|The Tax Publishers2021 TaxPub(DT) 0888 (Del-Trib) : (2021) 085 ITR (Trib) 0494
INCOME TAX ACT, 1961
Where AO did not reject assessee's books of account and also did not comment on genuineness of sales made by the assessee, the addition made on account of bogus purchases was rightly deleted by CIT (A).
Income from undisclosed sources - Addition under section 69 - Alleged bogus purchases - AO did not reject books of account and also did not comment on genuineness of sales
AO made addition on account of bogus purchases. Aggrieved, assessee filed an appeal before CIT(A) and produced voluminous evidence before him. Accordingly, the CIT(A) sought for remand report from the AO and based on such report and contentions of the assessee, the CIT(A) deleted the addition. Aggrieved, Revenue was in appeal. Assessee contended that the AO did not give any adverse remarks in respect of the addition or the evidence filed in support of the contentions in respect thereof. It was further contended by the assessee that the AO did not reject his books of account and also did not comment on genuineness of sales, thus, it was not open for the AO to reject the purchases. Therefore, the CIT(A) correctly deleted the addition on account of bogus purchases. Held: When assessee filed voluminous record in support of his contentions, the same were forwarded to the AO seeking remand report offering his remarks on the same; however, the AO did not offer any adverse comments on detailed submissions and documents filed by the assessee. Further, the AO examined the books of account, as evident from the assessment order, but he did not detail out any discrepancy therein. At the same time, the AO neither rejected the books of account nor invoked provisions of section 145 before disturbing the trading results. Further, sales were accepted by the AO, but the purchases were suspected leading to rumors situation of producing abnormal gross profit rate, which was not common in business conducted by the assessee. Therefore, the CIT(A) was justified in deleting addition made on account of bogus purchases.
FAVOUR : In assessee's favour
A.Y. : 2012-13
INCOME TAX ACT, 1961
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