The Tax Publishers2020 TaxPub(DT) 4894 (Mum-Trib)

INCOME TAX ACT, 1961

Section 69

Where AO alleged that assessee failed to prove genuineness of purchase of machinery and made additions by treating same as bogus purchase, considering that assessee furnished invoice and sanction letter of bank, and bank certified that payments were made to vendors, genuineness of purchases stood established.

Income from undisclosed sources - Bogus purchase - Assessee furnished invoice and sanction letter of bank, and bank certified that payments were made to vendors -

AO alleged that assessee failed to prove genuineness of purchase of machinery, therefore, AO disallowed cost of machinery, cost of installation as well as, depreciation claimed by assessee on aid machine. Assessee contended that merely on basis of enquiries conducted at alleged premises of supplier, AO formed an opinion that it was a case of bogus purchase. Held: Assessee in order to prove genuineness of purchase furnished invoice and sanction letter of bank. Assessee financed purchase and installation of machine from bank, which certified that payments were made to vendors, who installed the machine. Said fact was not rebutted by revenue. Machine was purchased during financial year 2008-09 and inspector visited premises of the vendors in december, 2014. Possibility of vendors shifting place of business in between could not be ruled out. Right course to verify purchase and installation of machine was to visit the premises of assessee, which inspector failed to do. Purchases alleged to be bogus was not a trading asset but a fixed asset. Since purchase of fixed asset was not reflected in profit and loss account, thus, it was not claimed as an expenditure and once expenditure was not claimed, same could not be disallowed.

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2009-10


INCOME TAX ACT, 1961

Section 147

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