Income Tax Officer vs The Silk Factory

“1.

On the facts and circumstances of the case, the Ld. CIT(A) has erred in law by restricting the addition of bogus purchases of Rs. 1,42,62,093/- made by the AO to 5% despite the fact that the AO has established that assessee was involved in accommodation entries and suppressing its profit due to bogus purchases thereby evading taxes.

2.

On the facts and circumstances of the case, the Ld. CIT(A) has erred while ignoring the findings of Investigation Unit which suggested that I the assessee was involved in bogus purchases for beneficiary of accommodation entries.

3.

Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not following the judgment of the Hon'ble Supreme Court in the case of NK Proteins Ltd vs DCIT(2017) 292 CTR 354(SC) which is squarely applicable to the facts of assessee case, WHARE the Hon'ble Supreme Court dismissed appeal filed by assessee and confirmed the findings of Hon'ble Gujarat High Court in respect of bogus purchase.”

“9.

The Co-ordinate Bench of the Tribunal in Assessee’s own case for Assessment Year 2022-23 in ITA No. 987/Del/2025, while dismissing the Appeal of the Revenue held as under:-

“6.

We find that the above stated documents clearly establishes that there were substantial evidences on which assesse had claimed that purchases were genuine and as assessee has discharged the initial onus of furnishing primary evidence and in particular the invoice copy, e-way bill and transport consignment note, month wise purchase and sales, details of opening and closing stock in value as well as in quantity.The ld. CIT(A) has taken note of above said documents and evidence which sufficiently prove purchases and prove the receipt of stock by the assessee, which has been sold by the assessee as per financial results and as per stock register furnished in value and as well as in quantity.The fact of the matter is that stock register not only reflects the value and quantity of stock but also reflects the party from whom purchases made and to whom sales made. Certainly if sales and turnover is accepted by department then goods purchased by the Assessee qua sales made by him are also bound to be accepted and section 69C of the Act cannot be invoked for deeming income. Where addition of purchase in total is proposed resulting intoGP exceeding the sales department must justify the addition with evidences not just suspicion that suppliers were Non Filers or did not reply to Notice u/s 133(6) of the Act, that supplier had their GST. Neither suspended or suo motto cancelled or cancelled on the request of the supplier. Many of them had multiple GSTN in their names. Many of them were Transient Companies meaning thereby that they had their GST registration made on a particular date, showed crores of sale to the assessee on the same day or for few days, and then requested for cancellation of GSTN, sometimes even within a few days or a month or that the GST Database showed that almost all of themwere not dealing in fabrics (which was what the assessee had claimed to have purchased from them). These suspicious circumstances should be relied only after rejecting the books like stock and sales and other corresponding expenditures. There is no allegation of fabricated evidences being filed so to justify the contentions of ld. DR. Thus the conclusion of ld. CIT(A) require no interference. The grounds have no substance. The appeal deserves to be dismissed. Accordingly ordered.”

10.

In view of the above discussion and also by following the order of the Tribunal in Assessee’s own case for Assessment Year 2022-23 (supra), we find no reason to interfere with the findings and the conclusion of the Ld. CIT(A) in restricting the addition made by the A.O. on account of unexplained expenditure u/s 69C of the Act to 5%. Accordingly, the Grounds of Appeal of the Revenue is dismissed as meritless. In the result, appeal of the Revenue in ITA No. 6048/Del/2024 is dismissed.”