ITAT Mumbai Dismisses Revenue Appeal on Bogus Purchases; Upholds Deletion of ₹68.77 Lakh and ₹7.94 Crore Additions

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, dismissed Revenue appeals for Assessment Years 2015–16 and 2017–18 in the case of M/s. Anantam, upholding deletion of additions made under Section 69C on account of alleged bogus purchases.

For AY 2015–16, the Assessing Officer had reopened the assessment based on information that the assessee had obtained accommodation entries from M/s R.K. Impex. An addition of ₹68.77 lakh was made under Section 69C, treating purchases as non-genuine. The CIT(A) deleted the addition on the ground that the assessee had furnished documentary evidence, including invoices, ledgers, and bank statements, which were neither rebutted nor independently verified by the Assessing Officer.

The Tribunal upheld the CIT(A)’s findings, noting that the Assessing Officer failed to conduct basic verification such as issuing notices under Section 133(6) or undertaking independent enquiry. It observed that the addition was based on general information without linking it to the assessee’s specific transactions.

For AY 2017–18, the Assessing Officer made a larger addition of ₹7.94 crore under Section 69C along with commission expenditure, alleging bogus purchases from multiple entities based on search findings. Despite the assessee furnishing voluminous documentary evidence, including purchase and sales records, bank statements, and registers, the Assessing Officer relied primarily on third-party statements and perceived discrepancies without conducting further verification or allowing cross-examination.

The Tribunal held that the assessee had discharged its onus by producing supporting evidence, and in absence of any contrary material or proper enquiry by the Assessing Officer, the additions could not be sustained.

Accordingly, both Revenue appeals were dismissed.