PCIT-18 Vs Pravesh Kumar Jaiswal (Calcutta High Court)
Summary: Bogus purchases cannot be disallowed merely because suppliers did not respond to notices under section 133(6) or their GST registrations were cancelled where the assessee’s books are accepted, sales are not disputed and purchase invoices and banking-payment records support the transactions.
Core Issue
Whether the ITAT was justified in deleting the addition of Rs. 12,73,85,064/- made under section 69C read with section 115BBE towards alleged bogus or unexplained purchases merely because the suppliers did not respond to notices issued under section 133(6), certain suppliers’ GST registrations were allegedly cancelled or suspended, and supporting stock or transportation records were not available, when the assessee’s books of account were accepted, corresponding sales were not doubted and purchase and payment documents were produced.
Facts
The assessee, an individual, filed a revised return for AY 2021-22 on 17 January 2022 declaring total income of Rs. 16,13,860/-. The case was selected for scrutiny on the ground that substantial purchases had been made from parties who were non-filers of returns, had filed non-business returns or had disclosed lower income in their returns compared with the turnover reported in their GSTR-1 returns, creating a possibility of bogus purchases. During assessment, the Assessing Officer issued notices under section 133(6) to the suppliers seeking verification of the transactions. As the suppliers did not respond to the notices, the AO concluded that the purchases were sham and non-genuine and completed the assessment at Rs. 12,89,98,924/- after making an addition of Rs. 12,73,85,064/- under section 69C read with section 115BBE. Penalty proceedings under section 271AAC(1) were also initiated separately.
