Stranex Industries Private Limited Vs ITO (ITAT Hyderabad)
Bogus Purchase Disallowance Quashed Because Assessee Produced Audited Books and Bank Proofs; ITAT Rules Purchases Cannot Be Disallowed When Books of Account Are Accepted by AO; Addition for Alleged Bogus Purchases Deleted Since Revenue Found No Defect in Records; ITAT Holds Supplier’s Failure to Reply Under Section 133(6) Not Enough to Deny Purchase Claim.
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, allowed the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2023-24. The dispute related to an addition of Rs.68,47,010 made by the Assessing Officer (AO) under Section 37(1) of the Income Tax Act on account of alleged bogus purchases.
The assessee, engaged in the business of manufacturing explosives and site mixed emulsion, had filed its return declaring total income of Rs.56,52,160. During scrutiny assessment proceedings, the AO noticed substantial sundry creditors and issued notices under Section 133(6) to certain creditors for verification. Since no response was received from M/s Core India Corporation, from whom purchases amounting to Rs.68,47,010 were made, the AO treated the purchases as bogus and disallowed the amount under Section 37(1). The assessment was completed under Sections 143(3) read with 144B, assessing total income at Rs.1,24,99,170.
