Accommodation entries and bogus purchases under section 69C require full factual scrutiny; matter remanded for fresh adjudication.

Accommodation entries and bogus purchases may be examined under section 69C on the basis of search material, statement evidence and surrounding circumstances; rejection of books under section 145(3) is not a mandatory precondition. At the same time, purchase registers, ledgers, audited books and bank statements, by themselves, do not conclusively prove genuineness. As the appellate order had not been examined on the correct factual and legal footing, the deletion of the addition was set aside and the matter was remanded to the CIT(A) for fresh adjudication after hearing the assessee.

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Issues: Whether the addition made on account of alleged accommodation entries and bogus purchases under section 69C could be sustained on the basis of search material and surrounding circumstances, and whether the matter required fresh adjudication.

Analysis: The Revenue relied on search material, the statement recorded during search, and digital evidence to contend that the assessee had obtained accommodation entries from the concerned supplier. It was held that rejection of books under section 145(3) is not a mandatory precondition for invoking section 69C, and that self-serving material such as purchase register, ledger accounts, audited books, and bank statements by themselves do not conclusively establish the genuineness of the purchases. At the same time, the matter was viewed in its entirety and the appellate order was found not to have been examined on the correct factual and legal footing, warranting reconsideration by the first appellate authority.

Conclusion: The order deleting the addition was set aside and the matter was remanded to the CIT(A) for fresh decision after giving the assessee an opportunity of hearing.

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