ITO Vs Nishant Agrawal (ITAT Raipur)
Protective Addition on Partner Set Aside Due to Lack of Direct Connection With Transactions; ITAT Rejects Protective Taxation of Partner for Partnership Firm’s Bogus Purchase Allegations; Bogus Purchase Addition Deleted as Assessee Was Only Partner During Relevant Year; ITAT Upholds Deletion of Rs.1.92 Crore Addition for Absence of Substantive Findings Against Partner.
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, dismissed the Revenue’s appeal against the deletion of a protective addition of Rs.1,92,55,750 made in the hands of an assessee in relation to alleged bogus purchases of a partnership firm. The assessee’s cross objection was also dismissed as infructuous.
The assessee had originally filed the income tax return for Assessment Year 2015-16 declaring income of Rs.5,11,880. The case was later reopened under Section 148 on the allegation that the assessee, as proprietor of M/s Ganpati Dal Mill with effect from 01.04.2015, had taken accommodation entries in the form of bogus purchases amounting to Rs.1,92,55,750. However, the Assessing Officer recorded in the reopening reasons that during the relevant financial year 2014-15, M/s Ganpati Dal Mill was a partnership firm and, therefore, the reassessment proceedings against the assessee were initiated on a protective basis. The addition was also made protectively in the assessee’s hands.
