Bholenath Foods Limited Vs ITO (ITAT Delhi)
Bogus Purchase Addition Not Decided Properly: ITAT Sets Aside NFAC Order for Violation of Section 250(6)
The Delhi Bench “A” of the ITAT, in Bholenath Foods Ltd. v. ITO (AY 2012-13), set aside the order of the NFAC which had confirmed an addition of ₹1.35 crore on account of alleged bogus purchases/accommodation entries, holding that the appellate order was not in conformity with section 250(6) of the Income-tax Act.
The reassessment was initiated on the basis of third-party survey statements of an alleged accommodation entry provider, Shri Ram Prakash Bhatia, who claimed that his concern Jai Bharat Foods issued bogus purchase bills without actual supply of goods. Relying primarily on this statement and investigation wing inputs, the AO treated the assessee’s purchases as non-genuine and made additions under section 68. The CIT(A)/NFAC upheld both the reopening and the additions, observing that the assessee failed to furnish extensive documentary evidence to prove genuineness.
The Tribunal noted a fundamental contradiction in the appellate approach: while the CIT(A) himself listed 11 categories of documents required to establish genuineness of purchases, he dismissed the appeal without granting an effective opportunity to furnish such details and without passing a reasoned order as mandated by section 250(6). The order was found to be largely a reproduction of the AO’s findings, lacking independent adjudication.
Holding that such an approach violates principles of natural justice and statutory requirements, the ITAT set aside the NFAC order and restored the matter to the CIT(A) for fresh adjudication after granting adequate opportunity to the assessee to file complete evidence. The assessee was directed to submit details within a stipulated time. The appeal was thus allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT DELHI
