Addition Deleted as Purchases Cannot Be Treated Bogus Without Rejecting Books

Pravesh Kumar Jaiswal Vs ITO (ITAT Kolkata)

The assessee appealed against the order of the Commissioner of Income Tax (Appeals), Kolkata, which had upheld an addition of ₹12,73,85,064 under section 69C read with section 115BBE. The Assessing Officer had treated the entire purchases as non-genuine on the ground that several suppliers from whom the assessee purchased goods were either non-filers of income tax returns, had extremely low turnover, or had GST registrations that were cancelled or suspended. The scrutiny assessment was initiated after the department, based on ADG (GST) data, suspected possible booking of bogus or inflated purchases.

During the assessment, the Assessing Officer issued notices under section 133(6) to the suppliers to verify the transactions. Many notices remained unserved or unanswered, and in some cases, emails bounced back. The assessee was asked to produce the suppliers or furnish additional evidence of genuineness. According to the Assessing Officer, the assessee failed to do so. Relying mainly on the lack of supplier confirmations and adverse GST status of the suppliers, the Assessing Officer concluded that the purchases were not genuine and made the entire addition under section 69C.

The CIT(A) upheld this view, holding that the assessee did not sufficiently discharge the burden of proving the genuineness of the purchases.