Facts of the Case

The present appeal was filed by the Revenue challenging the order dated 30 September 2020 passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2009–10.

The Assessing Officer (AO) had made an addition of ₹7,05,00,000/- on account of alleged bogus purchases made by the assessee from a concern, M/s Ridhi Sidhi Enterprises, whose proprietor had allegedly admitted to issuing accommodation entries.

The Commissioner of Income Tax (Appeals) [CIT(A)] and ITAT deleted the addition.

Issues Involved

  • Whether addition on account of alleged bogus purchases can be sustained solely based on third-party statements.
  • Whether the deletion of addition by CIT(A) and ITAT gives rise to a substantial question of law.
  • Whether failure of the assessee to establish actual receipt of goods justifies addition.

Petitioner’s Arguments (Revenue)

  • The ITAT erred in deleting the addition made by the AO.
  • The AO had relied upon the statement of the supplier (Surendra Kumar Sharma), who admitted issuing bogus bills.
  • The assessee failed to establish actual receipt of goods corresponding to the alleged purchases.
  • Therefore, the purchases were non-genuine and liable to be added to income.

Respondent’s Arguments (Assessee)

  • The addition had already been examined and deleted by CIT(A) and ITAT based on factual findings.
  • Similar transactions involving the same supplier had been adjudicated in another case (Vijay Kumar Goel), where relief was granted.
  • The Revenue failed to bring any new material to justify interference.

Court’s Findings / Order

  • The Court noted that both CIT(A) and ITAT had deleted the addition after examining the facts and evidence.
  • The deletion was based on a precedent involving similar facts, which had already been upheld by the Allahabad High Court.
  • The Court emphasized that there were concurrent findings of fact by lower authorities.

Final Order:

  • No substantial question of law arose in the present case.
  • The appeal filed by the Revenue was dismissed.

Important Clarification

  • Mere reliance on third-party statements without corroborative evidence is insufficient to sustain additions.
  • When lower authorities record concurrent findings of fact, High Courts generally do not interfere unless a substantial question of law arises.
  • Consistency in judicial decisions (especially where similar facts exist) plays a crucial role in tax litigation.

Sections Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal to High Court)
  • Section 69 / 69C (Unexplained expenditure / bogus purchases – implied context

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:970-DB/MMH16032022ITA532022_194240.pdf

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