Bogus purchase additions fail where documentary evidence is unrebutted and grey-market benefit is not independently proved.

Estimated additions on alleged bogus purchases were deleted where the assessee produced purchase invoices, e-way bills, bank statements, transporter records, toll and dharam-kanta receipts, GPS photographs and other supporting documents, and the revenue did not identify any specific defect or fabrication in that material. The Tribunal held that acceptance of sales and an alleged grey-market profit element could not justify taxation on suspicion alone. It further required independent material showing that the purchases were sourced at lower rates from the grey market and that the assessee actually benefited by booking inflated bills. On that basis, the profit-element addition was deleted.

---

---

Issues: Whether the additions made by estimating 3.27% profit element on alleged non-genuine purchases were sustainable when the assessee had produced purchase invoices, e-way bills, bank statements, transporter records, toll and dharam-kanta receipts, GPS photographs and other supporting material.

Analysis: The assessee had filed primary documentary evidence to support the purchases, and the revenue authorities did not record any specific defect, fabrication, or discrepancy in those materials. The additions were sustained mainly on the basis that the suppliers were non-filers, had short-lived or cancelled GST registrations, and the supporting evidence could be manufactured in accommodation-entry cases. The Tribunal held that where sales were accepted and only an alleged grey-market profit element was sought to be taxed, such a finding could not rest on suspicion alone. It further held that the evidentiary value of the assessee's documents had to be independently rebutted by material evidence showing that the purchases were available at lower rates from the grey market and that the assessee had in fact benefited by booking inflated bills.

Conclusion: The additions on account of alleged bogus purchases and estimated profit element were deleted, and the appeal was allowed in favour of the assessee.

---