ITO-Ward-1 Vs Shri Rohit (ITAT Chandigarh)
Bogus Purchase Addition of ₹15.09 Crore Rejected: ITAT Chandigarh Upholds Deletion Where Sales Accepted and Purchases Backed by Evidence
The Income Tax Appellate Tribunal dismissed the Revenue’s appeal for AY 2021-22 and upheld the order of the Commissioner of Income Tax (Appeals), which had deleted an addition of ₹15.09 crore made under section 69C on account of alleged bogus purchases.
The Assessing Officer had disallowed the entire purchases merely because certain suppliers had not filed income-tax returns, showed lower turnover, or had their GST registrations suspended, and treated the purchases as bogus after rejecting books under section 145(3). However, the assessee had produced extensive documentary evidence, including purchase invoices, GST returns, e-way bills, transport and toll receipts, bank statements showing payments through banking channels, and supplier details. Importantly, the corresponding sales were accepted as genuine.
The Tribunal observed that there cannot be sales without purchases, and once the assessee had discharged the primary onus by producing cogent evidence, the burden shifted to the Revenue. The AO failed to carry out transaction-level verification, relied on presumptions, did not confront the assessee with adverse material, and even withheld verification-unit reports—amounting to a breach of natural justice. The compliance failures of suppliers could not, by themselves, invalidate genuine business transactions of the buyer.
Relying on binding precedents, including Supreme Court of India in Odeon Builders Pvt. Ltd., and High Court rulings, the Tribunal held that full disallowance of purchases is unsustainable when purchases are supported by documentary evidence and sales are accepted.
Accordingly, the deletion of the entire addition was confirmed, and the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
