Bogus purchase additions under Section 69C rejected where contemporaneous documents prove goods movement and payment.

Where an assessee produced contemporaneous documentary evidence-ledger confirmations, bank statements, seller affidavit, stock registers, invoices, delivery challans and weight receipts-demonstrating physical receipt, sale and payment, additions treating purchases as bogus under the Income-tax Act could not be sustained in absence of any adverse material or identified infirmity in those documents; on that basis the Tribunal deleted the impugned addition of the specified amount and allowed the appeal in favour of the assessee.

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Issues: Whether purchases of Rs. 76,34,197/- from M/s. Uttam Metals can be treated as bogus and added to the assessee's income under Section 69C of the Income-tax Act, 1961.

Analysis: The appeal concerned an addition of Rs. 76,34,197/- on the ground that purchases from M/s. Uttam Metals were bogus. Reassessment was initiated on the basis of information from the investigation wing, but the orders below recorded that the assessee had not proved movement of goods. On appeal before the Tribunal the assessee produced during assessment proceedings ledger confirmations, bank statements, affidavit of the seller, stock register showing inward and outward movements, purchase and sale invoices, delivery challans and weight receipts evidencing inward and outward movement and payments. The CIT(A)'s finding that movement of goods was not established is factually incorrect because the documentary materials demonstrating physical receipt and sale of goods and corresponding payments were on record and the Revenue did not point to any infirmity in those documents or any adverse material.

Conclusion: The assessee has discharged the onus of proving the genuineness of purchases from M/s. Uttam Metals; the addition of Rs. 76,34,197/- treated as bogus under Section 69C is deleted and the appeal is allowed in favour of the assessee.

Ratio Decidendi: Where an assessee produces contemporaneous documentary evidence demonstrating movement of goods and payments, the addition treating purchases as bogus under Section 69C of the Income-tax Act, 1961 cannot be sustained in absence of adverse material or a valid evidential infirmity in those documents.

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