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Facts
The assessee-company, engaged in trading waste paper, filed its return of income. During assessment, the AO disallowed purchases amounting to Rs. 23,36,31,053 due to discrepancies in vehicle numbers for transport and suppliers not filing income tax returns.
Held
The CIT(A) deleted the addition, observing that the assessee had discharged the onus with documentary evidence. The Tribunal agreed, finding that the AO was not justified in disallowing a significant portion of purchases based on doubts and surmises.
Key Issues
Whether the disallowance of purchases was justified based on discrepancies in transport vehicle numbers and supplier's return filing, when the assessee provided supporting documents and made payments through banking channels.
Sections Cited
143(3), 144B, 69, 46A
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the Revenue for Assessment Year (AY) 2021-22 arises out of the order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 25.07.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) r.w.s 144B of the Income-tax Act,1961 (hereinafter “the Act”) on 22.12.2022.
ITA No.2486/Chny/2024 :- 2 -:
The brief facts of the case are that the assessee-company is engaged in the business of trading of waste paper and filed its return of income on 16.03.2022 by declaring total income of Rs. 25,66,590/-.
During the course of assessment proceedings, the A.O has made verification on purchase and found discrepancy in the purchases from seven parties of Rs.14,34,74,907/- as vehicle number for transport was found incorrect or not mentioned and in case of 9 parties of purchase of Rs.9,01,56,146/-, they have not filed their return of income. The A.O therefore, made disallowance on purchase to the extent of Rs. 23,36,31,053/- u/s. 69 of the Act. The assessee filed appeal before Ld CIT(A) and filled all the documents filed before AO.
The Ld. CIT(A) observing that the assessee has discharged the onus with documentary evidence in support of the purchases and therefore, relying on the decision of Hon’ble Supreme Court in the case of CIT vs. Century Plyboard (I) Ltd. 103 taxmann.com 179 (SC) and the order of ITAT, Delhi in the case of Manoj Sharma vs. ITO [2019] 103 taxmann.com (Delhi-Trib.) has deleted the addition. The Revenue is in appeal against deleting the addition raising the ground that the Ld. CIT(A) has failed to appreciate that the A.O has made finding on verification that vehicle number mentioned in the transport bill for purchase does not exist in certain cases and in some cases vehicle :- 3 -: number pertaining to two wheeler. The Revenue is also raised the ground that the Ld. CIT(A) has accepted the additional evidences in the form of return of income of the supplier in violation of Rule 46A.
The Ld. Departmental Representative (DR) has argued that the A.O has disallowed the purchases as he found in certain bills for transport two wheeler numbers were mentioned and in some cases no vehicle number was mentioned . The Ld DR further argued that the Ld. CIT(A) without remanding the matter has accepted the return of supplier filed by the assessee.
The Ld. Authorized Representative (A.R) of the assessee, on the other hand, has submitted that Ld A.O has disallowed purchases of Rs. 23,36,31,053/- which is 80% of total purchase , though assessee has submitted all the documents including details of purchase ,invoices, ledger copy and payment details. The Ld. AR has submitted that the assessee before the A.O against the show cause notice has submitted that the assessee is not necessitated to have knowledge over the transport since assessee-company do not make any payment on account of transport as it fall on the part of the supplier only and the correct vehicle number and copy of invoices, were subsequently :- 4 -: submitted before him. The Ld. AR has submitted that the assessee is not expected to submit the income tax return of the third party and department can always access to them in case there is a doubt. The Ld. AR has submitted that there is no additional evidence submitted before the Ld. CIT(A) except the ITR acknowledgement of Ganesan Gopinath and all the documents were already submitted before the A.O therefore, there is no additional evidence submitted before the Ld.
CIT(A).
We have heard the rival submissions, and perused the materials available on record. The A.O has made the disallowance of purchase of Rs. 23,36,31,053/- as in initial enquiry he found the vehicle number was not mentioned or vehicle number was not correct and assessee has not submitted copy of income tax return or the suppliers were non fillers. The assessee before the A.O itself has submitted correct vehicle number and copy of purchase invoice, payment details etc.
Assessee has maintained proper books of account, which is duly audited and payments for purchase has been made through banking channel. The Ld A.O has not doubted the sale and assessee has provided all the documents in support of the purchase. Therefore, the Ld A.O was not justified to disallow 88% of purchase on doubts and surmises. We are of opinion that Ld CIT(A) has correctly held that :- 5 -: assessee has discharged complete onus. In view of the above, we do not find any infirmity in the order of Ld. CIT(A) and therefore, the appeal filed by the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 29th January, 2025.