The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) upheld the disallowance of bogus purchases which have no implication in income accounted for work in progress.
The appeal and the Cross Objection filed by the Revenue and the assessee are against the order dated 11.07.2014 of the CIT(A)-1, New Delhi, relating to Assessment Year 2011-12.
The AO observed that the assessee, Amrapali Eden Park Developers Pvt. Ltd transactions of purchase of building materials/steels alleged to be sourced from the parties remained unverified and treated as ‘bogus and unexplained expenditure.’ It was submitted by the revenue that the purchases from all four parties were rightly treated as ‘bogus’ and the CIT(A) was not justified in granting relief to the assessee.
The assessee was asked to produce books of accounts & ITR to prove the genuineness of the party and the transactions, which was a failure to which the purchase transactions were treated as bogus.
A Coram of Shri C M Garg, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member observed that the CIT(A) has rightly observed that the disallowance of expenditure claimed by the assessee does not have any implications on its income which has been accounted for as work-in-progress and deleted the addition made by the AO.
The assessee has claimed expenditure on account of purchase from certain parties who are involved in the mere issue of purchase bills and effecting payments through banking channels for commission and not supported with the physical transfer of goods.
The Tribunal restored the issue to the file of the CIT(A) to consider the adjudication of the issue in AY 2012-13 and relevant subsequent assessment years and, thereafter re-adjudicate the issue after allowing the due opportunity of hearing to the assessee.
The appeal filed by the Revenue as well as the CO filed by the assessee was allowed for statistical purposes. Shri Ishtiyaque Ahmed appeared on behalf of the revenue and none appeared for the assessee.
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