Bogus Purchase Addition under section 69C fails where documentary evidence and banking payments are not contradicted by corroboration.

An addition under section 69C could not be sustained where it was based only on third-party search material and statements, because the assessee had produced purchase invoices, ledger extracts, export sales invoices, stock statements and banking-channel payments. In the absence of any adverse finding on those documents or corroborative material to displace them, the purchases could not be treated as bogus merely on the basis of third-party material. The addition was therefore deleted in favour of the assessee.

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Issues: Whether the addition made under section 69C by treating the purchase transactions as bogus was sustainable on the basis of third-party search material and statements, notwithstanding the documentary evidence produced by the assessee.

Analysis: The addition rested on information from a search in the case of a third party and the statements recorded therein. The assessee had produced purchase invoices, ledger extracts, corresponding export sales invoices and stock statements, and had also shown payment through banking channels. No adverse finding was recorded on these documents, nor was any corroborative material brought on record to displace them. A transaction cannot be treated as non-genuine merely on third-party material without examining the assessee's evidence and recording a contrary finding.

Conclusion: The addition under section 69C was not sustainable and was deleted in favour of the assessee.

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