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Facts
The Revenue appealed against the order of the CIT(A) which deleted an addition of Rs. 4,80,20,603/- made by the AO on account of 'bogus purchases' under section 69C. The assessee, engaged in the business of premium cooking oils, declared a total loss for the assessment year 2017-18. The AO made the addition as the assessee failed to substantiate the identity, creditworthiness, and genuineness of the parties from whom purchases were made.
Held
The Tribunal observed that while the assessee had filed documentary evidence, the CIT(A) had not fully verified the genuineness of the parties and the transactions. The CIT(A) also did not seek a remand report from the AO. Therefore, the issue was remanded back to the CIT(A) for de novo adjudication.
Key Issues
Whether the CIT(A) erred in deleting the addition for bogus purchases without proper verification of the suppliers' genuineness and transaction validity.
Sections Cited
69C, 133(6), 143(2), 142(1), 143(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI B R BASKARAN, AM & MS. KAVITHA RAJAGOPAL, JM
(Assessment Year: 2017-18) ACIT, Circle-6(1)(2) Kamani Foods Pvt. Ltd. Room No. 506, 5th Floor, 810, 8th Floor, C Wing One BKC, Vs. Aayakar Bhavan, M. K. Road, Bandra Kurla Complex, Bandra (E), Mumbai-400 020 Mumbai-400 051 PAN/GIR No. AAECN 9686 L (Assessee) (Respondent) : Assessee by : Shri Mahesh O. Rajora Respondent by : Shri P. D. Chougule Date of Hearing : 08.05.2024 : 05.07.2024 Date of Pronouncement O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18.
The Revenue has challenged this appeal on the following grounds:
1 Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is erred in directing the A.O. to delete the addition of Rs.4,80,20,603/- made u/s. 69C without appreciating the facts Rs.3,70,95,914/- that except one party the other four parties has not filed any confirmations in respect of transactions entered into by the assessee company ? 2 The appellant prays that the order of the ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 3 The appellant craves leave to amend, or alter any grounds or Rs.3,70,95,914/- add a new grounds, which may be necessary 3. The brief facts are that the assessee is engaged in the business activity of specializing in premium cooking oils and reseller of edible oils and also into sale of return of income on 25.10.2017, declaring total loss of Rs.16,86,51,724/-. The assessee’s case was selected for scrutiny under CASS and notice u/s. 143(2) and 142(1) were duly issued and served upon the assessee.
The ld. Assessing Officer ('A.O.' for short) observed in the profit and loss account of the assessee that the assessee had made purchase of Rs.88,11,70,904/- and inorder to ensure that it was genuine purchases, the A.O. issued notices u/s 133(6) of the IT Act, 1961 to the parties from whom the assessee had made the impugned purchases and out of which only some of them replied. After duly considering the assessee’s submission, the ld. A.O. passed the assessment order u/s. 143(3) of the Act dated 19.12.2019 where the ld. A.O. determined the total income at Rs.4,80,20,603/- after making an addition of Rs.4,80,20,603/- on ‘bogus purchase’ u/s. 69C of the Act on the ground that the assessee had failed to substantiate the identity and creditworthiness of the parties and the genuineness of the transaction.
The assessee was in appeal before the first appellate authority who vide order dated 17.10.2023 deleted the impugned addition made by the ld. A.O. on the ground that the assessee had furnished all the documentary evidences which includes copy of ITR-V, copy of bills, bank statements, ledger account, lorry receipt, challan, etc.
The Revenue is in appeal before us, challenging the impugned order on the ground that the ld. CIT(A) had deleted the impugned addition without getting into the merits of the submission of the assessee.
Heard the rival submissions and perused the material available on record. It is observed that the assessee has filed the documentary evidences pertaining to the five transactions. From the assessment order and the ld. CIT(A)’s order, it is noticed that the said suppliers could not be verified for the purpose of paucity of time and it is also evident that the said suppliers have not responded to section 133(6) notice. The first appellate authority, on the other hand, has also not considered the fact that the said parties have not been verified as to their genuineness and also whether or not confirmation has been received from these parties subsequently are all not discussed in the findings of the ld. CIT(A). No doubt, the assessee has filed the relevant documentary evidences in support of its claim, the ld. CIT(A) having co-terminus power as that of the ld. A.O. ought to have verified those and given a finding. As this exercise is not carried out by the ld. CIT(A), the Revenue has challenged the impugned order and had contended that the ld. CIT(A) has also not sought for a remand report in this case from the ld. A.O.
On the above factual matrix, we are of the considered view that this issue has to be remanded back to the file of the ld. CIT(A) for de novo adjudication on the merits of the case after duly considering the submission of the assessee and the veracity of the documents filed by the assessee. The ld. CIT(A) is directed to hear both the sides and decide this issue in accordance with the law.
In the result, the appeal filed by the Revenue is allowed for statistical purpose.
Order pronounced in the open court on 05.07.2024.