KDP Infrastructure Private Limited Vs DCIT (ITAT Delhi)
Bogus purchases can’t be taxed u/s 69 without rejecting books: ITAT Delhi deletes ₹4.55 cr addition
Delhi Tribunal allowed the assessee’s appeal and deleted the addition of ₹4.55 crore made u/s 69 on account of alleged bogus purchases. The Tribunal held that where purchases are duly recorded in the books of account and payments are made through banking channels, the same cannot be treated as unexplained “investments” u/s 69 unless the books are first rejected or there is material to show unrecorded investments. It was noted that the AO himself treated the amount as bogus purchases debited to the profit & loss account, without doubting the overall books of account or examining stock/inventory discrepancies. Section 69 was held to be inapplicable, as there was no case of investments not recorded in the books or purchases made from unknown sources. The plea that quoting a wrong section is a mere technical error was rejected, since each deeming provision casts a distinct onus on the assessee. In absence of any finding justifying invocation of sections 69 or 69C, the addition was held to be unsustainable and was directed to be deleted in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 23.01.2024 of the Ld. Commissioner of Income Tax(A)-3 Noida (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No. CIT(A), Kanpur-4/11054/2019-20 arising out of the appeal before it against the order dated 01.12.2023 u/s 154 r.w.s. 254 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the ACIT/DCIT/ACIT, Central Circle, Ghaziabad for Assessment Year 2012-13.
