ITO Vs Dhawan Creative Prints Pvt. Ltd. (ITAT Delhi)
Purchase Addition Restricted Because Only One Supplier Denied Transactions; ITAT Upholds Relief Because Non-Response to Section 133(6) Notices Alone Cannot Prove Bogus Purchases; Revenue Appeal Fails Because Purchases Were Supported by Audited Books and Stock Records; Section 69A Addition Deleted Because Cash Deposits Were Recorded in Audited Books; ITAT Rules Same Income Cannot Be Taxed Twice While Deleting Cash Deposit Addition.
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre dated 20.06.2025 for Assessment Year 2017-18. The assessee company was engaged in the business of trading fabric and cloth and had filed its return declaring total income of ₹8,04,920. The case was selected for scrutiny and assessed under Section 143(3) of the Income-tax Act.
During assessment proceedings, the Assessing Officer examined the financial statements and noted revenue from operations of ₹41.15 crore and purchases of stock-in-trade amounting to ₹39.95 crore. Based on incomplete confirmations and an adverse response from one supplier, the Assessing Officer issued a show-cause notice proposing disallowance of 20% of total purchases amounting to ₹7,99,01,884. The assessee contended that the purchases were genuine and supported by books of account, ledger copies, bank statements, and stock records. It further argued that non-response to notices by third parties could not be attributed to it. However, the Assessing Officer was not satisfied and disallowed 20% of the total purchases. The Assessing Officer also made an addition of ₹8,30,083 under Section 69A in relation to cash deposits made during the demonetisation period.
