Bogus purchase additions upheld and assessment sustained where genuineness was unproved and section reference error did not vitiate proceedings.

ITAT Surat upheld the addition for alleged bogus purchases because the assessee failed to establish genuineness through purchase invoices, stock records and supporting evidence, while non-appearance of suppliers under section 131 and replies under section 133(6) reinforced the Revenue's doubt. The assessment was also held valid despite a reference to section 144 along with section 143(3), because the assessee had participated in the proceedings and responded to notices; the order was treated in substance as one under section 143(3). Both objections were rejected and the Revenue's additions and assessment approach were sustained.

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Issues: (i) Whether the addition made on account of alleged bogus purchases and corresponding sales was sustainable. (ii) Whether the assessment was invalid merely because the order referred to section 144 along with section 143(3).

Issue (i): Whether the addition made on account of alleged bogus purchases and corresponding sales was sustainable.

Analysis: The purchase and sale transactions were examined with reference to the stock register, replies received to notices issued under section 133(6) of the Income-tax Act, 1961, and the statements and invoices placed on record. The assessee did not produce the purchase invoices despite reference to them in the paper book, and the genuineness of the purchases was not established. The non-appearance of the parties in response to summons under section 131 of the Income-tax Act, 1961 supported the doubt raised by the Assessing Officer.

Conclusion: The addition based on bogus purchases was upheld in favour of Revenue.

Issue (ii): Whether the assessment was invalid merely because the order referred to section 144 along with section 143(3).

Analysis: The assessee had participated in the assessment proceedings and had responded to notices. In that situation, the mere mention of section 144 did not render the assessment invalid, as the assessment was treated in substance as one made under section 143(3) of the Income-tax Act, 1961.

Conclusion: The assessment was not invalid on this ground, and the objection was rejected.

Final Conclusion: Both appeals failed, and the additions and assessment approach challenged by the assessee were sustained.

Ratio Decidendi: Where the assessee fails to establish the genuineness of purchases despite material scrutiny, the related addition can be sustained, and a mere misdescription of the assessment provision does not vitiate the assessment when the assessee has participated in the proceedings.

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