Shujath Ulla Shariff Vs ITO (ITAT Bangalore)
Bogus Purchase Addition Deleted – ITAT Bangalore Holds Third-Party Data Insufficient Without Independent Verification
AO made an addition of ₹21,17,844 u/s 69A, alleging bogus purchases from M/s Prestige Interiors based solely on information received from the Department of Commercial Taxes that certain invoices were fictitious & unsupported by movement of goods. Assessee, who had declared income u/s 44AD from trading activity, produced invoices, GST registration & supplier details but was unable to furnish transport bills or confirmations.
CIT(A) confirmed the addition, holding that absence of delivery challans & proof of payment rendered the purchases non-genuine.
Before the Tribunal, Assessee contended that AO conducted no independent enquiry, issued no summons, & relied only on third-party data. It was further argued that once turnover & gross receipts declared u/s 44AD were accepted, separate disallowance of purchases was unjustified.
Tribunal observed that though information from another department could trigger inquiry, addition cannot rest solely on such data without verification. Since AO accepted turnover & carried out no independent investigation, the presumption of bogus purchases was unsustainable. It emphasized that under presumptive taxation, when gross receipts are accepted, purchases cannot be selectively disallowed without evidence of falsity.
