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2024 (4) TMI 586 - AT - Income Tax


Issues Involved:
The appeal filed by the Income Tax Officer against the appellate order passed by the National Faceless Appeal Centre for assessment year 2011-12 under section 147 read with section 144 of The Income Tax Act.

Issue 1: Restriction of Addition on Account of Bogus Purchase

The learned CIT (A) restricted the addition made on account of bogus purchase to 12.5% of total bogus purchases, considering the involvement of hawala traders and accommodation entries. The Sales Tax Department's findings were a crucial factor in this decision.

Issue 2: Admission of New Evidences

The learned CIT (A) admitted new evidence without seeking a remand report from the Assessing Officer as required by rule 46B of the Income Tax Rule, 1952, raising a procedural issue.

Issue 3: Deletion of Unexplained Purchase Amount

The learned CIT (A) deleted the unexplained purchase amount added by the Assessing Officer, citing lack of compliance by the assessee and purchases from parties engaged in bills-trading without actual trading activity.

Issue 4: Failure to Produce Parties for Verification

The learned CIT (A) noted the assessee's failure to produce parties for verification, despite opportunities provided by the Assessing Officer, raising concerns about substantiating transactions.

Issue 5: Examination of Quantity Tally

The learned CIT (A) was criticized for restricting the addition to 12.5% of total bogus purchases without examining the quantity tally of day-to-day transactions, sales, stocks, and corresponding values.

Issue 6: Deletion of Addition Without Appreciating Supreme Court Decision

The learned CIT (A) deleted an addition made by the Assessing Officer without appreciating the Supreme Court's decision in N.K. Proteins Ltd., emphasizing the liability of disallowing purchases from bogus suppliers.

Issue 7: Deletion of Addition Without Substantiating Sales

The learned CIT (A) deleted an addition without substantiating sales corresponding to bogus purchases, leading to a discrepancy in the assessment proceedings.

The appeal involved intricate issues related to bogus purchases, procedural lapses, evidentiary requirements, and judicial precedents. The decision highlighted the importance of substantiating transactions, complying with procedural rules, and considering relevant legal precedents to determine the extent of additions in such cases.

 

 

 

 

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