DCIT Vs Sudesna Arunkumar Dana (ITAT Pune)
Entire Purchase Cannot Be Treated as Bogus When Sales Are Accepted; ITAT Upholds Partial Disallowance as Assessee Already Offered Income Under Section 41(1); Bogus Purchase Addition Reduced Because AO Failed to Identify Alleged Bill Providers; ITAT Dismisses Revenue Appeal Against Relief Granted in Bogus Purchase Case.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, dismissed both the Revenue’s appeal and the assessee’s cross objection for Assessment Year 2011-12 in a case concerning alleged bogus purchases. The Revenue challenged the order of the CIT(A), which had restricted the disallowance to Rs.2,16,393 as against the addition of Rs.17,31,143 made by the Assessing Officer. The assessee, through a cross objection, contended that a substantial portion of the alleged bogus purchases had already been offered to tax under Section 41(1) of the Income Tax Act in subsequent assessment years, and therefore any further addition would amount to double taxation.
The assessee had originally declared income of Rs.13,38,741, and the return was processed under Section 143(1). Reassessment proceedings were later initiated under Sections 147 and 148 based on information received from the Investigation Wing regarding beneficiaries of fictitious purchase and sale transactions involving shell entities linked to Maharashtra VAT cases. During reassessment, the Assessing Officer identified purchases of Rs.17,31,143 from parties allegedly acting as bogus bill providers. Although the assessee maintained that the purchases were genuine, sales were undisputed, and stock records were maintained, the Assessing Officer rejected the explanation and added the entire amount to income.
