ITO Vs Ajay Kumar (ITAT Delhi)
Bogus Purchase Addition Deleted Despite 133(6) Non-response: ITAT Upholds Genuineness Where Sales, Books and GST Records Accepted
The Delhi ITAT dismissed the Revenue’s appeals for AYs 2021-22 and 2022-23 and upheld the CIT(A)’s deletion of massive additions of ₹15.17 crore on account of alleged bogus purchases and ₹97.49 lakh relating to freight TDS issues in the case of Ajay Kumar. The Assessing Officer had treated purchases as non-genuine under Section 69C mainly because several suppliers did not respond to notices issued under Section 133(6) and some GST registrations were cancelled.
The Tribunal noted that the assessee had furnished confirmations, audited books, quantitative stock details, bank payment proofs and GST records (GSTR-2A), and that corresponding sales were fully accepted without rejection of books under Section 145(3). Non-response by third parties, by itself, was held to be insufficient to brand purchases as bogus, especially when suppliers were registered under GST and transactions were duly recorded and supported by documents. The AO neither established that suppliers were non-existent nor disproved the documentary evidences produced.
Relying on several High Court and ITAT decisions including Nikunj Eximp Enterprises, Vaman International, Orissa Corporation and Sonicwall Technology, the Tribunal held that Section 69C could not be invoked when expenditure and its source were duly explained and sales were accepted. It further observed that sales cannot exist without purchases and additions based only on suspicion and non-response to notices are unsustainable.
Accordingly, both the bogus purchase additions and the freight-related disallowances were deleted, and Revenue’s appeals for both years were dismissed in entirety
FULL TEXT OF THE ORDER OF ITAT DELHI
