The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that addition would not sustain once the genuineness of transaction is proven.
During the assessment proceedings the assessing officer got information from the investigation wing that Delight Diam P Ltd. and Bafna Exim Pvt. Ltd. are not carrying out any real business but are only providing accommodation entries. Since, the assessee had made bogus transactions with Delight DiamPvt. Ltd and Bafna Exim Pvt Ltd during the year under consideration.
The assessee, Ganesh GanpatAlim had not furnished his explanation during the assessment proceedings. Therefore, AO noted that it is nothing but unaccounted income of the assessee and the same was not offered for taxation. The assessing officer, having gone through the reply of the assessee, held that assessee has not explained the bona fide of these transactions therefore made addition.
SapneshSheth, appeared on behalf of the assessee.
Ashok B. Koli, on behalf of the revenue submitted that the assessee had not explained the genuineness of the transactions and therefore it was a case of bogus purchase.
The two-member Bench of Pawan Singh (Judicial Member) and A L Saini (Accountant Member) allowed the appeal holding that the addition made by the Assessing Officer in reassessment proceedings was not sustainable in law.
The Bench further held that there was no finding that any details, documents and evidence supplied by the assessee to the AO in respect of payment/repayment in the same year were found to be incorrect or erroneous or false.
The bench added that, such addition cannot be made where the assessee has paid the due amount in the assessment year itself.
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