Bogus purchase claims and CBDT monetary limits bar: unproved packing material expenses were sustained, and the Revenue's appeal was dismissed.

Alleged purchases of packing material were treated as bogus expenditure where the supplier could not be traced, notices remained unserved, local enquiries failed to locate the concern, and the bank trail showed immediate cash withdrawals; on those facts, the addition was sustained and rejection of the books of account was upheld. The Revenue's appeal was also held not maintainable because the CBDT's revised monetary-limit instruction applied to pending matters, and the tax effect was below the prescribed threshold; accordingly, the appeal was dismissed in limine. The commentary states that unsubstantiated purchase claims may be disallowed when adverse material is not rebutted by credible evidence, and departmental appeals below the binding threshold cannot be entertained.

---

---

Issues: (i) Whether the addition made on account of alleged purchases of packing material was sustainable as bogus expenditure and whether the books of account could be rejected. (ii) Whether the Revenue's appeal was maintainable in view of the CBDT monetary limit applicable to pending appeals.

Issue (i): Whether the addition made on account of alleged purchases of packing material was sustainable as bogus expenditure and whether the books of account could be rejected.

Analysis: The claimed purchases were held to be unproved as the supplier could not be traced, notices issued to it remained unserved, local enquiries failed to locate the concern, the alleged purchaser-supplier connection was not substantiated, and the bank trail showed immediate cash withdrawals. The assessee did not remove these adverse findings with reliable evidence.

Conclusion: The addition for packing material expenses was rightly sustained and the rejection of the books of account was upheld, against the assessee.

Issue (ii): Whether the Revenue's appeal was maintainable in view of the CBDT monetary limit applicable to pending appeals.

Analysis: The applicable CBDT instruction prescribing the revised monetary limit for departmental appeals was held to apply to pending matters, and the tax effect in the Revenue's appeal was below the prescribed threshold.

Conclusion: The Revenue's appeal was not entertained and was dismissed in limine, in favour of the assessee.

Final Conclusion: The assessee's challenge to the disallowance failed, while the Revenue's appeal was rejected on the ground of low tax effect, leaving both appeals dismissed.

Ratio Decidendi: Alleged purchases may be treated as bogus where the supplier is untraceable, supporting enquiries fail, and the assessee cannot produce credible evidence to dispel the adverse material; departmental appeals below the binding monetary threshold are not maintainable even if pending.

---