| Question And Answer | |
|---|---|
| Subject: | Addition as non Genuine Purchases |
| Category: | Income-Tax |
| Querist: | Prakash Kulkarni |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | purchases, Search Action, Unexplained cash credit |
| Date: | September 15, 2022 |
Assessee is private limited co, engaged in the business of manufacturing of steel plates and other allied products . Search action U/Sec. 132 was conducted in the year 2021-22 . During the search in respect of certain purchase bills the assessee was not able to provide the details of Toll receipts, and LR receipts along with the E way Bills . The investigating team has drawn the inference that all these bills are non genuine . On the basis of these defects, during the course of reassessment proceedings initiated U/Sec.148A, AO has issued show cause as to why the purchases should not be considered as non genuine . Assessee has given the reply as under:
a. In respect of inference that assessee has not produced Toll receipts, assessee has obtained the same from the transporter, where toll was paid , given the evidence that the vechicle was used the route which do not require toll payment.
b. provided the confirmation as well as account extract of the parties giving their valid GST Numbers and PAN
c. Lorry receipts as well as Good received Receipts
d. Genuine E Way bills
e. Electricity consumption
f. quantitative details of consumption of material and inventory
Inspite of this the AO proposed to make an addition of 100% of the purchases from such parties , even though the discripancies found were for few bills . Is the action of the AO is justified?
The action of the Ld. Assessing Officer is not completely justified. However, since its clear on what basis the additions have been made by the Ld. AO, the Assessee can file additional evidence before the CIT(A) by making an application under Rule 46A of the Income-tax Rules, 1962 and gather a remand report from the Ld. AO.
What justification has been given by the AO in the draft assessment order is very important. Exact guidance can be give on that basis only.
However, you can file quantitative details of prior years as well for comparison purpose, details of tax deducted on source on transport payment and of suppliers.
Further, if suppliers are in existence and in touch with, ask the AO to issue notice u/s 133(6) or summons u/s 131(1)