GST Cancellation Alone Cannot Make Purchases Bogus – ITAT Restricts Addition to 5% Profit Element

Paras Khurana Vs ITO (ITAT Delhi) The Delhi ITAT held that mere cancellation of GST registration of suppliers or their non-compliance before the department cannot automatically render purchases bogus. In the case of the assessee, the AO had treated purchases of ₹8.77 crore as suspicious because several suppliers were GST non-filers, their GST registrations stood cancelled and notices issued by the department remained unanswered. However, instead of disallowing the entire purchases, the AO estimated profit element at 10% and made an addition of ₹87.75 lakh. Before the Tribunal, the assessee...