Purchases Supported by Invoices, Transport Documents and Bank Payments Cannot Be Held Bogus Merely Due to Supplier’s Non-Response: ITAT

Espee Pharma Chem Pvt. Ltd. filed its return for AY 2019-20 declaring income of Rs. 2.98 crore. The case was reopened under Section 148 based on the Insight Portal information alleging bogus purchases of Rs. 42.95 lakh from M/s Biotavia Labs Pvt. Ltd. The Assessing Officer treated the purchases as accommodation entries and made an addition under Section 69C, primarily relying on a survey statement recorded in the seller’s case and non-response to notice under Section 133(6).

<div class="related-article-inline">Also Read<a href="/nfra-cracks-down-on-audit-file-lapses-60-day-completion-rule-7-day-submission-deadline-many-more-403838.html" class="related-link">NFRA Cracks Down on Audit File Lapses: 60-Day Completion Rule, 7-Day Submission Deadline, Many More</a></div>

The assessee produced purchase invoices, e-way bills, transport details, bank payment proofs, confirmation from the supplier, and corresponding sales records. Despite repeated requests, no cross-examination was allowed and no inspector verification was carried out. The addition was upheld by the NFAC, prompting the assessee’s appeal before the Tribunal.

Main Issue: Whether purchases supported by invoices, transport documents, bank payments and corresponding sales can be treated as bogus under Section 69C solely based on a general survey statement of the supplier and non-response to Section 133(6) notice.

ITAT's Order: The ITAT allowed the assessee’s appeal on merits and deleted the entire addition of Rs. 42.95 lakh. The Tribunal held that the assessee had discharged its onus by producing complete documentary evidence establishing actual purchase, movement of goods, payment through banking channels, and subsequent sales. It was observed that the Assessing Officer failed to point out any defect in the evidence and relied only on a general admission made during the survey in the seller’s case.

<div class="related-article-inline">Also Read<a href="/nfra-cracks-down-on-audit-file-lapses-60-day-completion-rule-7-day-submission-deadline-many-more-403838.html" class="related-link">NFRA Cracks Down on Audit File Lapses: 60-Day Completion Rule, 7-Day Submission Deadline, Many More</a></div>

The Tribunal ruled that a blanket allegation of accommodation entries cannot automatically invalidate all transactions of a supplier. In the absence of specific evidence linking the assessee to bogus purchases, the addition under Section 69C was unsustainable. Jurisdictional grounds not pressed were dismissed, and the appeal was partly allowed.

To Read Full Judgment, Download PDF Given Below

Purchases Supported by Invoices, Transport Documents and Bank Payments Cannot Be Held Bogus Merely Due to Supplier’s Non-Response: ITAT

Espee Pharma Chem Pvt. Ltd. filed its return for AY 2019-20 declaring income of Rs. 2.98 crore. The case was reopened under Section 148 based on the Insight Portal information alleging bogus purchases of Rs. 42.95 lakh from M/s Biotavia Labs Pvt. Ltd. The Assessing Officer treated the purchases as accommodation entries and made an addition under Section 69C, primarily relying on a survey statement recorded in the seller’s case and non-response to notice under Section 133(6).

[related id="403838"]

The assessee produced purchase invoices, e-way bills, transport details, bank payment proofs, confirmation from the supplier, and corresponding sales records. Despite repeated requests, no cross-examination was allowed and no inspector verification was carried out. The addition was upheld by the NFAC, prompting the assessee’s appeal before the Tribunal.

Main Issue: Whether purchases supported by invoices, transport documents, bank payments and corresponding sales can be treated as bogus under Section 69C solely based on a general survey statement of the supplier and non-response to Section 133(6) notice.

ITAT's Order: The ITAT allowed the assessee’s appeal on merits and deleted the entire addition of Rs. 42.95 lakh. The Tribunal held that the assessee had discharged its onus by producing complete documentary evidence establishing actual purchase, movement of goods, payment through banking channels, and subsequent sales. It was observed that the Assessing Officer failed to point out any defect in the evidence and relied only on a general admission made during the survey in the seller’s case.

[related id="403838"]

The Tribunal ruled that a blanket allegation of accommodation entries cannot automatically invalidate all transactions of a supplier. In the absence of specific evidence linking the assessee to bogus purchases, the addition under Section 69C was unsustainable. Jurisdictional grounds not pressed were dismissed, and the appeal was partly allowed.

To Read Full Judgment, Download PDF Given Below

The ITAT holds that purchases supported by invoices, transport documents, bank payments, and matching sales cannot be treated as bogus solely due to a supplier’s non-response, rejecting additions under Section 69C

Purchases Supported by Invoices, Transport Documents and Bank Payments Cannot Be Held Bogus Merely Due to Supplier’s Non-Response: ITAT

ITAT Holds Resale Price Method as Most Appropriate for Benchmarking Import of Finished Goods Without Value Addition

In a significant ruling, the ITAT quashed an income tax assessment after holding that the order attained legal existence only upon being digitally signed.

ITAT Holds Assessment Order Is Legally Complete Only After Digital Signature; Time-Barred Order Quashed

HC Denies Anticipatory Bail to Material Supplier in Alleged Nal-Jal Yojana Fraud Over Missing GST Bills and Invoices

ITAT Rules No TDS on Commission Paid to Overseas Agent for Procuring Export Orders 

ITAT Deletes Penalty under Section 270A for Vague Show Cause Notice Lacking Specific Charge

Income Tax Dept Removes ‘Other Exempt Income’ Option from ITR Forms, Revises Schedule EI for AY 2026-27

Bombay High Court upholds negative crude oil futures settlement, refusing to rewrite completed derivative contracts.

HC Upholds MCX Circular Fixing Negative Due Date Rate for Crude Oil

Bombay High Court quashes penalty after time-barred Order Giving Effect caused assessment proceedings to abate completely.

HC Holds Time-Barred Assessment Cannot Sustain Penalty Under Section 271(1)(c)

ITAT rules revocable determinate securitisation trust qualifies for pass-through taxation, rejecting assessment as an AOP.

ITAT Upholds Pass-Through Taxation for Revocable Securitisation Trust Under Income Tax Act

ITAT condones delay, restores Section 50C appeal after finding denial of adequate hearing by CIT(A).

ITAT Remands Section 50C Addition After Finding Breach of Natural Justice

ITAT allows Section 87A rebate on Section 111A gains for AY 2024-25, rejecting CPC's denial.