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Facts
The assessee, an individual running M/s. Vaidehi E-Link, faced disallowance of purchases amounting to ₹35,48,955/- for A.Y. 2009-10. This disallowance, upheld by the CIT(A), was based on information from the Sales Tax Department alleging vendors did not deposit VAT and the assessee's failure to produce lorry receipts, despite extensive documentation provided by the assessee.
Held
The Tribunal found that the assessee had furnished all possible documents, including banking proofs, invoices with VAT details, and lorry registration numbers. It noted that the Revenue had no independent evidence against the purchases other than old Sales Tax data and that burdening the assessee to compel vendors to appear after 15 years was unreasonable. As the assessee's books were not rejected and other sales/purchases were accepted, the Tribunal deleted the disallowance.
Key Issues
Whether the disallowance of purchases was justified when the assessee provided substantial documentary evidence and banking proofs, despite vendors allegedly not depositing VAT and the non-production of lorry receipts.
Sections Cited
Section 250, Section 143(3), Section 254
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Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGPUR
Before: DR. MANISH BORAD
This appeal at the instance of the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”], dated 30/04/2025 passed u/s. 250 of the Income Tax Act, 1961 (for short, 'the Act') which is arising out of assessment order dated 10.11.2017 passed u/s. 143(3) r.w.s. 254 of the Act by DCIT, Circle-2, Nagpur for the Assessment Year 2009-10 (A.Y.)
Registry has informed that there is a delay of 100 days in filing the instant appeal. Application for condonation of delay along with affidavit has been filed and placed on record.
2 ITA.No.623/NAG/2025 (Hemraj Umraoji Punekar) Ld.Departmental Representative (DR) opposed for condonation of delay. I have gone through the contents of the affidavit and the reasons stated for delay and find that the same are reasonable cause and the assessee had bonafide reason giving rise to this delay and the delay is not intentional and the assessee has not gained by delaying the appeal. Therefore, adopting a justice oriented approach and also taking guidance from the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [(1987) 2 SCC 107] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), I hereby condone the delay of 100 days in filing of the instant appeal before this Tribunal and admit the appeal for adjudication.
The sole grievance of the assessee is against the disallowance of purchases of ₹ 35,48,955/-.
Brief facts of the case are that assessee is an individual and return of income for A.Y. 2009-10 filed on 30.09.2009 declaring income of ₹ 13,31,090/-. In the first round, assessment u/s. 143(3) of the Act completed on 27.01.2015 disallowing purchases of ₹ 35,48,955/-. Assessee carried the matter before the Ld.CIT(A), but failed to succeed. Thereafter, when the matter travelled before this Tribunal, by order dated 10.01.2017, this Tribunal restored the issues to the file of Ld.Jurisdictional Assessing Officer (JAO) for examining the 3 ITA.No.623/NAG/2025 (Hemraj Umraoji Punekar) veracity of the submissions of the assessee. In compliance, proceedings u/s. 143(3) r.w.s. 254 of the Act were carried out. In the course of proceedings, assessee furnished the details of goods purchased, registration numbers of the vendors, proof of payments through banking channel. However, Ld.AO again made the very same addition for want of lorry receipts and evidence of the transportation of goods, thereby assessing at ₹49,00,050/-. Again assessee travelled before the Ld.CIT(A). But for want of lorry receipts, transportation documents for the purchases from M/s. Reliance Metal Alloy, Mumbai and M/s.P.M. Trading Company, Mumbai, Ld.CIT(A) has confirmed the addition. Now assessee is in appeal before this Tribunal.
Learned counsel for the assessee reiterated the submissions filed before the lower authorities and also made reference to the documents filed in the paper book running into 85 pages. His main contentions are that whatever documents are required to discharge the onus of proving the genuineness of purchases, stand filed. Ld.AO had only made the addition based on the information received from VAT. He submitted that assessee has made the payments for the goods as well as VAT tax, however, since the vendors did not deposit the due sales tax, the impugned disallowance has been made. He, therefore, prayed for deletion of impugned addition.
On the other hand, Ld. Departmental Representative (DR) vehemently argued supporting the order of Ld. CIT(A).
4 ITA.No.623/NAG/2025 (Hemraj Umraoji Punekar) 7. I have heard rival contentions and perused the records placed before me. I observe that disallowance of purchases of ₹35,48,955/- has been affirmed by the Ld.CIT(A) which has been made by the Ld.AO for the purchases of ₹ 30,63,269/- from M/s. P.M. Trading Company, Mumbai and ₹ 4,85,686/- from M/s. Reliance Metal Alloy, Mumbai. I observe that assessee is running sole proprietorship concern M/s. Vaidehi E-Link (formerly known as M/s. PHP Electrical Services), Gross turnover during the year is at ₹ 1,78,71,045/- and purchases for the year are at ₹12,66,205/- Except disallowing the alleged purchases, Ld.AO has not disputed the remaining figures of gross sales and purchases and other details of the books of accounts. The main reason for making the said disallowance by the Revenue is on account of information received from Sales Tax Department about the suspicious dealers who did not deposit the VAT collected by them to the kitty of State Government. Ld.AO also alleged that assessee has failed to provide lorry receipts and transportation documents.
I note that assessee is in regular business of electrical items. In the regular course of his business activities has made purchases including the alleged purchases. Both the alleged parties are registered dealers under MVAT when the transactions took place. Tax invoices have been issued by the alleged vendors charging VAT along with specifying the 5 ITA.No.623/NAG/2025 (Hemraj Umraoji Punekar) particulars of goods and quantity. The goods were agreed to be delivered at the doorstep of the assessee. Lorry registration numbers used for transporting such goods are mentioned on the tax invoices issued by both the alleged vendors. Delivery challans are also claimed to be available with the assessee. Payments have been made through banking channel. Ledger accounts of both the vendors in question are placed on record. Payments have been made in the subsequent period, but through the regular bank account of the assessee. These facts indicate that whatever possible documents which assessee could gather and place on record to explain the genuineness of the alleged purchases have been filed in order to discharges his onus. Admittedly, vendors did not respond to the notices issued by the Assessing Officer. However, it is not possible for any assessee to keep control of the vendors once the goods are supplied and payments have been made. I also note that the year under consideration for A.Y. 2008-09 and the second round of assessment proceedings concluded on 10.11.2017 and immediately thereafter assessee filed the appeal, but first appellate authority has disposed the appeal after a long span of eight years. As on today, period of purchases is almost 15 years old and the litigation is alive.
I find that the assessee has furnished all possible details to explain the genuineness of purchases, burdening the assessee, now to bring the vendors before the Revenue
6 ITA.No.623/NAG/2025 (Hemraj Umraoji Punekar) authorities is practically neither possible nor justified. The Revenue authorities have also not been able to file any contrary material or independent verification report except Sales Tax Department information which too was received around 12-13 years back. Under these facts and circumstances, when the books of accounts are not rejected sales figures are also not in dispute and the remaining purchases have been accepted by the Ld.AO, I fail to find any merit in the action of the Ld.AO making the alleged disallowance of purchases. Accordingly, finding of the Ld.CIT(A) is reversed and the disallowance of purchases of ₹35,48,955/- is deleted. Grounds of appeal raised by the assessee are allowed.
Here, I would like to make it clear that this decision shall not be taken as precedent for deciding the other issues since the decision in the present case is purely based on the facts placed before me.
In the result, appeal of the Assessee is allowed.