This appeal was filed by the Deputy Commissioner of Income Tax (DCIT), Circle-28(1), New Delhi (the appellant) against the order dated 08.04.2019 passed by the Commissioner of Income Tax (Appeals)-10, New Delhi, for the assessment year 2015-16. The case was heard by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘F’, through video conferencing.
The respondent, Pinnacle Clothing Company, is engaged in the business of manufacturing and exporting garments. The firm, with partners Sh. Sumit Kumra and Ms. Vani Kumra, filed its return of income for the assessment year 2015-16 on 30.09.2015, declaring an income of Rs.7,41,08,880/-. During the assessment, the Assessing Officer (AO) disallowed certain expenses and treated purchases from M/s Vrindavan International Trade Pvt. Ltd. as bogus, leading to an addition of Rs.3,59,02,700/- to the income of the respondent.
The Revenue raised the following grounds of appeal:
The respondent provided substantial evidence to support its purchases, including gate inward registers, lorry receipts, and payment confirmations. The CIT(A) noted that the AO failed to disprove these evidences and relied primarily on the statement from M/s Vrindavan International Trade Pvt. Ltd., which admitted to bogus transactions for its own purposes. The CIT(A) held that the AO did not provide the respondent an opportunity to cross-examine the vendor, violating principles of natural justice. The CIT(A) thus deleted the addition made by the AO.
During the hearing on 02.08.2023, the Tribunal considered the evidence provided by the respondent, including documentation and confirmation of purchases through proper channels. The Tribunal found that the AO’s disallowance was based on insufficient inquiry and lack of substantive evidence against the respondent. The Tribunal upheld the CIT(A)’s decision to delete the addition, emphasizing that the AO had not conducted a thorough investigation nor provided the respondent with an opportunity to defend its case adequately.
Thus, the appeal of the Revenue was dismissed.
The Tribunal’s decision to dismiss the appeal underscores the importance of thorough investigation and the provision of opportunities for cross-examination in tax disputes. This case highlights the necessity for the AO to substantiate claims with concrete evidence and follow due process in assessments.
The order was pronounced in open court on 18th August 2023.
Order pronounced in open court on this 18th day of August 2023.
Sd/-
(Kul Bharat)
Judicial Member
Sd/-
(Dr. B. R. R. Kumar)
Accountant Member
Date: 18.08.2023
Copy forwarded to:
Assistant Registrar
ITAT, Delhi Benches
Delhi
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform