Addition under Section 69C for bogus purchases deleted where invoices, e-way bills and transport documents substantiated transactions

Addition under provisions relating to unexplained investments and income was contested on grounds that purchases were recorded in regular books and supported by GST invoices, e-way bills, transport documents and subsequent recorded sales; the assessing officer did not undertake comparative documentary analysis or independent verification and based the assessment on presumptions. The tribunal held that absence of cogent analysis by revenue and presence of documentary evidence and payment records defeated a finding of bogus purchases, and therefore deletion of the addition was sustained, resulting in decision for the taxpayer against revenue.

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Issues: Whether the deletion by the CIT(A) of the addition of Rs. 15,09,90,967 made by the Assessing Officer under Section 69C of the Income-tax Act, 1961 (on account of alleged bogus purchases) was legally justified.

Analysis: The assessee, engaged in trading, presented comprehensive primary documentary evidence for purchases including audited books, GST invoices, e-way bills, transport documents, ledger extracts and bank payments. Verification by the Assessing Officer was limited, transactional scrutiny was not conducted, and verification-unit enquiries covered only a few suppliers with reports not confronted to the assessee. The Assessing Officer based addition on broad assumptions drawn from third-party compliance history without specific, transaction-level contradictions or giving the assessee an opportunity to meet precise allegations. Established legal principle requires that once an assessee furnishes primary evidence substantiating purchases, the Revenue must rebut with cogent counter-evidence and afford a fair opportunity to the assessee; mere reliance on third-party information or non-filing does not automatically render buyer's purchases bogus.

Conclusion: The deletion of the addition under Section 69C is upheld and the result is in favour of the assessee.

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