2015 (8) TMI 1203 - AT - Income Tax

High Court Overturns ITAT Decision on Bogus Purchases for Assessment Years 2000-01 & 2001-02

M/s Dharmik Exim Pvt. Ltd. Versus ACIT, Range-9 (1), Mumbai and DCIT, Range-9 (1), Mumbai Versus M/s Dharmik Exim Pvt. Ltd.,

The appeals regarding the disputed addition of bogus purchases for the assessment years 2000-01 & 2001-02 were initially partially allowed by the ... Bogus purchases - deletion of 75% of bogus purchases by CIT(A) - matter further travelled to the Hon’ble Bombay High Court, wherein set aside the order of the ITAT insofar as it relates to disallowance of purchases and restored the matter back to the file of ITAT for fresh consideration of the issue - Held that:- After considering the assessee's affidavit, the Hon'ble High Court restored the matter back to the file of the Tribunal for fresh consideration by considering the assessee's plea that the assessee has furnished PAN of eight parties from whom purchases have been made by the assessee. However, details of such PAN No. of eight parties do not find any mentioned in the orders of the lower authorities nor in the orders of the tribunal passed on earlier occasions. Genuineness of purchase can be verified only after examining the assessment records of these parties as per PAN No. details filed through affidavit, before Hon’ble High Court. For this purpose both the Id. AR and Id. DR fairly conceded that the matter may be restored to the file of the A. O. for re-examining the alleged purchases in the light of the fact that all the eight parties from whom purchases was made are having PAN. Thus we restore the matter back to the file of the A. O. for deciding the genuineness of the purchases made from eight parties having PAN as supplied by the assessee before the Hon'ble High court as per the affidavit dated 31.12.2011, as reproduced above. - Decided in favour of assessee and revenue for statistical purposes. Issues:Cross appeals by the assessee and Revenue against the order of CIT(A) for the assessment years 2000-01 & 2001-02.Analysis:1. The appeals were filed regarding the addition made on account of bogus purchases. The Tribunal initially allowed the revenue's appeal for the deletion of 75% of bogus purchases, while partially allowing the assessee's appeal on the validity of reopening but confirming the addition related to bogus purchases.2. The matter went to the Bombay High Court, which set aside the ITAT's order on disallowance of purchases amounting to Rs. 3.79 crores, directing a fresh consideration. The High Court emphasized that the assessee had provided Permanent Account Numbers (PAN) of the parties involved, contradicting the ITAT's decision.3. Following the High Court's direction, the Tribunal reconsidered the issue. The assessee submitted affidavits confirming purchases from eight parties with PAN details. The Tribunal, after acknowledging the PAN submission, restored the matter to the Assessing Officer (AO) for verifying the genuineness of purchases from these parties.4. The Tribunal found discrepancies in the assessment records regarding the PAN details provided by the assessee. Consequently, the matter was sent back to the AO for re-examination to determine the authenticity of purchases from the eight parties with PAN details.5. Ultimately, both appeals for the assessment year 2000-01 were allowed for statistical purposes, with the issue of bogus purchases in the following year also being remanded to the AO for fresh assessment, mirroring the directions given for the previous year.This detailed analysis outlines the progression of the case, highlighting the key legal arguments, court decisions, and the final outcome of the appeals filed by the assessee and the Revenue regarding the disputed addition of bogus purchases.