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

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). 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. 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