Revenue's appeal dismissed regarding section 69A additions and bogus purchases after assessee proved GST fraud victimization

ITAT Mumbai dismissed revenue's appeal regarding additions under section 69A and bogus purchases. For section 69A addition concerning sales to M/s. Gulathi Enterprises, the tribunal found the assessee was a victim of GST fraud, having furnished police complaint and cancellation certificate. The AO failed to conduct proper inquiry despite having only 20 days for GST department response. Since purchases (Rs. 5.37 crore) exceeded sales (Rs. 3.95 crore) and assessee proved different GST numbers, no addition was warranted. Regarding bogus purchases, the AO relied on statements from 2017-18 search operations unrelated to the assessment year. The vendor responded to notices under sections 133(6) and 131 with corroborative evidence, which the AO found satisfactory. Both grounds were dismissed.

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Issues Involved:
1. Deletion of addition made u/s 69A on account of sales to M/s. Gulathi Enterprises.
2. Deletion of addition on account of bogus purchases from M/s. Ankit International.

Summary:

Issue 1: Deletion of addition made u/s 69A on account of sales to M/s. Gulathi Enterprises

The Revenue challenged the deletion of an addition of Rs. 3,95,15,327/- made u/s 69A of the Income Tax Act, 1961, on account of sales to M/s. Gulathi Enterprises. The assessee, engaged in trading steel products, claimed that M/s. Gulathi Enterprises fraudulently used his GST number. The assessee filed complaints with the Police and GST Department, and the GST number of M/s. Gulathi Enterprises was canceled. The Assessing Officer (AO) added the sales to the assessee's income due to lack of corroborative evidence. The learned CIT(A) deleted the addition, noting no verification of the sales and the discrepancy between sales and purchases. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the deletion of the addition u/s 69A.

Issue 2: Deletion of addition on account of bogus purchases from M/s. Ankit International

The Revenue contested the deletion of an addition of Rs. 91,07,200/- made u/s 69C of the Act for bogus purchases from M/s. Ankit International. The AO based the addition on statements from a 2017 search on M/s. Viraj Profile Ltd, which indicated accommodation entries. The assessee argued the purchases were genuine, supported by invoices and bank statements, and that the search findings were outdated. The learned CIT(A) deleted the addition, noting the AO relied on old statements irrelevant to the current year. The Tribunal upheld the CIT(A)'s decision, finding no adverse evidence against M/s. Ankit International for the year under consideration.

Conclusion:

The appeal by the Revenue was dismissed, with the Tribunal upholding the learned CIT(A)'s decisions on both issues.

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