DCIT Vs Adventure Resorts And Cruises Pvt. Ltd. (ITAT Delhi)
Without Rejecting Books, Bogus Purchase Addition Unsustainable- Sales Accepted, Purchases Cannot Be Disbelieved- ITAT Delhi Upholds Deletion of ₹3.82 Cr Bogus Purchase Addition
Assessee, operating luxury cruises on the Brahmaputra, declared tourism income of ₹6.15 crore. AO noted sudden spurt in trade payables (₹18.89 lakh in FY 2012-13 vs. ₹4.16 crore in FY 2013-14). On inquiry, creditors SRS Industries (₹2.18 cr) & RS Industries (₹1.64 cr) were found non-existent at given addresses. Since Assessee also failed to produce transportation proof, freight bills or godown details, AO treated entire purchases of ₹3.82 cr as bogus & added them back, alleging a ploy to reduce taxable tourism profits.
CIT(A)’s Decision:
- Assessee had shown sales of ₹3.30 cr to Ganga Enterprises & ₹1.16 cr to Mamta Traders against textile purchases from SRS & RS.
- Books of accounts & stock registers, including quantity details, were produced & not rejected by AO.
- Payments were made by account-payee cheques; corresponding sales proceeds also received by cheque.
- Without purchases, accepted sales could not exist. If purchases were bogus, sales & profit of ₹84.80 lakh would also be bogus, which Revenue never disputed.
- Accordingly, addition was deleted.
Tribunal’s Findings:
- AO failed to reject books u/s 145; hence, disallowance of purchases without disturbing sales was untenable.
- Assessee produced complete ledgers, bills, vouchers, bank statements & quantitative details corroborating purchases & sales.
- Time gap between purchases (2013-14) & investigation (2016) explained non-traceability of suppliers.
- CIT(A)’s reasoning was upheld; Revenue’s appeal dismissed.
- Assessee challenged validity of notice u/s 143(2), alleging it was not issued by jurisdictional AO. Tribunal, based on remand report, noted that notice was issued on 28.08.2015 by ITO Ward-12(2) & again on 14.09.2015 after transfer to DCIT Circle-1(2). Both were served by speed post. Since notice was within limitation & by competent AO, cross objection was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
