating the purchases as bogus. The appeal by the Revenue was dismissed, and the order was pronounced in open court on 21/10/2024.
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