The Income Tax Appellate Tribunal (ITAT), Chennai bench deleted the addition made towards the bogus interest expenditure based on sworn statements as well, as reconciliation statements filed by the assessee during the course of assessment proceedings.
The assessee, Tulsian Refinery Pvt. Limited is a resident corporate engaged in supply of edible oils. Following the search action under section 153A in the KRPL case on May 17, 2017, the assessee was the subject of an impugned assessment based on some incriminating material discovered during the course of the search activities. The seized material, inter-alia, contained details of refined sunflower oil supplied by assessee to KRPL.
It turned out that KRPL bought oil from a number of sources, including the assessee. Only until the quality control department had confirmed the oil’s quality did M/s KRPL accept delivery. These quality reports, together with invoices and weighing slips, are essential components of record keeping.
However, some of the purchases were not accompanied with the quality reports and therefore, the same were held to be bogus in nature.Therefore after verifying the assessee transaction in related to bogus bills and inflated bills / invoices to KRPL concluded that assessee issued bogus sales vouchers to KRPL which was used by the assessee to settle the interest dues to KRPL against loans availed from them. Also The interest of Rs.72 Lacs so claimed by the assessee was found to be bogus in nature
Aggrieved by the order, the assessee filed an appeal before the CIT(A) who dismissed the appeal and held that interest expenditure was nothing but accommodation entry provided by the assessee for KRPL. Thereafter the assesee filed a second appeal before the tribunal.
Dinesh, the Counsel for the assessee submitted that assessee has not done any bogus sale. The interest was paid through banking channels after complying with TDS provisions.
V. Nandakumar, Counsel for Revenue, supported the order of lower authorities.
The tribunal observed that the additions are based on sworn statements as well as reconciliation statements filed by the assessee during the course of assessment proceedings. Also the KRPL’s claim qua bogus purchases has been accepted for all the years except for AY 2016-17 by the Income Tax Settlement Commission.
After reviewing the facts and records, the two-member bench of Manoj Kumar Aggarwal (Accountant Member) and Mahavir Singh (Vice President) observed that the additions are based on sworn statements as well as reconciliation statements filed by the assessee during the course of assessment proceedings.
Therefore, the bench allowed the appeal filed for the assessment year 2017-18 and deleted the addition.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
