No addition for bogus purchases in case of lack of enquiry by AO

Supertechforgings (India) Pvt. Ltd. Vs DCIT (ITAT Amritsar)

Conclusion: Additions made for alleged bogus purchase bills by AO was not justified as AO had not applied his mind to the information received from the Investigating Wing and he had not provided the opportunity to cross examine a person whose statement was recorded by the investigating wing and relied upon by AO itself was a also reason to quash the entire assessment.

Held: Assessee-company was engaged in the business of manufacturing of Aluminum conductor steel reinforced (ACSR Conductors), DPC Wire Strips (double paper covered wire), steel wire ropes, PVC Cables and besides trading of M.S Pipes, aluminum wire and allied products. AO reopened the case u/s 147 on the basis of the information received from the investigation wing in the form of statement recorded in the case of Sh Madan Lal. In the reasons recorded, AO had mentioned that the purchases made from certain parties were bogus and as such there was escapement of income to the tune of Rs. 4.26 Cr. It was held that AO had merely relied upon the report of the investigating wing. Further, AO had not provided a copy of the statement of Shri Madan Lal recorded to assessee. Once AO of Shri Madan Lal had accepted the sales made to the Assessee in the Assessment Order passed under Section 143(3) read with 147, then the said purchases (sale of Shri Madan Lal) could not be disputed by AO of assessee. The above said fact was brought to the notice of AO. However, neither AO nor CIT (A) had considered the abovesaid fact. Further, both the Lower Authorities had not disputed that the purchases were made by assessee from the same parties in subsequent assessment years i.e. 2011-12 & 2012-13 and the assessment Orders were provided to the Lower Authorities. Assessee had requested for cross-examination of Shri Madan Lal and the same was not provided to assessee and therefore for not providing the opportunity to cross examine a person whose statement was recorded by the investigating wing and relied upon by AO itself was a reason to quash the entire assessment.

FULL TEXT OF THE ORDER OF ITAT AMRITSAR

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