The Tax Publishers2021 TaxPub(DT) 0956 (Del-Trib)

INCOME TAX ACT, 1961

Section 69C

Non-production of parties could not give credence to the bogus nature of purchases. Better way for AO could be to enquire about amounts received from assessee and from such amounts, if any, purchases of material have been made which, in turn supplied to assessee. Therefore, failure to follow principles of natural justice vitiated the proceedings and addition under section 69C was not warranted.

Income from undisclosed sources - Addition under section 69C - Purchases treated as bogus on account of non-production of suppliers before AO -

AO treated purchases claimed by assessee as bogus under section 69C on the ground of assessee's failure to produce suppliers before him. Held: Non-production of parties could not give credence to the bogus nature of purchases. Better way for AO could be to enquire about amounts received from assessee and from such amounts, if any, purchases of material have been made which, in turn, supplied to assessee. The non-purchase of material/non-utilization of the amounts for purchase of material by the suppliers would be an appropriate evidence to disallow this purchases but the same has been wanting. Failure to follow principles of natural justice vitiated the proceedings. Keeping in view the entire facts and circumstances of case, no addition was warranted based on the fact that suppliers had not appeared before AO.

Relied:B.C. Borana v. ITO (2006) 282 ITR 252 (Bom) : 2006 TaxPub(DT) 0167 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



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