Pruthvi Singh Solanki Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, partly allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2018-19. The dispute related to the addition of Rs. 50,33,695 made by the Assessing Officer (AO) on the ground that the assessee had made bogus purchases from five entities allegedly engaged in providing accommodation entries.
The assessee, an individual engaged in the business of trading in ferrous and non-ferrous metals under the name “Vinay Enterprises,” challenged the addition, contending that the purchases were genuine, the books of account had not been rejected, the corresponding sales, stock records, and material consumption had not been disputed, and that reliance on third-party statements without cross-examination violated the principles of natural justice.
The AO had reopened the assessment based on information received through the Insight portal indicating purchases from suspected entities issuing fictitious or bogus invoices. After examining the transactions, the AO treated the entire purchases of Rs. 50,33,695 as bogus and added the full amount to the assessee’s income. The CIT(A) upheld the addition.
The Tribunal observed that the assessee was a trader and had recorded corresponding sales against the disputed purchases. The AO had neither questioned the sales nor alleged any discrepancy in stock verification. The Tribunal held that once the sales were accepted, it was evident that purchases had been made and subsequently sold. Therefore, in the case of a trader, the entire purchase amount could not be added.
