UNEXPLAINED EXPENSE |
Business income ID – 46 (JBC-074) |
Purchases doubted - what should assessing officer do?
In CIT v. Hi Lux Automotive (P.) Ltd. [2009] 183 Taxman 260, the Assessing Officer was provided with bank statements of the vendors to whom the assessee had made account payee cheque payments. Doubting genuineness of purchases the Assessing Officer issued summons which remained uncomplied with and, thus, he took them as unverifiable and made an addition. The Delhi High Court did not find this kind of approach appropriate and observed as under :
“The reason for disallowing expenditure in respect of other four parties was that when the notices were sent they were not available. We are of the opinion that even in their absence the assessee had produced sufficient material to show payments, namely the bank accounts of such parties. We are constrained to note that if the summons are not issued to those parties or the same could not be served at the given addresses, the Assessing Authority could have obtained their addresses from the banks as the bank statements were produced and could have made an endeavour to serve those parties at the said addresses.”