DCIT Vs Surender Kumar Jain (ITAT Delhi)
ITAT Delhi held that addition under section 69C of the Income Tax Act towards bogus purchases cannot be sustained merely for failure on the part of 3rd party in not responding to the summons. Addition set aside since genuineness of transaction proved.
Facts- The assessee is engaged in the business of trading of gold and silver bullion in the name of proprietorship concern M/s. S.K. Impex. The assessee made purchase form M/s. Bombay Gold Lab (proprietor Shri Pravin Patil) in the sum of Rs. 2,79,52,732/- during the year under consideration which was treated as bogus and disallowed by AO u/s 37 of the Act.
CIT(A) sustained only the profit element embedded in the value of such purchase to the extent of 1% thereon and confirmed the addition of Rs. 2,79,527/- and deleted the remaining sum. Against this order of CIT(A), the assessee as well as the revenue has preferred the present appeal.
Conclusion- Hon’ble Supreme Court in the case of Orissa Corporation reported in 159 ITR 78(SC) wherein, failure of a 3rd party in not responding to the summons would not lead to draw an adverse inference against the assessee.
Held that the purchase made by the assessee from Bombay Gold Lab has been duly reflected in the audited books of account of the assessee, source for making payment are duly established by the assessee and corresponding sales made out of such purchase were also given to the ld AO and reflected in the books of account of the assessee. At the cost of repetition, the said party Bombay Gold Lab had duly responded to the notice issued u/s 133(6) of the Act by furnishing the requisite details directly before the ld AO. The assessee had even given the PAN details and GST details of the said party before the lower authorities. Hence, purchase transaction made from the said party cannot be treated as bogus. Once corresponding sales made out of disputed purchase stands accepted, the purchase cannot be doubted.
