Bogus purchase addition under section 69C fails where invoices, bank proof and sales records support the assessee's transactions.

Documentary evidence of purchases and corresponding sales, supported by bank statements and ledger entries, was treated as sufficient where the books were not shown to be defective. An addition for alleged bogus purchases under section 69C could not be sustained when the Assessing Officer relied on investigation material and third-party statements without independent enquiry or effective cross-examination. On those facts, the material was held inadequate to displace the assessee's evidence, and the deletion of the addition was upheld, with the Revenue's challenge failing.

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Issues: Whether the addition made on account of alleged bogus purchases under section 69C could be sustained where the assessee produced purchase invoices, sales invoices, bank statements and ledger entries, and the Assessing Officer relied only on investigation material without independent enquiry or cross-examination.

Analysis: The assessee had furnished detailed documentary material supporting the purchases and corresponding sales, and the payments were shown through banking channels. The books of account and book results were not shown to be defective. The Assessing Officer relied on the investigation report and statements of third parties, but no corroborative independent enquiry was made and no effective opportunity of cross-examination was granted. In such circumstances, the material relied upon was insufficient to displace the documentary evidence produced by the assessee or to sustain the entire addition as unexplained expenditure.

Conclusion: The deletion of the addition was , and the Revenue's challenge failed. The issue is decided in favour of the assessee.

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