Reassessment on investigation material and bogus purchases: invoices and payments alone were insufficient, so full section 69C addition stood.

Reassessment based on Investigation Wing information was sustained because the recorded reasons relied on tangible material, notice and opportunity were given, and statutory approval was obtained; the sufficiency of the material was not required to be tested at the initiation stage. Purchases from the alleged supplier were treated as bogus because the supplier was non-existent, notices were unserved, and no independent proof of delivery, transport, or consumption of goods was produced. Mere invoices and banking payments were held insufficient, so the full purchase amount was applied as unexplained expenditure under section 69C and profit estimation was rejected.

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Issues: (i) Whether the reassessment proceedings were validly initiated on the basis of information from the Investigation Wing; (ii) whether the purchases from the alleged supplier were bogus and liable to be added in full as unexplained expenditure under section 69C.

Issue (i): Whether the reassessment proceedings were validly initiated on the basis of information from the Investigation Wing.

Analysis: The reassessment was founded on specific material indicating that the assessee had obtained accommodation entries through bogus purchases. The recording of reasons referred to tangible information, the assessee was given notice and an opportunity to respond, and approval was obtained in the statutory manner. The sufficiency of the material was not required to be tested at the initiation stage.

Conclusion: The reassessment proceedings were held to be valid and sustainable.

Issue (ii): Whether the purchases from the alleged supplier were bogus and liable to be added in full as unexplained expenditure under section 69C.

Analysis: The supplier was found to be non-existent at the stated address and to have no business infrastructure, notices issued to it remained unserved, and no direct confirmation or independent evidence of actual delivery, transport, or consumption of goods was produced. Mere invoices and banking payments were held insufficient without proof of identity, capacity, and genuineness of the transaction. In such circumstances, the entire purchase claim was treated as unverified and the deeming provision for unexplained expenditure was applied; estimation of profit was rejected.

Conclusion: The purchases were held to be bogus and the full addition as unexplained expenditure was upheld.

Final Conclusion: The assessee failed to establish the genuineness of the purchases, and the reassessment addition, including the addition on account of bogus purchases, was sustained in full.

Ratio Decidendi: Where purchases are found to be accommodation entries and the assessee fails to prove the genuineness of the transaction and source of expenditure, the entire amount is liable to be treated as unexplained expenditure under section 69C, and profit estimation cannot substitute the statutory consequence of such failure.

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