HC Upholds Deletion of Rs. 5.04 Cr Bogus Purchase Addition Lacking Evidence

The assessee filed return for AY 2012–13 declaring income of Rs. 9.90 lakh, which was initially assessed under Section 143(3). Subsequently, based on information from the Investigation Wing alleging transactions with M/s Keshav Impex (an alleged accommodation entry provider), the assessment was reopened under Section 147. The Assessing Officer treated purchases of Rs. 5.04 crore as bogus and made full addition.

The assessee challenged the addition before the CIT(A), contending that no material evidence was provided, no cross-examination was allowed, and all transactions were supported by records including VAT payments and completed sales tax assessments. The CIT(A) accepted the explanation and deleted the addition, which was later affirmed by the Tribunal.

Main Issue: Whether deletion of addition on alleged bogus purchases raises any substantial question of law under Section 260A.

HC’s Decision: The High Court dismissed the Revenue’s appeal, holding that no substantial question of law arose. It observed that both the CIT(A) and the Tribunal had concurrently found in favour of the assessee after appreciating the factual record. The Court noted that the Assessing Officer failed to bring any cogent evidence to establish that the transactions were bogus.

No material was produced to disprove the assessee’s documents, and even the alleged statement of the entry provider was not properly relied upon. The Court further observed that the books of accounts were not rejected, and sales were not doubted. In such circumstances, the findings were purely factual, and the Court declined to interfere under Section 260A.

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