Sangam Wires Vs ITO (ITAT Hyderabad)
The case of Sangam Wires vs. ITO (Income Tax Officer), adjudicated by the Income Tax Appellate Tribunal (ITAT) Hyderabad, revolves around disputed purchases made by the assessee firm during the assessment year 2021-22. The dispute arises from the Assessing Officer’s contention that certain purchases made by the assessee from four specific parties were bogus, leading to an addition of Rs. 16,86,10,466 to the assessee’s total income.
The assessee, a firm engaged in trading high tensile steel wires and other steel products, filed its return of income admitting a total income of Rs. 80,64,210. However, during scrutiny, the Assessing Officer observed that a significant portion of the purchases were made from four parties: Pashupati Steels India, Rudhra Impex, Triveni Steels India, and Rico Impex. These parties were suspected of being non-existent, as notices issued under section 133(6) of the Income Tax Act were not complied with, and physical verification revealed that no such entities operated from the given addresses.
Additionally, the Assessing Officer noted discrepancies such as common transporters and cancelled GST registrations among these parties. Consequently, the AO treated the purchases from these parties as bogus and added the entire amount to the assessee’s income.
