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Commissioner Of Income Tax v. Nikunj Eximp Enterprises Private Limited

Commissioner Of Income Tax v. Nikunj Eximp Enterprises Private Limited

(High Court Of Judicature At Bombay)

Income Tax Appeal No. 5604 of 2010 | 17-12-2012

1. This appeal by the Revenue under section 260A of the Income-tax Act, 1961 (" the") challenges the order dated April 30, 2010, of the Income-tax Appellate Tribunal ("the Tribunal") relating to the assessment year 2001-02. The following question of law has been formulated for consideration of this court.

"Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the addition made by the Assessing Officer of Rs. 1,33,41/917 towards bogus purchases even though the suppliers were non-existent and one of the parties had categorically denied having any business dealings with the assessee-company"

2. The respondent-assessee had filed its return of income for the assessment year 2001-02 declaring a total income of Rs. 42.08 lakhs. The Assessing Officer, inter alia, disallowed an expenditure of Rs. 1.33 crores on account of non-genuine purchases from seven parties along with other disallowances. The Assessing Officer by order dated March 25, 2004, assessed the respondent-assessee to an income of Rs. 1.87 crores.

3. Being aggrieved an appeal was filed by the respondent-assessee with the Commissioner of Income-tax (Appeals) ("the CIT(A)"). By an order dated August 19, 2004, the Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer, inter alia, to the extent Rs. 1.33 crores disallowed as bogus purchases.

4. Being aggrieved by the order dated August 19, 2004, of the Commissioner of Income-tax (Appeals), the respondent-assessee preferred an appeal to the Tribunal. The Tribunal in the impugned order dated April 30, 2010, while allowing the appeal records that the respondent-assessee had filed letters of confirmation of suppliers, copies of bank statement showing entries of payment through account payee cheques to the suppliers, copies of invoices for purchases and stock statement, i.e., stock reconciliation statement. This reconciliation statement gave complete details with regard to the opening stock, purchases, sales and closing stock and no fault with regard to it was found. Besides, substantial amount of sales made by the respondent-assessee was to the Government Department, i.e., Defence Research and Development Laboratory, Hyderabad, and such sales could not be bogus. Besides the books of account of the respondent-assessee have not been rejected. In view of the above, by order dated April 30, 2010, the Tribunal deleted the disallowance of Rs. 1.33 crores by holding that the purchases were not bogus.

5. Mr. Vimal Gupta, senior counsel appearing in support of the appeal, submits that the Tribunal could not have relied only upon the stock statement, i.e., the reconciliation statement to conclude that the purchases were genuine. Therefore, he submits that the question formulated is a substantial question of law and needs to be decided by this court.

6. We have considered the submission on behalf of the Revenue. However, from the order of the Tribunal dated April 30, 2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement, i.e., reconciliation statement but also in view of the other facts. The Tribunal records that the books of account of the respondent-assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department, i.e., Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the Commissioner of Income-tax (Appeals), one cannot conclude that the purchases were not made by the respondent-assessee. The Assessing Officer as well as the Commissioner of Income-tax (Appeals) have disallowed the deduction of Rs. 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of Rs. 1.33 crores was not bogus. No fault can be found with the order dated April 30, 2010, of the Tribunal. In view of the above, we find that question as formulated is not a substantial question of law. Therefore, the appeal is dismissed with no order as to costs.

Advocate List

  • For Petitioner : Vimal Gupta, SeniorAdvocate

  • Padma Diwakar
  • For Respondent : J.D. Mistri, Senior Advocate andAasifa Khan

Bench
  • HON'BLE JUSTICE J.P. DEVADHAR
  • HON'BLE JUSTICE M.S. SANKLECHA
Eq Citations
  • [2015] 372 ITR 619 (BOM)
  • LQ/BomHC/2012/3072
Head Note

TAXATION — Income from Business or Profession — Deduction — Bogus purchases — Held, merely because suppliers have not appeared before Assessing Officer or Commissioner of Income-tax (Appeals), one cannot conclude that purchases were not made by assessee — Tribunal deleted additions on account of bogus purchases not only on basis of stock statement, i.e., reconciliation statement but also in view of other facts — Tribunal records that books of account of assessee have not been rejected — Similarly, sales have not been doubted and it is an admitted position that substantial amount of sales have been made to Government Department — Further, there were confirmation letters filed by suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that purchases were in fact made — Merely because suppliers have not appeared before Assessing Officer or Commissioner of Income-tax (Appeals), one cannot conclude that purchases were not made by assessee — Assessing Officer as well as Commissioner of Income-tax (Appeals) disallowed deduction of Rs. 1.33 crores on account of purchases merely on basis of suspicion because sellers and canvassing agents have not been produced before them — Order of Tribunal is well a reasoned order taking into account all facts before concluding that purchases of Rs. 1.33 crores was not bogus — No fault can be found with order of Tribunal — Question as formulated not a substantial question of law — Income-tax Act, 1961, Ss. 37 and 145(1)