Genuine sales supported by records defeated an estimated profit addition based only on third-party statements.

Sales and job-work receipts supported by GST returns, Form 26AS, ledger accounts and banking records were accepted as genuine because the revenue identified no defect in the supporting documents, no discrepancy in purchases, stock or sale proceeds, and no incriminating material showing the transactions were bogus. Third-party statements alone were insufficient to dislodge the documentary evidence or justify an adverse inference on conjecture. The estimated addition of 8% profit on the alleged bogus sales was therefore deleted.

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Issues: Whether the addition of profit at 8% on the alleged bogus sales made by the assessee to its partnership firm was justified.

Analysis: The assessee substantiated the sales and job work receipts with GST returns, Form 26AS, ledger accounts, and banking records. The revenue did not point out any defect in the documentary evidence, nor did it establish any discrepancy in the purchases, stock position, or sale proceeds. The addition was based mainly on statements of third parties, but those statements did not specifically record that the assessee's sales to the partnership firm were bogus. In the absence of incriminating material and without any adverse finding against the supporting evidence, an adverse inference could not be drawn merely on conjectures.

Conclusion: The sales were held to be genuine and the estimated addition of 8% profit thereon was deleted in favour of the assessee.

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