Gross Negligence by CIT(A) and AO in Ignoring Submissions and Evidence: ITAT Deletes ₹9 Cr Purchase Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT) held that the Commissioner of Income Tax (Appeals) (CIT(A)) and the Assessing Officer (AO) exhibited gross negligence in discharging their statutory duty by ignoring the submissions and evidence placed on record by the appellant, Pringalkumar Praveenbhai Shah. The tribunal set aside the order passed by CIT(A) and deleted the addition of ₹9 Crore made towards purchases

The appellant, Pringalkumar Praveenbhai Shah, filed an appeal against the confirmation by the CIT(A) of the disallowance of purchases amounting to ₹9,00,63,954 made by the AO under Section 69C read with Section 115BBE of the Income Tax Act, 1961. The disallowance was made on the ground that the appellant had failed to discharge the onus of proving the genuineness of the purchases

The counsel for the appellant, Umedsingh Bhati, contended that all documents sought by the AO during assessment proceedings to substantiate the genuineness of the purchases had been duly furnished. It was submitted that every query raised by the AO had been responded to with supporting documentation.

The appellant counsel demonstrated that the appellant had filed its audited balance sheet and Profit and Loss account, purchase registers, confirmations from suppliers, bank statements, freight bills, and copies of GST returns including GSTR-9, GSTR-9C, GSTR-3B and GSTR-1 to prove the genuineness of the purchases made by the appellant.

Rignesh Das, representing the Revenue Department, was unable to counter the facts pointed out by the appellant counsel and supported the orders of the CIT(A).

Sanjay Garg, Judicial Member and Annapurna Gupta, Accountant Member, observed that the order passed by CIT(A) is a classic case of gross callousness. The Tribunal noted that both the AO and the CIT(A) had ignored the evidence filed by the appellant and recorded findings contrary to the material available on record.

It was held by the tribunal that the authorities had exhibited gross negligence in the discharge of their statutory duty, resulting in harassment to the appellant. It further observed that the order was contrary to the principles of natural justice and not sustainable in law.

Accordingly, the Tribunal set aside the order of the CIT(A) and directed the deletion of the addition of ₹9,00,63,954.

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