ITAT Deletes Rs 1.70 Crore Additions, Says Purchases Cannot Be Disallowed Without Rejecting Book:

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has deleted additions aggregating to Rs 1.70 crore made under Section 69C of the Income Tax Act, 1961, against Global Jewellery, holding that the additions were not supported by sufficient evidence.

In the present case, the assessee, i.e., Global Jewellery, was aggrieved by two additions of Rs 1 lakh and Rs 1.60 crore made by the Assessing Officer on account of alleged unaccounted purchases under Section 69C of the Income Tax Act from Sh. Satish Gara and Boby Gupta, Trend Jewels, respectively.

During the personal hearing before the Income Tax Appellate Tribunal (ITAT), Delhi, the assessee contended that the addition of Rs 1 lakh made in respect of purchases from Sh. Satish Gara was unjustified, as it was solely based on a presumption, and no such purchases were made from Sh. Satish Gara during the concerned last year.

The assessee claimed that "the addition made by the AO was just based on reflection of a name in GST data just based on GSTR return incorrectly filed by 3rd party. The Ld. Counsel also argued that there is no corroborative evidence of the same, therefore, addition u/s.69C on this issue is not justified."

When the Tribunal analysed the facts of the case, it noted that the concerned tax authorities had not conducted any independent inquiry, recorded Satish Gara's statement or produced other supporting evidence to establish the transactions. Accordingly, the Tribunal held that an addition based merely on suspicion and third-party information could not be sustained.

On the purchases from Trend Jewels, the assessee submitted that the transactions were genuine, payments were made through banking channels, and the purchases were recorded in its books of accounts. It also pointed out that the corresponding sales and declared profits had been accepted by the Revenue and that the books of accounts had not been rejected.

The Tribunal noted that the assessee had furnished purchase invoices, GST details and banking records. It held that once the books of account had not been rejected, the entire purchases could not be disallowed under Section 69C.