What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of the addition. The CIT(A) had found that the parties could not comply due to address changes, and the assessee provided details of purchases, payments, and bank statements which were examined.

The Revenue appealed the deletion of an addition of Rs. 3,09,75,335/- by the CIT(A). The addition was related to purchases from 9 parties, which the AO considered bogus as notices remained unserved and no replies were received.

What were the issues?

Whether the CIT(A) erred in deleting the addition for alleged bogus purchases without establishing the identity of the parties and considering the assessee's modus operandi.

ACIT vs True Power International Ltd. | ITAT Delhi 2022

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Saktijit DeyDr. B. R. R. Kumar

Hearing: 09.03.2022Pronounced: 15.03.2022

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-29, New Delhi dated 17.10.2017.

Following grounds have been raised by the revenue:

“1. The Ld C1T(A) has erred in deleting the addition of Rs.3,09,75,335/- without considering that the identity of the above parties to whom purchases were made has not been established. It is just same parties which have no physical existence at all as have been found by conducting all possible enquiries and giving all possible opportunities.

2. The Ld. CIT(A) has erred in deleting the addition of Rs.3,09,75,335/- without considering that the appellant had adopted a modus operandi that the goods were purchased from the grey market by paying

2 True Power International Ltd. cash and the bills were obtained from the other parties, thereby, though the goods were purchased at lesser rate but shown the purchase price at higher rate. Thus an amount of Rs.31,25,66,447/- shown as purchases from above parties are considered as bogus purchase.”

During the year under consideration, the assessee company was mainly engaged in the business of trading of electrical items such as UPS, Inverters, CVT Batteries etc. During the year under consideration, the assessee company has derived income from business or profession and other resources.

The assessee had trade payables to about 9 parties of value Rs.31.25 crores. The AO held that during verification notices were issued to all the 10 parties and no replies have been received from about 8 parties. The assessee has explained the transactions with various parties along with details of the payments made in the subsequent years. However, the AO held that the transactions remained unverified and notices remained unserved and the outstanding amounts in the name of these parties have been brought to tax.

The ld. CIT(A) deleted the addition on the grounds that these parties could not comply due to change of the address. The new addresses were furnished before the AO during the assessment proceedings and correct addresses were mentioned even before the ld. CIT(A). All the details of purchases made from these parties were filed and examined by the ld. CIT(A). The payments were verifiable from the bank statements. The ld. CIT(A) has examined the details which has been mentioned at page nos. 7 to 11 of his order. Since, the ld. CIT(A) has given

3 True Power International Ltd. the remission after going through the entire factual matrix with regard to purchase of the goods, receipt of the goods, confirmations, bank payments, in the absence of any contrary material brought before us to dispute the decision of the ld. CIT(A), we hereby decline to interfere with the reasoned order of the ld. CIT(A).

In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 15/03/2022.

ACIT, CENTRAL CIRCLE- 26, NEW DELHI vs. TRUE POWER INTERNATIONAL LTD., DELHI

What did the Tribunal hold?

What were the facts?

What were the issues?

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