Tribunal upholds CIT(A) decision, dismisses Revenue's appeal on bogus expenses

ACIT, Circle-9 (1), New Delhi. Versus Fauji Exim Pvt. Ltd.

ACIT, Circle-9 (1), New Delhi. Versus Fauji Exim Pvt. Ltd. - TMI Issues Involved:
1. Deletion of addition made by the AO on account of bogus purchases/expenses.

Summary:

Issue 1: Deletion of Addition of Rs. 9,54,37,240/- on Account of Bogus Purchases/Expenses

The Revenue appealed against the order of the CIT(A) which deleted the addition of Rs. 9,54,37,240/- made by the AO on account of bogus purchases/expenses for AY 2014-15. The assessee, a trading company engaged in the export of food grains, had declared total income of Rs. 66,08,670/- and shown purchases of Rs. 121,26,32,114/- and freight and forwarding expenses of Rs. 6,15,01,432/-. The AO, not receiving replies from three parties (M/s. Ruchi Soya Industries Ltd., M/s. Mahesh Edible Oil Industries Ltd., and M/s. Amit Transport Co.) to notices issued under section 133(6), concluded that the transactions were bogus and added the amount to the income of the assessee.

The CIT(A) deleted the addition, noting that the assessee had provided sufficient evidence, including ledger accounts, bank statements, and confirmations during appellate proceedings. The CIT(A) emphasized that the AO did not reject the books of accounts under section 145(3) and that the assessee had shown a better gross profit compared to the previous year. The CIT(A) also referenced several case laws supporting the deletion of the addition when sales were not doubted, and payments were made through banking channels.

The Tribunal, after considering the findings of the AO and the submissions and additional evidence filed by the assessee, upheld the CIT(A)'s order. It noted that the AO did not doubt the sales and profit shown by the assessee and that the accounts were duly audited with quantitative details maintained. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal, concurring with the CIT(A)'s findings and reasoning.

Conclusion:

The Tribunal dismissed the Revenue's appeal, holding that the addition of Rs. 9,54,37,240/- made by the AO was not sustainable and that the CIT(A) was justified in deleting the same. The order was pronounced in the open court on 21st March 2023.