Case Law Details
Ravi Developments Vs ACIT (ITAT Mumbai)
Conclusion: Addition of bogus purchase by AO was not justified on borrowed satisfaction from the Value added tax (VAT) department without proper cross-verification.
Held: During the assessment proceedings, the purchase was disallowed by AO @ 91% of the total purchase. The addition was made fully depending on the available documents from the VAT authorities. No cross verification was allowed by AO. Assessee filed an appeal before the CIT(A). The CIT(A) confirmed the addition; hence, assessee filed an appeal before the ITAT. It was held that the VAT authorities were generally examining the payment of VAT. The Sale Tax Department mostly concerned about the input tax credit availed by the party & payment of output tax. Assessee had utilized this purchase for its working progress. The details of purchase was also submitted. The whole addition was made on borrowed satisfaction from VAT department. No proper cross verification was made by the revenue authorities. AO also did not make any strong objection against the assessee. The stock was exhausted by assessee during the year through sales. Hence, the addition sustained by the CIT(A) was deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeals are filed by the Assessee against the order of the Learned Commissioner Income Tax (Appeals), Pune-11 [in short CIT(A)] order passed u/s 250 of the Income Tax Act, 1961 (in short ‘Act’), for assessment years 2009-10 & 2010-11. Boththe orders were passed on dated 25.02.2022. The impugned orderswere generated for the period 2009-10 & 2010-11 from the orders of the learned Assistant Commissioner of Income Tax, Circle-2, Thane, both the orders are passed on 28.03.2013, passed u/s 143(3) r.w.s. 153A of Act.
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