AO cannot Make Addition on Bogus Purchases without Rejecting Books or Reported Sales : ITAT says such Addition Legally Unsustainable

The ITAT (Income Tax Appellate Tribunal) has ruled that an Assessing Officer (AO) cannot make additions for "bogus purchases" without rejecting the books of accounts or reported sales, stating such additions are "legally unsustainable." The tribunal emphasized that if sales are accepted and recorded in the books, and the books themselves are not rejected, then an addition purely for alleged bogus purchases without demonstrating that the sales were also fake, is inconsistent. This decision provides significant relief to assessees, ensuring a more consistent and legally sound approach to disallowances based on alleged bogus transactions.