Purchases Cannot Be Held Bogus if Assesse Files all Documentary Evidences: ITAT:

Purchases Cannot Be Held Bogus if Assessee Files All Documentary Evidence: ITAT The Income Tax Appellate Tribunal (ITAT), Ahmedabad, deleted an addition of Rs 76.34 lakh made by the assessing officer towards bogus purchases. The tribunal noted that the assessee had discharged his onus of proving the genuineness of the transaction by filing the relevant documentary evidence. The case of Dineshchandra Laddha (assessee) was reopened on the basis of the information received by the investigation wing of the department, which alleged that the assessee had bogus purchases of Rs 76,34,197 from Uttam Metals. During the assessment proceedings, the AO treated the entire amount as fake purchases, holding that the assessee failed to prove the movement of goods with documentary evidence. As a result, the purchases of Rs 76,34,197 were disallowed under section 69 of the Income Tax Act.

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The assessee challenged this disallowance before the CIT(A). However, the CIT(A) dismissed the appeal, observing that the assessee did not submit the required documentary evidence to prove the genuineness of the purchases. However, the assessee, during the hearing before the Income Tax Appellate Tribunal (ITAT), argued that he had filed all the documentary evidence, such as ledger confirmation, affidavit, and bank statement of Uttam Metals. Further, the assessee also said that he filed a purchase invoice from M/s. Uttam Metals, a weight receipt of the lorry, a sale invoice of goods, and a delivery challan to reflect the movement of materials. The assessee also argued that neither the AO nor the CIT(A) mentioned or discussed this information in their orders, on the basis of which the case was reopened. Further, he said that information was taken from the GST Department, and for the relevant year, no GST demand was raised against him.

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The ITAT examined the case and observed that the assessee had provided all the required documentary evidence, which clearly showed the movement of goods from M/s Uttam Metals to the assessee. Therefore, it disagreed with the CIT(A)'s claim that the assessee failed to establish the movement of goods. Therefore, the bogus purchase addition was directed to be deleted.