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Facts
The assessee, a partnership firm dealing in diamonds, challenged additions made by the Assessing Officer (AO) regarding alleged bogus purchases. The AO's additions were based on the statement of one Rajendra Jain, who later retracted his statement. The assessee provided invoices, IT returns, and export documents to support the genuineness of the purchases.
Held
The Tribunal held that the addition made by the AO solely on the retracted statement of Rajendra Jain was not sustainable, especially when the assessee provided substantial documentary evidence for the purchases and their export. The Tribunal noted that similar allegations in other assessment years did not lead to additions when similar evidence was produced.
Key Issues
Whether additions made on account of alleged bogus purchases, based solely on a retracted statement, are sustainable without independent investigation and corroborating evidence.
Sections Cited
Section 143(3), Section 147, Section 148, Section 142(1), Section 131(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
PER PRASHANT MAHARISHI, AM:
These are the two appeals filed by Star Brillian, Mumbai (assessee/ appellant) for A.Y. 2009-10 & 2013-14, involving similar issue. Both were heard together and disposed of by this common order.
ITA No.1551/Mum/2020 is filed for A.Y. 2009-10, filed against the appellate order passed by the Commissioner of Income-tax (Appeals)-59, Mumbai [the learned CIT (A)] dated 31st January, 2020, wherein the appeal filed by the assessee against the assessment order passed by the Income Tax Officer, Ward 19(3)(4), Mumbai [ the Ld AO ]
Aggrieved assessee preferred the appeal before the learned CIT (A), where assessee challenged the reopening of the assessment as well as the addition on merits. The learned CIT (A) dismissed the appeal of the assessee against the reopening of the assessment. However, on the merits assessee submitted that details of purchase and corresponding details of sales against each purchase, copies of the purchase invoices with corresponding sale invoices of the purchases and sale register for the entire year, ledger account of the parties and the copy of bank statement. It was further submitted that sales from the alleged purchases Assessee exported the goods, have been verified by the custom authorities with necessary evidences. The assessee further submitted the PAN, return of income, bank statement and also the copy of affidavit of all the alleged suppliers confirming the goods supplied by them. Therefore, the claim of the assessee is that the addition made by the learned Assessing Officer is incorrect. The learned CIT (A) after considering the explanation held that disallowance of 5% of the purchases is not at all justified. He directed the learned Assessing
We have carefully considered the rival contentions and perused the orders of the lower authorities. Assessee has not pressed the grounds of appeal with respect to the reopening of the assessment. Therefore, now the only issue that remains is whether the addition made by the learned Assessing Officer at the rate of 5% of alleged bogus purchases reduced by the learned CIT (A) at the rate of 3% is correct or not. It is found that assessee was directed by the co-ordinate bench to produce Mr. Rajendra Jain, before the learned Assessing Officer. The assessee has produced him before the learned Assessing Officer which is confirmed by the learned Assessing Officer. In his statement Mr. Rajendra Jain has categorically stated that his original statement given during the course of search has already been retracted by him and he stands by such retraction in the case of this assessee. Therefore, the original addition made by the learned Assessing Officer based on the statement of Mr. Rajendra Jain now does not stand. Now, the issue is to be examined independently of any admission or retraction made by Mr. Rajendra Jain. Admittedly, in this case, the assessee is exporter of diamond. The alleged purchases from the parties which
On careful perusal of the above facts and for identical reason as we have given in addition for A.Y. 2009-10, and specifically for the reason that in assessee's own case for
In the result, the appeals of the assessee for both the years are allowed.
Order pronounced in the open court on 15.03.2024.
Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 15.03. 2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, Mumbai 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai