Raghavendra Kumar Kunchala Vs ITO (ITAT, Hyderabad Bench)
Accepted Sales Could Not Rescue Alleged Bogus Purchases When the Assessee Himself Went Missing: Hyderabad ITAT Sustains ₹3.93 Crore Addition u/s 143(3) r.w.s. 144B
The controversy
The Hyderabad Bench of the ITAT dealt with an appeal involving an addition of ₹3,92,97,602, representing 25% of alleged bogus purchases. Although the assessee raised several substantial grounds concerning accepted sales, quantitative records, GST returns, banking channels & non-rejection of books, none of these arguments could be examined effectively because the assessee repeatedly failed to appear or furnish supporting material before both the CIT(A) & the Tribunal.
The assessee, Shri Raghavendra Kumar Kunchala, was engaged in the business of trading in iron & steel. He filed his return of income for AY 2021-22 on 31 March 2022, declaring a total income of ₹19,45,610. The case was selected for scrutiny under CASS & notice u/s 143(2) was issued by the AO.
Purchases of ₹15.72 crore treated as bogus
During assessment proceedings, the AO concluded that purchases aggregating to ₹15,71,90,411 made from various parties were bogus. Instead of disallowing the entire amount, the AO estimated the profit or unexplained component at 25% of the disputed purchases, resulting in an addition of ₹3,92,97,602.
