Case Law Details
PCIT Vs Nitin Ramdeoji Lohia (Bombay High Court)
Introduction: The Income Tax Appellate Tribunal (ITAT) passed a common order for three assessment years in the case of PCIT vs. Nitin Ramdeoji Lohia. The Revenue filed three separate appeals challenging the ITAT’s order. The Bombay High Court, in its judgment on 21st October 2022, disposed of two of the appeals, but remanded this appeal (ITXA No. 685 of 2018) to the ITAT for re-consideration on a specific issue.
Analysis: The case involves an assessee engaged in the business of trading in industrial oil and transport services. The Income Tax Department received information from the Sales Tax Department regarding alleged bogus purchases made by the assessee from Hawala dealers/parties. Based on this information, the Assessing Officer (A.O.) made an addition of Rs. 1,42,34,578/- on account of these alleged bogus purchases.
The assessee appealed before the CIT (Appeals), where partial relief was granted. The CIT (Appeals) opined that if the sales were not disputed, it could not be a case of bogus purchases and was likely to be inflated purchases. The CIT (Appeals) also estimated the gross profit rate at 5% and made an addition accordingly.
Both the Revenue and the assessee appealed further to the ITAT. The ITAT dismissed the Revenue’s appeal and allowed the assessee’s appeal, directing the A.O. to delete the addition on account of bogus purchases. The ITAT observed that the case relied solely on the Sales Tax Department’s investigation, without allowing cross-examination of the concerned individuals. The ITAT held that the A.O. had failed to complete a proper investigation and that the affidavits and confirmation letters submitted by the assessee were not duly inquired into. The ITAT concluded that the assessee had discharged the onus of proving the genuineness of the purchases, and no contrary evidence was brought by the A.O.
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