Basanthi Lal Sah Vs ITO (ITAT Hyderabad)
ITAT Hyderabad held that addition towards bogus purchases based on supporting documentary evidence, without carrying out necessary verification from GST department, cannot be sustained. Accordingly, matter restored back to file of AO for re-adjudication.
Facts- The assessee, who is an individual running two proprietary concerns, viz. M/s. Bhavani Oxide and M/s. Bhavani Industries. During the course of assessment proceedings, AO observed that the assessee in the year had made huge purchases from various agencies. On a perusal of the details, AO observed that the assessee had, inter alia, made purchases of Rs. 10,51,03,435/- from four parties. AO after drawing support from the judgment of the Hon’ble Supreme Court in the case of M/s. N.K. Proteins Ltd. Vs. DCIT held the entire amount of purchases of Rs. 10.51 crore as bogus and made addition of the same to the returned income of the assessee.
CIT(A) dismissed the appeal and upheld the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that though the assessee had placed on record the copies of invoices along with E-Way Bills, but in totality of the facts when serious doubts regarding the genuineness of purchases were raised by the A.O., then a very heavy onus was cast upon the assessee to substantiate his claim based on irrefutable documentary evidence. In our view, the assessee ought to have placed on record the copies of the confirmations of the aforementioned parties and also substantiated his claim of having received the goods at his office/work premises based on supporting documentary evidence. Apart from that, the A.O. ought to have undertaken further verification by obtaining details from the GST department pertaining to the aforementioned parties, rather than summarily treating the purchase transactions as bogus and making consequential additions in the hands of the assessee. Considering the fact that instances of movement of vehicles through tolls with valid E-Way Bills but without actually carrying any goods could also have been verified by the A.O. by calling for the weighbridge receipts of the concerned vehicles. We also find substance in the claim of the Ld. AR that in case the entire amount of purchases of Rs.10.51 crores (supra) are held as bogus, then the same would result to the G.P. rate of 38%, which is unheard of in the trade line of the assessee, who has consistently disclosed a G.P. rate of 8% over the years.
