Ex Parte Dismissal and Bogus Purchases Addition: ITAT Remands Matter to CIT(A) [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)  remanded the matter to the Commissioner of Income Tax(Appeals)[CIT(A)] for a proper review after noting that the appeal was dismissed ex-parte without considering the evidence provided by the assessee, concerning the addition of Rs.11.84 crore for bogus purchases.

Hari Krushna Machintech Private Limited,appellant-assessee, filed its return of income for the Assessment Year 2012-13 on 29.09.2012, declaring Rs.1,80,65,490/-, which was processed under Section 143(1) of the Act. The Assessing Officer(AO) found that the assessee was involved in bogus purchases worth Rs.11.84 crore in circular trading with other entities. The funds moved between AV Sales, OM Surgical, Dishant Trading, and the assessee, returning to AV Sales.

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A notice under Section 148 was issued for reopening the case. The assessee filed its return again on 26.04.2019, declaring the same income. However, the requested details were not provided, and the AO concluded the purchases were bogus. As a result, an addition of Rs.11.84 crore was made to the total income in the Assessment Order dated 18.12.2019.

Aggrieved by the order of the AO the assessee appealed before the CIT(A),which later dismissed the appeal.The assessee then appealed before the tribunal.

Read More: Bogus Purchases Claim on Rs. 94.3 Crore: ITAT Upholds CIT(A) Relief Based on Supporting Evidence

The assessee's counsel said the CIT(A) passed an ex-parte order without giving the appellant-assessee a fair chance. They asked for the matter to be sent back to the CIT(A) for a proper review.

In response, the revenue counsel stated that the assessee was given sufficient opportunities but did not respond, so the CIT(A) rightly dismissed the case.

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The two member bench comprising Dr.BRR Kumar(Vice President) and Suchitra Kamble(Judicial Member)reviewed the case and noted that the assessee requested more time to submit documents. It appeared that the CIT(A) did not consider the evidence provided.

The tribunal decided to send the matter back to the CIT(A) to review the evidence and make a decision, ensuring the assessee was given a fair hearing.

In short, the appeal filed by the assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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