Genuine purchase evidence overrides mere GST cancellation where sales match and supporting records confirm the transactions.

Purchase disallowance as non-genuine was considered unsustainable where the assessee supported the transactions with invoices, delivery challans, stock register, bank payment evidence, GST returns, ledger accounts and supplier particulars. The supplier's death and cessation of business meant non-response could not, by itself, discredit the purchases. With no dispute on corresponding sales and no purchase-sales mismatch shown, mere cancellation of GST registration was treated as insufficient to justify an addition when the surrounding evidence supported genuineness.

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Issues: Whether the disallowance of purchases as non-genuine under section 37(1) of the Income-tax Act, 1961 was justified on the facts and evidence on record.

Analysis: The assessee produced purchase invoices, delivery challans, stock register, banking evidence of payment, GST returns, ledger account, and complete particulars of the supplier. The record also showed that the supplier had died, and the business had ceased thereafter. The alleged non-response from the supplier could not, in these circumstances, be treated as conclusive against the assessee. The revenue did not dispute the corresponding sales or point out any mismatch in the purchase vis-a -vis sales. Mere cancellation of GST registration, without more, was held insufficient to sustain the addition when the surrounding evidence supported the purchase transactions.

Conclusion: The disallowance of the purchase amount as non-genuine was held to be unsustainable and the addition was deleted in favour of the assessee.

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