Loading judgment…
Facts
The assessee made purchases from 21 parties who were non-filers of income-tax returns. The AO disallowed 25% of these purchases as non-genuine because two parties did not respond to notices issued under Section 133(6). The CIT(A) confirmed this disallowance.
Held
The Tribunal held that once the assessee furnished primary evidence like supplier details, PAN, ledger accounts, and bank statements, the onus was discharged. Non-response from suppliers or their non-filing status cannot be a ground to disallow genuine purchases.
Key Issues
Whether purchases from non-filer suppliers can be disallowed if the assessee has provided primary evidence of genuineness and payment, despite suppliers not responding to notices.
Sections Cited
143(3), 144B, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2021-22 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 27.09.2024 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s 144B of the Income-tax Act, 1961 (hereinafter “the Act”) dated 27.12.2022.
Chny/2025 Workenstein Collaborative Spaces Pvt. Ltd. :- 2 -:
There is a delay of 149 days in filing the appeal by the assessee.
The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. We have considered the petition/affidavit of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is hereby condoned.
The assessee-company filed its return of income declaring a total loss of Rs. 6,40,61,654/-. The A.O in the assessment order has noticed that the assessee has made purchases of Rs. 34,20,192/- from 21 parties, who were non-filers of income-tax returns. The Assessing Officer (A.O) conducted verification in respect of two parties out of the said 21parties , namely, M/s. Deligent Metal and M/s.
Interfaceflor India Pvt. Ltd., from whom purchases of Rs. 3,86,907/- and Rs. 23,53,571/- respectively were shown by issuing 133(6) notice.
As these parties did not respond to the notices issued u/s. 133(6) of the Act the A.O treated the purchases as not fully verifiable and disallowed 25% of the same as non-genuine. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the disallowance holding that the assessee failed to establish the Chny/2025 Workenstein Collaborative Spaces Pvt. Ltd. :- 3 -: identity, creditworthiness of the suppliers, and the genuineness of the transactions beyond doubt, and therefore, rightly rejected the claim.
4. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee had produced all relevant evidences, including details of suppliers, copies of ledger accounts, and bank statements reflecting payments made to the suppliers, to establish the genuineness of the purchase transactions. It was further submitted that the assessee’s accounts were duly audited and all available documents were furnished before the authorities. The Ld. AR contended that if the suppliers did not respond to the notices issued u/s. 133(6) of the Act, the assessee cannot be held responsible for the same, and therefore, no addition could be sustained on that ground.
On the other hand, the Ld. Departmental Representative (DR) relied upon the orders of the lower authorities.
We have heard the rival submissions and perused the material available on record. The A.O made the disallowance of 25% of the purchases on the ground that the suppliers were non-filers of income- tax returns and had not responded to the notices issued u/s. 133(6) of the Act. However, it is observed that the assessee had furnished the Chny/2025 Workenstein Collaborative Spaces Pvt. Ltd. :- 4 -: details of suppliers, PAN, ledger accounts, and bank statements evidencing payment through banking channels to prove the genuineness of the transactions. Once such primary evidences are produced, the onus stands discharged by the assessee. Non-response by the suppliers to notices issued by the A.O or their non-filing of returns cannot be a ground to disallow genuine purchases when the assessee has otherwise substantiated the transactions. We therefore do not find merit in the order of the Ld. CIT(A) and delete the addition made by the A.O .
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 29th day of August, 2025 at Chennai.