Karam Chand Rubber Industries (p) Ltd. Vs ACIT (ITAT Delhi)
The assessee has duly discharged its initial onus by submitting sufficient proof substantiating purchase and the payment is also routed through banking channel, simply because of non-existence of parties at the given address, the transaction cannot be treated as bogus and no addition can be made accordingly.
FACTS –
Assessee is engaged in manufacturing of cycle/rickshaw rims. In July, 2011 search operation was initiated. Income tax return for FY 2010-11 was filed on 13th June, 2012 and during the assessment proceeding, AO observed that the assessee had purchased nickel worth INR 2,79,80,857 from four parties. During the post-search enquiry, AO concluded that the said four parties could not be located and it was reported that the four parties never existed at the address provided by the assessee. AO asked the assessee to prove the identity, credit worthiness of the parties and genuineness of the transaction.
Assessee submitted that all the four parties were registered with the Department of trade and taxes. Assessee submitted that the payment to the four parties were done through banking channel and provided all the necessary purchase proof like purchase invoice, ledger account, C Form issued to the suppliers, Form No. XXXVIII of the Department of Commercial Taxes which accompanies details of each consignment that enters UP from other States.
Assessee further submitted that since inquiry was conducted at later stage the said four parties cannot be located at the given address.
HELD –
During the search operation, nothing adverse was found from the premises of the assessee regarding the purchases made from the four parties. Only during the post search enquiry, the four parties were not available at the given address.
It is an admitted fact that the payment to the four parties has been done through the banking channel and assessee has provided sufficient proof substantiating purchase which proves the genuineness of the transaction and hence addition not possible.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the Revenue is directed against the order dated 30th September, 2014 of the CIT(A)-3 1, New Delhi relating to Assessment Year 2011-12.
2. The facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of cycle/rickshaw rims. A search u/s 132 of the IT Act was carried out at M/s Dhirani group of cases on 28th July, 2011 during which the business premises of the assessee was also covered. In response to notice u/s 153A of the IT Act dated 21st May, 2012, the assessee filed its return of income on 13th June, 2012 declaring total income of Rs.46,05,820/-. In response to notice u/s 142(1)/143(2), the assessee filed the requisite details as called for by the Assessing Officer from time to time.
3. The Assessing Officer, during the course of assessment proceedings, observed that the assessee has purchased nickel from the below mentioned four parties, the details of which are as under:-
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