Allegation of Bogus Purchase on borrowed satisfaction from VAT Dept. without Proper Cross-Verification: ITAT deletes Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has deleted the addition made on the allegation of bogus purchase on borrowed satisfaction from the Value added tax (VAT) department without proper cross-verification.

The appellant, Ravi Developmentsis a developer and carrying on business as a promoter. During the assessment proceedings the Assessing Officer disallowed 91% of the purchase claimed in respect of project VAL DAF D & ORC B,C i.e. 91% of Rs.68,49,206/- amounting to Rs. 62,32,777/- alleging that such purchases were bogus. The aggrieved appellant filed an appeal before the CIT(A). The CIT(A) confirmed the addition; hence, the appellant filed an appeal before the ITAT.

The counsel for the appellant submitted that the addition was made fully depending on the available documents from the VAT authorities. No cross-verification was allowed by the AO. The VAT authorities are generally examining the payment of VAT. The Sale Tax Department is mostly concerned about the input tax credit availed by theparty and payment of output tax. The appellant had utilized this purchase for its working progress.

The Coram of Mr. B.R. Baskaran, Accountant Member,and Mr.Anikesh Banerjee, Judicial Member observed that the whole addition was made on borrowed satisfaction from the VAT department and no proper cross-verification was made by the revenue authorities.The stock was exhausted by the assessee during the year through sales. Hence, the Tribunal has held that “we are declining the order of the Ld. CIT(A) and directing to delete the addition amount of Rs. 62,32,777/-.”

Mr. Mahaveer Jain and Mr. H.N. Singh appeared on behalf of the appellant and revenue respectively.

To Read the full text of the Order CLICK HERE

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