Addition for bogus purchase deleted as enquiry conducted from other supplier with similar name

Addition for bogus purchase deleted as AO conducted enquiry u/s 133(6) from the different supplier having name similar to actual creditor

ABCAUS Case Law Citation:
ABCAUS 3206 (2019) (12) ITAT

In the instant case, the appeal was filed by the assessee against the order of CIT(A) on the solitary issue related to the addition made by the Assessing Officer (AO) and confirmed by the CIT(A) on account of the alleged bogus purchase.

During the course of assessment proceedings, a notice u/s 133(6) was issued by the AO to one creditor in order to cross verify the claim of the assessee of having made purchases from the said party during the year under consideration.

In reply to the said notice, the creditor however denied of having any transaction made with the assessee during the year under consideration. When this reply was confronted by the AO to the assessee, it was submitted by the assessee that the purchases claimed by him were genuine and there were corresponding sales made by him out of the said purchases.

This submission of the assessee was not found acceptable by the AO who treated the purchases claimed to be made by the assessee from the said creditor as bogus and made addition to that extent to the total income of the assessee.

During the course of appellate proceedings before the CIT(A), it was submitted by the assessee that the enquiry was made by the AO with other similar named creditor whereas the impugned purchases were made from another creditor.

This contention of the assessee was not found acceptable by the CIT(A) in the absence of any evidence to support and substantiate the same. He accordingly confirmed the addition.

The Tribunal observed that the assessee produced the copies of various bills under which the purchases were made. The case of the assessee was that an adverse inference was drawn by the authorities below treating the said purchases as bogus based on the enquiry wrongly made by the AO with other similar named party.

Bogus purchase addition deleted as enquiry was made from similarly named party

The Tribunal observed that a similar contention was raised by the assessee even before the CIT(A) pointing out the mistake in the order committed by the AO in making the verification from some other party having some resemblance in the name. However, the CIT(A) did not accept the same for the lack of evidence.

The Tribunal noted that it was established by the assessee that the impugned purchases were made from another creditor as duly supported by the relevant documentary evidence in the form of bills raised by the said party.

In view of the above, the Tribunal opined that the addition made by the AO and confirmed by the CIT(A) by treating the said purchases is bogus was not sustainable.

Accordingly, the said addition was deleted.

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