ITAT restores Rs.8.79 lakh matter of Asiatic Industries to AO for re-adjudication
The appeal of the assessee was partly allowed for statistical purposes
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has restored the matter involving bogus purchase addition of Rs.8.79 lakh to the Assessing Officer (AO) for fresh adjudication in the Asiatic Industries’ Assessment Year 2011-12 scrutiny.
The single-member bench of George Mathan (Judicial Member) held that the addition was made without adequate verification and directed the assessee to produce the suppliers before the AO.
The AO made an addition due to the alleged bogus purchases from three suppliers and issued notices to the suppliers under Section 133(6) of the Income Tax Act, 1961. These were returned unserved with remarks indicating ‘non-existence’.
The AO had treated the purchases as bogus and added the amount to the assessee’s income, noting that the latter failed to substantiate the genuineness of the transactions despite providing ledger accounts showing running balances.
Aggrieved by the AO’s order, the assessee appealed before the Commissioner of Income Tax (Appeals), who confirmed the addition and upheld the AO’s findings.
Dissatisfied with the order, the assessee approached the ITAT.
The assessee argued that the AO erred in not issuing a summons under Section 131 despite his request and that the AO relied solely on returned notices under Section 133(6). He added that the ledger accounts showed ongoing business relations, and the addition should be deleted due to lack of proper verification.
The tribunal observed that the AO had issued notices under Section 133(6) but did not exercise powers under Section 131 to summon the suppliers, despite the assessee’s operational business and running ledger accounts.
Thus, the bench directed the assessee to produce the sellers/suppliers before the AO for verification. It granted the AO the liberty to draw an adverse inference if the assessee failed to comply.
The matter was restored to the AO for fresh adjudication after providing the assessee a reasonable opportunity of being heard.