INCOME TAX OFFICER, C R BUILDING ITO NEW DELHI vs. MITTAL WOOLLENS PVT. LTD. , NEW DELHI

Aggrieved, the Revenue is in appeal before us. The ld. DR supporting the findings of the Assessing Officer submitted that the onus was on the assessee to produce all the relevant details and supporting documents to establish the genuineness of the purchases and since the assessee has failed to discharge the onus cast upon it, the action of the Assessing Officer is fully justified and the CIT(A) grossly erred in restricting the addition. The entire addition deserves to be sustained.

Per contra, the ld. AR vehemently stated that the assessing officer has grossly erred in ignoring the direct evidences furnished by the assessee in support of genuineness of the purchases. It is the say of the ld. AR that the entire addition has been made by the Assessing Officer and partly sustained by the CIT(A) only on the ground that the assessee could not produce the relevant details and documentary evidence.

The ld. counsel for the assessee strongly stated that merely because the details and documents could not be produced, would not mean that the purchases are bogus. The ld. counsel for the assessee argued that the sales transaction has not been disputed. The books of account have not been rejected and stock statement is accepted and no adverse inference has been drawn. The ld. counsel for the assessee vehemently submitted that since the books of account have not been rejected, the Assessing Officer cannot consider the purchases as bogus.

We have heard the rival submissions and have perused the relevant material on record. We find that the Assessing Officer has made addition of Rs,2,35,54,903/- on account of bogus purchase u/s 69C of the Income tax Act 1961, on the ground that the assessee did not establish the genuineness of the entities from whom purchases were made and there was no independent confirmation from the relevant parties.

With regard to the purchases, we are in conformity with the observation of the ld. CIT(A) that if purchases to the tune of Rs.2,35,54,903/- out of total purchase of Rs.2,37,99,613/-, are treated as bogus, the sales to the tune of Rs. 2,45,97,188/- is not possible. We are also in conformity with the CIT(A)’s findings that except for issue of notice u/s 133(6) of the Act, the Assessing Officer has not made any further inquiries either during the assessment proceedings or during the appellate/remand proceedings. Since the assessee has filed various documents during the remand proceedings to substantiate the purchases along with confirmation, the onus has shifted to the Assessing Officer. The Assessing Officer was required to examine these parties and bring out for the facts regarding the genuineness of the purchase or otherwise which he failed to do so.

We are, therefore, of the considered opinion that the action of the Assessing Officer of considering the purchases as bogus but accepting simultaneously the corresponding sales as genuine, is not valid. The assessing officer has neither disturbed the book result nor has rejected the books of account produced before him during the remand proceedings.

With respect to the addition made on the basis of G.P. on account of certain unpaid creditor, we endorse the action of the ld. CIT(A). The ground no. 2 is, accordingly, dismissed.

In the result, the appeal of the Revenue in is dismissed.