Vinod Kumar Goyal Vs NFAC (ITAT Delhi)
Section 69C Can’t Be Used for Recorded Purchases: No 145(3), No Disallowance—ITAT Delhi Deletes 12.5% Estimation
Assessee, engaged in trading of iron & steel, faced addition of ₹1.03 crore by estimating profit @12.5% of purchases, invoking s.69C on the allegation of bogus purchases, merely because notices u/s 133(6) issued to suppliers were not complied with. AO accepted sales, did not reject books u/s 145(3), and brought to tax only the so-called “profit element”. NFAC confirmed the addition without independent findings.
ITAT Delhi allowed Assessee’s appeal. Tribunal held that s.69C is wholly inapplicable where purchases are already recorded in the books, payments are made through regular banking channels, and source of expenditure is not in doubt. For s.69C to apply, Revenue must first establish unexplained expenditure; here, the source stood explained from disclosed books & bank balances. When books are not rejected u/s 145(3) and corresponding sales are accepted, estimation of profit by invoking s.69C is unsustainable. Mere non-response by suppliers to 133(6) notices cannot justify addition.
Relying on Garg Acrylics Ltd (ITAT Delhi), Tribunal held that once purchases are disclosed & paid from explained sources, nothing remains “unexplained” to attract s.69C. Accordingly, entire addition was deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
