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2024 Supreme(Online)(ITAT) 1704
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Annapurna Gupta, ACJ, T.R. Senthil Kumar, J
VINAL COAL PRIVATE LIMITED AHMEDABAD – Appellant
Versus
THE DY. COMMISSIONER OF INCOME TAX CIRCLE-4(1)(2) AHMEDABAD – Respondent
Income Tax Appeal No. 896/Ahd/2023
For the Appellants/Petitioners: Shri Sunil Maloo, CA
For the Respondents: Ms. Saumya Pandey Jain, Sr. DR
The tribunal ruled that the addition of profits from purported bogus purchases was unjustified as the assessee sufficiently proved transaction genuineness, rendering the incriminating evidence relied on by the Revenue unreliable.
Headnote:(A) Income Tax Act, 1961 - Section 250 - Addition of profit element embedded in bogus purchases - Assessee engaged in trading Steam Coal, was held liable for unsubstantiated purchases amounting to Rs.2,47,76,349/- with an addition of Rs.25,91,606/- as gross profit - Assessee discharged onus of proving genuineness via evidences including sales contracts and vendor confirmations - CIT(A) upheld AO’s addition on basis of incriminating material which was deemed unreliable - Court found no basis for treating purchases as bogus, ruling addition contradicted evidence presented. (Paras 5-15)
(B) Onus of Proof - The assessee successfully established genuine transactions with evidence; reliance on unverified material by AO was unwarranted. (Paras 10-14)
(C) Credibility of Evidence - Department failed to substantiate claims of bogus nature of purchases, thus the addition deemed unsustainable. (Paras 10-15)
| Table of Content |
|---|
| 1. introduction of appeal details and grounds raised. (Para 1 , 2) |
| 2. arguments from the appellant and respondent regarding evidences. (Para 3 , 4) |
| 3. court's observation on evidences provided by the appellant. (Para 5 , 7) |
| 4. findings regarding the genuineness of transactions. (Para 10) |
| 5. final decision regarding the addition made to the income. (Para 12 , 15) |
आदेश/ORDER
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER:
The present appeal has been filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 22.09.2023 passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as "the Act" for short) for the Assessment Year (AY) 2017-18.
2. At the outset itself, it was stated that the solitary issue in the present appeal pertains to addition made to the income of the assessee of profit element embedded in the purchases made by the assessee held to be bogus. The quantum of purchases made by the assessee so treated as bogus amounts to Rs.2,47,76,349/- and 10.46% of the same (GP average of last three years starting from AY 2017-18) was estimated as the profit element embedded in it resulting in addition being made to the income of the assessee amounting to Rs.25,91,606/-.
2.1 The grounds raised by the assessee in this regard before us are as under:-
“Improper Confirmation of Additions Despite Acceptance of Books of Accounts: The learned CIT(A) has erroneously upheld an addition of INR 25,91,606/- equating to 10% of alleged bogus purchases amounting to INR 2,47,76,349/- notwithstanding the formal acceptance of the Assessee's books of accounts under Section 145 (3) of the Income Tax Act, 1961 .
Confirmation of Addition in Absence of Contradictory Evidence: The decision of the CIT(A) to confirm the addition of INR 25,91,606/- is contended to be baseless, as it lacks substantiation through adverse documentary evidence against the Assessee.
Disregard for Documentary Evidence and Vendor Confirmation: The CIT(A) is alleged to have overlooked the documentary evidence provided by the Assessee and the confirmation of transaction details by the seller party, M/s, HJM Fuels Pvt Ltd, presented during the proceedings before the AO.
Unjustified Double Taxation through Gross Profit-Based Addition: The addition of Gross Profit at 10% on the purchase transactions by the CIT(A) has led to an inadvertent double taxation of the same income, as the income from subsequent sales has already been offered for taxation.
Reservation of Rights: The Appellant reserves the right to add, alter, amend, or modify any of the grounds of appeal during the course of the appellate proceedings.”
3. The primary contention of the ld. Counsel for the assessee before us was to the effect that the assessee had duly discharged its onus of proving the genuineness of purchases made by the assessee to the tune of Rs.2.47 crores and had also pointed out that the incriminating material, based on which the Department treated the purchases to be bogus, could not be given any credence to and had no evidentiary value; and also that the party from whom the purchases were made had confirmed during the present assessment proceedings to all the transactions of purchases being genuine. That none of the facts pointed out by the assessee were controverted by the Revenue and despite so, the Revenue authorities (AO/CIT(A) still went on to hold the purchases as bogus and made addition of gross profit earned by the assessee on the same. The ld. Counsel for the assessee, therefore, contended that the addition made was grossly unjustified and needed to be deleted.
4. The Ld. DR, however, relied on the order of the ld. CIT(A) and stated that in the light of the incriminating material in the possession of the Department, the assessee had miserably failed to discharge its onus of proving the genuineness of the purchases made by the assessee to the tune of Rs.2.47 cro
