DCIT Vs Gunasekaran (ITAT Chennai)
Chennai ITAT Upholds Deletion of Ad Hoc Disallowances; GSTR-2A Is Strong Corroborative Evidence and Purchases Cannot Be Rejected Without Verification
The Chennai ITAT upheld the deletion of ad hoc disallowances towards purchases, salary and office expenses, holding that the Assessing Officer cannot make arbitrary disallowances without conducting meaningful verification or bringing adverse material on record. The Tribunal observed that during appellate proceedings the assessee furnished party-wise purchase details, purchase ledgers, GST particulars and Form GSTR-2A, which were forwarded to the Assessing Officer in remand proceedings. However, the Assessing Officer neither verified the invoice-wise details reflected in GSTR-2A, nor examined the suppliers, issued notices under section 133(6), or established that any supplier was non-existent or that the purchases were bogus. The Tribunal held that Form GSTR-2A, being a system-generated statement based on suppliers’ statutory GST filings, constitutes significant corroborative evidence of purchases, and its evidentiary value cannot be dismissed without proper enquiry. It further noted that the books of account were not rejected, contract receipts were accepted, and the assessee’s gross profit and net profit were consistent with earlier years, making the ad hoc disallowance of 50% of purchases unsustainable. Likewise, the Tribunal upheld the deletion of disallowances relating to salary and office expenses, observing that despite remand proceedings, the Assessing Officer failed to identify any specific bogus or excessive expenditure or conduct any independent verification. It reiterated that disallowances based merely on suspicion, conjectures or surmises, without cogent evidence, cannot be sustained, and accordingly dismissed the Revenue’s appeal.
