Different Evidence View By AO, CIT(A) No Ground To Interfere With ITAT Findings: Calcutta High Court

On 22 September, the Calcutta High Court held that a different view of the evidence taken by the Assessing Officer and Commissioner of Income-tax (Appeals) cannot, by itself, justify interference with factual findings of the Income Tax Appellate Tribunal (ITAT) under Section 260A of the Income Tax Act.

A Division Bench of Justices Rajarshi Bharadwaj and Sudip Deb dismissed the Revenue's appeal against an ITAT Kolkata order granting relief to bullion trader Utkarsh Rai for Assessment Year 2020-21. It held:

“The mere fact that the Assessing Officer or the Commissioner of Income-tax (Appeals) had taken a different view of the evidence does not justify interference under Section 260A of the Act.”

Rai carries on bullion trading through his proprietorship concern. The Assessing Officer had treated purchases worth Rs. 85.13 crore as bogus and made an addition under Section 69C of the Income Tax Act.

The Assessing Officer noted that the vendors had not filed income-tax returns, their businesses were allegedly unrelated to Rai's business, notices issued under Section 133(6) had not been complied with, and there were discrepancies in the documents and bank transactions. The Commissioner of Income-tax (Appeals) upheld the addition.

Rai relied on purchase invoices, ledger accounts, confirmations, banking transactions, GST records and stock registers to substantiate the purchases. He also pointed out that the corresponding sales had not been disputed and that bullion trading ordinarily involves low profit margins.

The Tribunal accepted these submissions and held that the entire purchases could not be treated as bogus merely because the vendors subsequently failed to file income-tax returns, cancelled their GST registrations or were allegedly carrying on a different business. Considering the discrepancies pointed out by the Assessing Officer, however, it applied a gross-profit rate of 0.15% to the disputed purchases.

The High Court also noted that the corresponding sales had not been disputed and that treating the entire purchases as bogus would result in an “unrealistic and commercially incongruous gross-profit rate” in the bullion business.

Finding no perversity in the Tribunal's factual findings and no substantial question of law, the Bench dismissed the Revenue's appeal.

For the Appellant/Revenue: Mr. Prithu Dudhoria, Advocate; Ms. Sukanya Duta, Advocate.

For the Respondent/Assessee (Utkarsh Rai): The judgment does not record any counsel/appearance for the respondent.