ITAT upholds deletion of Rs. 7.17 crore addition for AY 2011-12 and 2012-13. Purchases genuine.

The ITAT upheld the CIT(A)'s decision to delete an addition of Rs. 7,17,95,500 for both AY 2011-12 and AY 2012-13. The Tribunal found the purchases genuine, recorded in the books, and paid for through banking channels. The AO's claims of bogus purchases were dismissed due to lack of substantial evidence. Both appeals filed by the Revenue were dismissed.

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Issues Involved:
1. Deletion of addition on account of unexplained expenditure.
2. Verification of the existence of entities from which purchases were made.
3. Opportunity for the Assessing Officer (AO) to rebut the submissions made by the assessee.
4. Applicability of Section 69C for disallowance of purchases.

Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Expenditure:
The Revenue challenged the CIT(A)'s decision to delete an addition of Rs. 7,17,95,500 made by the AO on account of unexplained expenditure. The AO had concluded that the purchases of TMT Bars from M/s Ganesh Traders and M/s Trade Link were not genuine, as the shops were either closed or nonexistent. However, the CIT(A) found that the purchases were recorded as advances in the books for AY 2011-12 and were debited in AY 2012-13. The CIT(A) held that the disallowance should be considered in the year the purchases were debited, thus deleting the addition for AY 2011-12.

2. Verification of the Existence of Entities:
The AO's investigation revealed that the shops of M/s Ganesh Traders and M/s Trade Link were either closed or nonexistent. Despite this, the CIT(A) noted that the goods were delivered and payments were made through banking channels. The CIT(A) emphasized that the non-availability of the sellers did not negate the fact that the goods were received and paid for, thus rejecting the AO's claim of bogus purchases.

3. Opportunity for AO to Rebut Submissions:
The Revenue contended that the CIT(A) accepted the assessee's contentions without giving the AO an opportunity to rebut the submissions. However, the CIT(A) had considered the AO's findings and the assessee's evidence, including bank statements and transport documents, before arriving at the decision to delete the addition.

4. Applicability of Section 69C:
The CIT(A) concluded that Section 69C, which pertains to unexplained expenditure, was not applicable in this case. The AO had accepted that the goods were delivered and payments were made through banking channels. The CIT(A) found no evidence of unaccounted cash transactions during the search, thus deeming the AO's addition as based on conjectures and surmises.

Conclusion:
The ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 7,17,95,500 for both AY 2011-12 and AY 2012-13. The Tribunal agreed that the purchases were genuine, recorded in the books, and paid for through banking channels. The AO's claims of bogus purchases were dismissed due to lack of substantial evidence. Consequently, both appeals filed by the Revenue were dismissed.

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