Ashok Kumar Rungta Vs ITO (Bombay High Court)
Bombay High Court held that addition of 10% of allegedly bogus purchases without any cogent or convincing evidence is not sustainable in law. Accordingly, impugned order set aside and appeal disposed of in favour of the assessee.
Facts- Present appeals are filed against an Order and Judgment of the Income Tax Appellate Tribunal upholding an Order dated April 27, 2015 passed by the Commissioner of Income Tax – Appeal, disallowing 10% of certain suspect purchases on the premise that they are bogus purchases. Originally, AO had passed an order dated March 21, 2014 on reassessment of returns for three Assessment Years, disallowing all the expenses incurred towards purchase from certain entities, and thereby adding such expenses to the income of the Appellant-Assessee.
Conclusion- Held that the onus of bringing the purchases by the Appellant-Assessee under cloud was on the Respondent-Revenue, which has not discharged this burden in the first place. Apart from the inputs being received from the investigation wing, there is nothing concrete in the material on record that was used to confront the Appellant-Assessee. If the counterparties in these purchases could not be produced years later, simply adopting a 10% margin for disallowance, without any cogent or convincing evidence, in our opinion, would be unreasonable and arbitrary. It is repugnant for the ITAT to uphold such an addition of 10% of the allegedly bogus purchases to the income of the Appellant-Assessee, despite returning a firm finding that the AO Order was untenable not being backed by cogent and convincing evidence.
