ITO Vs Raman Kohli (ITAT Chandigarh)
Sales Accepted, Purchases Can’t Be Branded Bogus: ITAT Chandigarh Dismisses Revenue Appeals for AYs 2020-21 & 2021-22
The Income Tax Appellate Tribunal dismissed the Revenue’s appeals for AYs 2020-21 and 2021-22, upholding the Commissioner of Income Tax (Appeals) orders that deleted large additions on account of alleged non-genuine purchases.
The Assessing Officer had disallowed purchases aggregating ₹10.15 crore (AY 2020-21) and ₹11.66 crore (AY 2021-22) mainly because certain suppliers were non-filers of returns, had no email IDs, or did not fully respond to section 133(6) notices. Despite this, the Tribunal noted that:
- The assessee’s sales were accepted and quantitatively reconciled.
- All suppliers had PAN, GST registration and bank accounts at the time of transactions.
- Payments were made through banking channels and supported by invoices, ledgers and GST records.
- No allegation of collusion, cash-back, or non-delivery of goods was made; nor were any defects found in books or quantitative details.
The Tribunal reiterated that failure of third-party suppliers to respond or their compliance lapses cannot invalidate genuine purchases when primary evidence is produced and sales are accepted—there cannot be sales without purchases. It found the AO’s approach presumptive, involving a disproportionate disallowance (>40% of total purchases) without transaction-level verification.
Accordingly, finding no infirmity in the CIT(A)’s reasoning, the Tribunal confirmed deletion of the additions for both years and dismissed the Revenue’s appeals.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
