TaxTMI 
TaxTMI 
2026 (7) TMI 1305
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....e three grounds of appeal, has challenged the disallowance of bogus purchases of Rs. 5,61,580/- upheld by the Ld. CIT(A). 3. Facts, in brief, relevant for adjudication of this appeal are that the assessee is engaged in the business of manufacturing and trading of steel products. It filed its Income Tax Return ('ITR') of the relevant year on 26.03.2019 declaring income of Rs. 7,13,26,490/-. The ITR was processed under section 143(1) of the Act at income of Rs. 7,19,40,170/- wherein the employee's contribution towards PF and ESIC paid after due date specified in the said Act was disallowed by the Assessing Officer ('AO') - CPC. Later, this case was reopened under section 148 of the Act on the reasoning that the assessee has taken bogus pur....
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....of goods. • The assessee has not submitted GSTR-2A which is auto populated to evidence that the transactions are reported in GST. • The assessee has not given proof of delivery slips/gate pass to evidence the actual movement of goods. • Assessee has not submitted copy of purchase bill duly signed and stamped by the said party. • The assessee has not submitted any transport details or any other details pertaining to movement and delivery of goods. • There is information received from ITO(INV) (OSD2) (Unit2), Delhi which has been shared with assessee and as per the same there is finding given that above entities have indulged in purchase and sale only on paper without actual mov....
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....allowed u/s. 37(1) as the same is not incurred for the purposes of the business." 4. Aggrieved with the assessment order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) admitting additional evidences, such as, (i) Copy of purchase invoices from M/s Mideast Integrated Steels Ltd., (ii) Delivery challans / gate passes, (iii) GSTR-2A reflecting corresponding input tax credit and (iv) Ledger and payment details through banking channel, restricted the disallowance @ 12.5% of purchases of Rs. 44,92,645/- instead of @ 25% done by the Ld. AO. The relevant part of the impugned order reads as under: "7.3 Legal Position: Courts have consistently held that when purchases are supported by books, invoices, and payment through....
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....the assessee had failed to produce the truck details etc. through which the goods were actually transported at the factory premises of the assessee. She drew our attention to the case law mentioned at page No. 11 of the assessment order in the case of State of Karnataka Vs. Ecom Gill Coffee Trading Pvt. Ltd.; SLP (Civil) 2572/2022 [TS-99-SC-2023-VAT], wherein the Hon'ble Supreme Court clarified that mere production of vouchers or payment by cheque were not sufficient and could not be said to be proving burden as per section 70 of the KVAT Act. She categorically submitted that the assessee had failed to demonstrate the actual physical movement of goods through any corroboratory evidence even during the appellate proceedings before the Ld. CI....
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....en note of the fact that the assessee has not filed any document before the Ld. AO, which may demonstrate input or output analyses establishing the actual consumption of the said goods in the production. Since, the core document regarding the transportation of goods and consumption of goods in the production were not filed before the Authorities below; therefore, we do not find any infirmity in the order of the Ld. CIT(A) as far as upholding the disallowance @ 12.5% of bogus purchases are concerned. Accordingly, this appeal is dismissed. Before parting out, we make it clear that the above finding will not have any bearing on the Revenue's cross-appeal. 8. In the result, this appeal of assessee is dismissed. Order pronounced in the ope....