Bogus Purchase cannot be Alleged on the basis of Mere Non-Appearance of the Supplier: ITAT Jaipur [Read Order]

A division bench of the Jaipur ITAT in Beauty Tax v. DCIT, held that the allegation of bogus purchase cannot be confirmed on the basis of mere non-appearance of the supplier in absence of any other corroborate evidence.

Allowing a second appeal filed by the assessee, the bench deleted the assessment order passed under the Income Tax Act.

The assessing Officer made an addition against the assessee alleging bogus purchase. The Officer found that the assessee failed to produce the supplier M/s Mahveer Textile Mills, in order to prove the genuineness of the claim. The first appellate authority sustained the addition on appeal. Aggrieved by the order, the assessee preferred a second appeal before the ITAT.

The bench found that there were similar other transactions which were held to be bogus in nature by the AO in AY 2008-09 and the Assessing Officer has blindly followed the findings given in assessment proceedings for A.Y for 2008-09 while bringing the subject transaction with M/s Mahaveer Textiles to tax in the year under consideration. The addition made for the year 2008.09 removed by the Tribunal on appeal.

“The only grievance of the Assessing Officer is that the assessee has failed to produce the party so as to establish genuineness of the transaction and secondly, no payment has been made to the party till the year end. The ld.CIT(A) while confirming the disallowance has stated that though confirmation has been obtained from the party, however, a simple confirmation is not sufficient to establish the fact of purchase without elaborating what more is required from the assessee to justify its claim”, the Tribunal said.

It was also noted that the assessee had produced all the necessary documentary evidence in order to prove their version. However, the AO has not considered the same while confirming the addition.

“Merely non-appearance of the supplier in absence of any other corroborate evidence cannot be a basis to justify the stand of the Revenue that the transaction of purchase is bogus. In the result the purchases made from M/s Mahaveer Textiles have not been proved to be bogus by the Revenue and the said additions cannot be sustained in the eye of law in absence of any conclusive evidence brought on record”, the Tribunal also added.

Read the full text of the Order below.