ITAT Directs AO to Delete Addition made on Bogus Purchase without considering Relevant documents of Assessee: Bombay HC Directs Re-Consideration [Read Order]

The Bombay High Court directed the Income Tax Appellate Tribunal (ITAT) to re-consider the order for deleting the addition made by the assessing officer on bogus purchase on the ground of non-consideration of relevant documents. 

Nitin Ramdeoji Lohiathe, the respondent was engaged in the business of trading in industrial oil and transport services. A return of income was filed by the assessee declaring a total income and the assessing officer made addition to the income of the assessee.

The revenue appealed against the order passed by the Income Tax Appellate Tribunal (ITAT) of common order for three Assessment Years for directing the assessing officer to delete the addition made.

Suresh Kumar, the counsel for the petitioner contended that the ITAT was justified in directing the assessing officer to delete the addition made on account of bogus purchase by ignoring the fact. 

Also stated that the addition was made based on credible information from the Sales Tax Department and the assessee did not substantiate or confirm the veracity of the impugned purchases in the assessment proceedings. 

Further submitted that the order of the Income Tax Appellate Tribunal was not following the prescribed law and was liable to be deleted. 

Ruturaj H. Gurjar, the counsel for the respondent contended that the assessing officer had failed to complete the investigation in the case and that the affidavits and the confirmation letters filed by the assessee from three dealers from whom it had made purchases, were not inquired into at all. 

Also submitted that the assessee had discharged the onus of proving the factum of making purchases from the respective parties and that there was no contrary evidence brought on record by the assessing officer while deciding the addition. 

The Court observed that the matter involved in this appeal was necessary to re-consider for the addition made by the assessing officer by the Income Tax Appellate Tribunal. 

The two-member panel comprising Firdosh P. Pooniwalla and K.R. Shriram remanded back the matter to the Income Tax Appellate Tribunal for re-consideration only to the limited extent of going into the issue based on the addition made by the assessing officer. 

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