DCIT Vs Kay Bouvet Engineering Limited (ITAT Pune)
Survey Statement Alone Can’t Sink Purchases: Pune ITAT Upholds Deletion of 2% “Commission” Addition u/s 68
In a significant ruling, the Pune Bench of the ITAT dismissed Revenue’s appeals and upheld deletion of addition of ₹3.60 crore made u/s 68 on account of alleged bogus purchases, holding that additions based merely on third-party survey statements u/s 133A, without independent enquiry, cross-examination & rejection of books, are unsustainable.
The Assessee, Kay Bouvet Engineering Limited, engaged in manufacture of sugar mill & special purpose machinery, had duly recorded purchases, maintained audited books, quantitative stock records & supported transactions with invoices, e-way bills, GRNs, transport documents & bank payments. The AO reopened assessment based on survey findings in the case of a third party alleging accommodation entries and treated purchases as bogus, estimating 2% commission income.
CIT(A)/NFAC deleted the addition after detailed examination of documentary evidence, noting that:
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Books were audited & never rejected
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Quantitative records & stock consumption were not disputed
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Payments were through banking channels
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E-way bills & transport documents established movement of goods
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No adverse material was brought on record by AO except third-party survey statement
The Tribunal affirmed the deletion, reiterating that:
