Tribunal Upholds Deletion of Unverifiable Purchases for Assessment Year 2011-12 The Tribunal upheld the deletion of the addition of Rs. 93,44,424/- against unverifiable purchases made by the assessee company for the assessment year ...
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Tribunal Upholds Deletion of Unverifiable Purchases for Assessment Year 2011-12
The Tribunal upheld the deletion of the addition of Rs. 93,44,424/- against unverifiable purchases made by the assessee company for the assessment year 2011-12. The CIT(A) found in favor of the assessee, citing industry demands and business expediency for cash purchases, and the lack of specific basis for the AO's disallowance. The Tribunal agreed with the CIT(A) and dismissed the Revenue's appeal, affirming the deletion of the addition.
Issues: Deletion of addition of Rs. 93,44,424/- against unverifiable purchases made by the assessee company.
Analysis: 1. The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) regarding the addition of Rs. 93,44,424/- made by the Assessing Officer (AO) on account of unverifiable purchases for the assessment year 2011-12.
2. The AO disallowed 20% of the assessee's purchases as unverifiable, leading to the addition of Rs. 93,44,424/-. The assessee, engaged in running a slaughterhouse, appealed to the CIT(A) who relied on the decision of the Calcutta High Court in the case of 'CIT vs. CPL Tannery' to delete the addition.
3. The CIT(A) found strength in the assessee's claim that purchases were made in cash due to industry demands and business expediency. The AO's acceptance of similar cash purchases in subsequent years further supported the assessee's case.
4. The CIT(A) observed that the AO's disallowance lacked a specific basis and was made on assumptions and guesswork. The CIT(A) upheld the deletion of the addition based on the consistency of the assessee's cash purchases and the lack of adverse findings by the AO in subsequent years.
5. The Tribunal concurred with the CIT(A)'s decision, emphasizing the acceptance of the assessee's trading results in subsequent assessment years. The Tribunal found no merit in the Revenue's appeal and upheld the deletion of the addition of Rs. 93,44,424/-.
6. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition. The order was pronounced on 19th August 2019.
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