Tribunal allows appeal, deletes disallowance of Rs. 10,00,538 for bogus purchases.

The Tribunal allowed the assessee's appeal for the Assessment Year 2012-13 by deleting the disallowance of Rs. 10,00,538 for bogus purchases of jowar. The Tribunal found the disallowance unjustified as the purchases were unverifiable and not debited in the profit and loss account. Consequently, the Tribunal allowed Ground No. 2 of the appeal, leading to the deletion of the disallowance amount. The alternate claim in Ground No. 3 was deemed academic and not addressed. The appeal was thus allowed in favor of the assessee.

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Issues: Disallowance of Bogus Purchases

Analysis:
The case involved an appeal against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13. The assessee, a dealer in Maize, Rice, and Wheat, had declared an income of Rs. 37,100 in the return filed. However, the assessment under Section 143(3) of the Income Tax Act resulted in the determination of the assessee's income at Rs. 16,82,287 due to various additions and disallowances, including a disallowance of Rs. 10,00,538 for URD Jowar Purchases. The CIT (Appeals) granted partial relief to the assessee, leading to the appeal before the Tribunal.

The main issue raised in the appeal was the disallowance of payments towards the purchase of jowar amounting to Rs. 10,00,538 as being bogus. The Assessing Officer disallowed this amount as it was not debited in the profit and loss account. The assessee contended that since the purchases were not debited in the profit and loss account, they cannot be disallowed, as per accounting principles. The Departmental Representative for Revenue supported the orders of the authorities below.

After considering the contentions of both parties and examining the material on record, the Tribunal found that the Assessing Officer's disallowance of Rs. 10,00,538 for bogus purchases of jowar was based on the purchases being unverifiable and not debited to the assessee's profit and loss account. Since the purchases were not claimed in the profit and loss account, the Tribunal held that the disallowance was not justified. Therefore, the Tribunal allowed Ground No. 2 of the assessee's appeal, deleting the disallowance of Rs. 10,00,538.

As a result of the finding on Ground No. 2, the Tribunal deemed the alternate claim raised in Ground No. 3 of the assessee's appeal as academic and did not adjudicate on it. Ultimately, the assessee's appeal for the Assessment Year 2012-13 was allowed based on the deletion of the disallowance of Rs. 10,00,538 for bogus purchases of jowar.

The judgment was pronounced in the open court on the 20th day of September 2018 by the Tribunal.

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