ACIT Vs Escon Elevators Pvt. Ltd. (ITAT Chennai)
The ITAT Chennai dismissed the Revenue’s appeal and upheld deletion of a ₹20,588 disallowance u/s 69C, holding that a purchase cannot be branded bogus merely because the supplier’s name appears in a “suspicious dealer / MAHAVAT list”.
The AO had disallowed the purchase from M/s Bhumi Sales Corporation solely on the basis of an affidavit allegedly filed by the seller before Sales-tax authorities and the seller’s inclusion in the MAHAVAT list, without conducting any independent enquiry and without furnishing the adverse material to the assessee.
Before the CIT(A), the assessee produced purchase bills, delivery challans, purchase orders, goods receipt notes, material inspection reports, ledger accounts, etc., thereby discharging the initial onus to prove the genuineness of the expenditure. The CIT(A) deleted the addition.
Affirming the relief, the Tribunal held that once the assessee substantiates the purchase with primary evidence, the onus shifts to the Department. Reliance on third-party information alone, without verification or granting opportunity of cross-examination, renders the disallowance bad in law. The Bench relied on the Supreme Court ruling in Odeon Builders Pvt. Ltd. (SC), which squarely holds that additions based solely on untested third-party material cannot survive.
Accordingly, the ITAT found no infirmity in the CIT(A)’s order and dismissed the Revenue’s appeal, reiterating that lists and affidavits from other authorities are not a substitute for investigation.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-5 (hereinafter referred to as “the Ld.CIT(A)”), Chennai, dated 19.08.2025 for the Assessment Year (hereinafter referred to as “AY”) 2010-11.
