TaxTMI 
TaxTMI 
2026 (1) TMI 991
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.....ITBA/NFAC/S/250/ 2024-25/1069258422(1)(1) dated 30.09.2024 is against the law and facts of the case. 2. The Ld. CIT (A) has not appreciated the facts that the genuineness of the purchases made by the assessee have not been established of Rs. 15,17,83,873/-. 3. The ld. CIT (A) has not appreciated the facts that the genuineness of non-deduction of tax at source from amount paid to contractors for freight by the assessee have not been established of Rs. 97,49,289/-." 4. Ground No.1 is general in nature, hence not adjudicated. 5. Brief facts with regard to ground no.2 are, AO made the addition of Rs. 15,17,83,873/- on account of purchases made by the assessee treating the same as bogus invoking provision of section 69C of the Income-tax Act, 1961 (for short 'the Act'). Aggrieved, assessee preferred an appeal before CIT(A) whereby CIT(A) deleted the addition considering the submission made by the assessee. The relevant findings of the Ld. CIT(A) are as under: "1. The appellant on merits has taken the plea that the purchases of Rs. 83,32,61,134/- undertaken from different parties, which have been not allowed as genuine purchases by the Ld. Assessing Offi....
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.... reasonable and sufficient opportunity of being heard to the Appellant. If the Ld A.O. was not satisfied with the reply of Assessee regarding Genuineness of purchases, Appellant should have been given sufficient opportunity of being heard, to explain the same further and Ld. AO has failed to appreciate the fact that no response received for Notice u/s 133(6) of Income Tax Act is no ground to treat the purchases as non-genuine and liabilities as unexplained credits. That most humbly will like to mention that all the above said dealers are duly registered dealers under Goods and Service Tax Act. All the purchases claimed by the Appellant are duly reflecting on the Goods and Services Tax Portal under the Form named "GSTR 2-A". The Goods and Service Tax Department which is also office of Central Government of India has duly an accepted all the invoices and have never raised any objections the authenticity, which clearly shows that the said purchases are bona-fide and the seller has even paid the due taxes thereon. Copy of the GSTR 2A is attached in the Paper Book. That the Appellant was not having any control over the filling of responses by these vendors. Further there is no mechanism....
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....to our notice detailed findings of the Assessing Officer and submitted that most of the dealers has not responded to the show-cause notices issued under section 133(6) of the Income-tax Act, 1961 (for short 'the Act') and further submitted that most of the dealers have not filed their return of income and also relevant GST were also got cancelled. He objected to the relief granted to the assessee by the ld. CIT (A) and heavily relied on the findings of the Assessing Officer. He submitted that the facts in AY 2021-22 are similar. 8. On the other hand, ld. AR of the assessee submitted as under :- "A. Non-Compliance with Notices under Section 133(6):- Notices issued under section 133(6) to 5 suppliers did not yield any response implied that the purchases were not verifiable - The Assessing Officer has drawn an adverse inference on the genuineness of purchases solely based on the non-response of suppliers to notices issued under Section 133(6) of the Income-tax Act, 1961. It is respectfully submitted that such an inference is both legally unsustainable and factually flawed, for the following reasons: i. Non-response by Third Parties Cannot Lead to any Disa....
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.... full, and there was no adverse comment on stock, purchases, or the method of accounting employed. Furthermore, complete quantitative details of the principal items traded can be verified from Clause 35(a) of the Tax Audit Report. The item-wise details of opening stock, purchases, and closing stock have been duly audited, and no adverse inference has been drawn in this regard. It is a well-established principle of tax jurisprudence that even where books are rejected, the AO must base any estimation of income on a reasonable and justifiable foundation, such as past results, comparable cases, or prevailing industry trends. An addition based merely on conjecture or a fixed percentage-without any objective basis-is unsustainable in law. Further, where the books of account are regularly maintained, duly audited, and supported by proper documentation, the burden is on the AO to establish concrete inconsistencies before drawing adverse inferences. Mere suspicion, non-responses from third parties, or general observations do not justify additions, particularly when the sales are undisputed. This view is supported by the following binding precedents: ITAT ....
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....024] 159 TAXMANN.COM 1225 (DELHI - TRIB.) In light of the above, and given that there is no defect in the assessee's books and the sales have been accepted, the addition made by the AO lacks legal justification and is liable to be deleted." 9. Considered the rival submissions and material placed on record. We observed that the Assessing Officer has made addition on account of bogus purchases as well as on account of outstanding listed under sundry creditors. We observed that the Assessing Officer proceeded to make the addition for the simple reason that several parties to whom notices u/s 133(6) were issued but most of them are not responded, however we observed that two of the major parties who had responded and filed the relevant information, they are M/s. Salasar Trading Company and Shri Kishan Lal. However, the Assessing Officer proceeded to treat the purchases as bogus and proceeded to disallow the whole purchases from the parties who had not responded to the notice issued u/s. 133(6) of the Act. In this regard, we find force from the decision of ITAT Mumbai in the case of ACIT vs. Sonicwall Technology System Ltd. - ITA No. 3860/Mum/2019, has held as under:- ....