100% Disallowance for Bogus Purchase can’t be made when Sales are not Doubted: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that 100 percent disallowance cannot be made in respect of bogus purchase when the sales made by the assessee are not doubted.

The assessee in the instant case is engaged in the business of trading in steel & scrap. On basis of an information that the assessee was one of the beneficiaries of transactions with Hawala dealers, the department initiated proceedings against the assessee. The hawala dealers also had admitted before the Sales-tax authorities in their statement/affidavit that they were providing only accommodation bills without there being any actual purchase/sale of goods.

While completing the re-assessment proceedings, the Assessing Officer confirmed the additions against the assessee by holding that the assessee failed to establish the genuineness of the purchases from the above listed parties.

Diving deeply into the facts of the case, the bench noted that the purchase bills from the non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine.

To Read the full text of the Order CLICK HERE