ITO Vs Ramlal Manekchand HUF (ITAT Ahmedabad)
ITAT Ahmedabad order on Addition u/s 69C – unexplained purchases – creditworthiness and genuineness of the two suppliers was not established – status of input text credit (ITC) claimed under the GST regime in respect of purchases made from these parties
Brief Facts: The assessee-HUF, engaged in trading of gold and silver bullion and jewellery, filed return declaring income of ₹18.91 lakh. During scrutiny, it was noticed that the assessee had made large purchases of about ₹25.17 crore from five parties who were either non-filers or had filed non-business returns.
AO’s Enquiry: Notices under Section 133(6) were issued to all five suppliers. Some notices remained unserved, others were not complied with.
The matter was referred to the Designated Verification Unit (DVU). On physical verification, it was found that:
Two suppliers, Pareshbhai Prabhudasbhai Tank and Rajeshbhai Maganbhai Badrakia, were engaged as labourer (Mistry) and in furniture-related work, with no business commensurate to high-value transactions.
The other three suppliers, Bhavinbhai Bharatbhai Soni, Umadevi Rajapurohit, and Bhartiben Vinodbhai Purohit, were not traceable at the given addresses.
Summons and verification reports thus cast serious doubt on the creditworthiness and genuineness of these suppliers.
AO’s Findings: Purchases of ₹16.23 crore from the first two parties were treated as unexplained expenditure u/s 69C, and after allowing gross profit margin, a net addition of ₹16.13 crore was made.
