The Chennai Bench Of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer ( AO ) for de novo adjudication concerning alleged bogus purchases by the assessee, allowing the consideration of additional evidence.
Greta Energy Limited,the appellant-assessee,had been a resident corporate entity engaged in power generation and distribution. The assessment order indicated that the return of income had initially been scrutinized under Section 143(3).
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However, the case was reopened due to allegations of bogus purchases totaling Rs. 92.43 lakhs from M/s. Shree Om Sai Industries Pvt. Ltd. Despite receiving multiple notices during the assessment proceedings, the assessee failed to provide a satisfactory response.
The verification unit had issued a notice under Section 133(6), and a field inspector reported that the supplier had not existed at the given address for over eight years. Consequently, the AO concluded that the transactions with this non-existent entity were not genuine, leading to the addition of the amount to the assessee’s income under Section 69C of the Act.
The Commissioner of Income Tax(Appeals)[CIT(A)], upon reviewing the submissions, directed the AO to limit the addition to the gross profit percentage shown by the appellant-assessee. The CIT(A) determined that this income did not qualify as a statutory addition as per Central Board of Direct Taxes(CBDT) Circular No. 36 of 2017 and was thus ineligible for deduction under Section 80-IA. This decision resulted in cross-appeals.
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The tribunal noted that while purchases had been made from the supplier, the appellant-assessee had failed to substantiate these transactions adequately. However, considering new evidence that could materially impact the case, the tribunal set aside the orders of the lower authorities.
The two-member bench, consisting of Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member), restored the matter to the AO for de novo adjudication, which included evaluating the new evidence presented. The issue of deduction under Section 80-IA was also left open for reconsideration if needed.
Consequently, the cross-appeals were allowed for statistical purposes.
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