Jain Brothers Vs NFAC (ITAT Delhi)
Goods Came by Cycle Rickshaw, but Justice Arrived by ITAT- ITAT Delhi Deletes Addition on ‘Bogus Purchases’ – “Cycle Rickshaw or Not, Sales Were Real!”
Assessee, a Delhi-based firm, was subjected to reassessment u/s 147 on the basis of information that it had made bogus purchases of ₹6,41,900 from M/s Balaji Trading Company, alleged to be a non-existent entity. AO treated the said purchases as unexplained expenditure u/s 69C r.w.s. 115BBE, holding that the supplier was inactive on the GST portal & hence fictitious.
Assessee contended that the purchases were duly recorded in books, payments were made through banking channels, goods were reflected in stock register, and sales made out of such purchases were accepted by the Department. Invoices of Balaji Trading Co. & transportation details (humorously, on cycle rickshaw) were also produced.
However, NFAC/CIT(A) dismissed the appeal for non-prosecution & held that Balaji Trading Co. was non-existent since it didn’t respond to notices, thereby sustaining the addition.
Before Tribunal, Assessee reiterated that even the Department had accepted the corresponding sales, and therefore, the purchases could not be treated as bogus. Tribunal observed that Revenue failed to prove that Balaji Trading Co. was non-existent — in fact, it had availed ITC of ₹5.83 crores, showing ongoing operations.
