Professional Update
(Income Tax Case laws)
Civil Appeal 1753 of 2018 (Bombay High Court).
Ashok Kumar Rungta
vs
Income tax officer 24(1)(1).
Ratio.
The Bombay High Court held that Addition of bogus purchase cannot be simply based on the sales tax investigation report, without making any independent inquiries.
Facts.
The appellant has appeal u/s 260A of the income tax act against an order of ITAT dated 09th August 2017. The ITAT upheld the order of CIT(A) wherein 10% disallowance was made for the alleged bogus purchase as held by the Ld. AO. The Ld. AO is suspicion is based on the investigation report of sales tax authorities.
Issue.
Whether the addition could be made based on the sales tax authority report without making any independent inquiry regarding the same.
Held.
The Bombay High Court held that the onus of bringing the purchases by the Appellant-Assessee under cloud was on the Respondent-Revenue, which has not discharged this burden in the first place.
Apart from the inputs being received from the investigation wing, there is nothing concrete in the material on record that was used to confront the Appellant-Assessee. If the counterparties in these purchases could not be produced years later, simply adopting a 10% margin for disallowance, without any cogent or convincing evidence, in our opinion, would be unreasonable and arbitrary.
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CA Manoj Garg
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