Addition confirmed on Diamond Purchase alleging Suppliers’ Purchase Bogus: ITAT Permits Additional Evidence including ITR of Suppliers and Purchase Invoices [Read Order]

The Income Tax Appellate Tribunal (ITAT), Surat Bench, confirmed addition to assessee's income on diamond purchase alleging supplier’s purchase to have been bogus. ITAT permitted additional evidence for the assessee's case, including Income Tax Return (ITR) of suppliers and purchase invoices.

Also Read: NCLT Rejects CIRP Plea against Steel Exchange India Over ₹162 CrDisputed Delayed Charges

The assessee company, Redeem Exports, is engaged in the business of trading of rough and polished diamonds. In the case of Crossiance Diamond Pvt Ltd, the Assessing Officer (AO) recorded a statement where it was admitted that Dharmik Export Pvt. Ltd. and Santosh James Pvt. Ltd. were paper concerns.

The assessee company had purchased rough diamonds from these two companies and the payment was reflected in their bank accounts. After taking cognizance of the assessee’s reply to the allegations, the AO made an addition of INR 1,15,80,000/- under Section 68 on account of bogus purchase.

The counsel for the assessee submitted that the assessee had filed details during assessment proceedings which proved the identity, creditworthiness and genuineness of the transactions. It was also added that the assessee was not given proper opportunity to cross-examine the persons concerned.

ITAT took note of the additional evidences including ledger confirmation, purchase invoice, ITR of the suppliers, stock register, bank statements and sales and purchase registers filed at the time of personal hearing. The bench acknowledged that the evidences need to be looked into and remanded the file back to the Commissioner of Income Tax (Appeals) [ CIT(A) ].

The bench of Dr. BRR Kumar (Vice President) and Suchitra Kamble (Judicial Member) thus remanded the matter for proper verification and adjudication of issue on merit as per the Income Tax Act. Conclusively, the appeal of the assessee was partly allowed for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates