GRETA ENERGY LTD.,CHENNAI vs. ITO, CORPORATE WARD-2(3),, CHENNAI

Aforesaid cross-appeals arises out of an order passed by Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 30-03-2024 in the matter of an assessment framed by Ld. AO u/s.147 r.w.s 144B of the Act on 13-03- 2023. The sole issue that arises for our consideration is addition made by Ld. AO on account of alleged bogus purchases. The Ld. AR has filed an application under Rule 29 of The Appellate Tribunal Rules, 1963 and prayed for admission of additional evidences which inter-alia, include MVAT Form 231 of the supplier. Having heard rival submissions, the cross-appeals are disposed-off as under. The assessee being resident corporate assessee is stated to be engaged in power generation and distribution.

From assessment order, it emerges that originally the return of income was scrutinized u/s 143(3). However, the case was reopened on the allegation that the assessee made bogus purchases of Rs.92.43 Lacs from an entity M/s Shree Om Sai Industries Pvt. Ltd. Though various notices were issued to the assessee during assessment proceedings as is evident from para-2 of the assessment order, the assessee failed to furnish any response. The verification unit (VU) issued notice u/s 133(6) and field inspector reported that the said entity did not exist at the given address. The said entity had left the premises more than 8 years ago. The Ld. AO held that the transaction with non-existent entity was not to be considered as genuine and therefore, the amount of Rs.92.43 Lacs was added to the income of the assessee u/s 69C.

The Ld. CIT(A), considering the submissions of the assessee, directed Ld. AO to restrict the addition to the extent of Gross Profit percentage shown by the assessee. The aforesaid income would not be statutory addition as referred to by CBDT in its Circular No.36 of 2017 and therefore, the same would not constitute income from business and thus not eligible for deduction u/s 80-IA. The said adjudication has led to cross-appeals before us.

From the facts, it is clear that the assessee has made purchases from the said supplier but failed to substantiate the transaction to the satisfaction of Ld. AO. The field enquiries have revealed that the said supplier has left the premises at around 8 years whereas the purchases have been made by the assessee subsequently. The assessee, in our opinion, has failed to discharge its onus of substantiating the impugned transaction. No effective representation has been made by the assessee before Ld. AO. However, considering the fact that the assessee has now furnished additional evidences which would have material bearing on the claim of the assessee, we set aside the orders of lower authorities and restore the impugned issue back to the file of Ld. AO for de novo adjudication, inter-alia, by considering the additional evidences as furnished by the assessee before us. The issue of deduction u/s 80-IA may also be re-adjudicated, if required. The assessee is directed to substantiate its case.

The cross-appeals stand allowed for statistical purposes in terms of our above order. Order pronounced on 22nd October, 2024. (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) "ाियक सद4 / JUDICIAL MEMBER लेखा सद4 / ACCOUNTANT MEMBER चे2ई Chennai; िदनांक Dated : 22-10-2024 DS आदेशकीQितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. " थ"/Respondent 3. आयकरआयु;/CIT Chennai. 4. िवभागीय"ितिनिध/DR 5. गाड@फाईल/GF