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Facts
The assessee, an individual, filed a return declaring an income of Rs. 2,49,390/-. The AO received information regarding bogus purchases amounting to Rs. 14,50,800/- from M/s. Hiraani Suppliers Pvt. Ltd. and Niraj Nathani. The AO treated these purchases as bogus and made an addition under section 69C of the Act.
Held
The Tribunal held that the purchases from M/s. Hiraani Suppliers Pvt. Ltd. were clearly bogus, as evidenced by the lack of details in the invoices, the unverified existence of the supplier, and the statement of Niraj Nathani. The assessee failed to prove the genuineness of these purchases.
Key Issues
Whether the purchases made by the assessee were genuine or bogus, and consequently, whether the addition made by the AO and confirmed by the CIT(A) on account of unexplained source of transaction is justified.
Sections Cited
147, 148, 144B, 69C, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: SHRI DUVVURU RL REDDY
O R D E R The present appeal is directed at the instance of assessee against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 09.06.2025 passed for Assessment Year 2018-2019. 2. The only ground raised
by the assessee is with regard to addition made by the AO and confirmed by the ld.CIT(A) on account of unexplained source of transaction u/s.69C of the Act.
3. Brief facts of the case are that the assessee is an individual and had filed return of Income on 30.10.2018 for the A. Y. 2018-19 declaring total income of Rs. 2,49,390/-. The AO had received information that the assessee was one of the beneficiary of bogus transactions made in the form of fictitious purchases and bogus billing from the parties like Hiraani Suppliers Pvt. Ltd; Niraj Nathani to the tune of Rs.14,50,800/- during the F.Y.2017-18. The assessee was the recipient of irregular input tax credit amounting to Rs.14,50,800/-during the FY 2017-18 relevant to the A.Y.
2018-19, therefore, the AO issued notice u/s.148 of the Act and subsequently the AO passed assessment order u/s.147 r.w.s.144B f the Act making addition u/s.69C of the Act at Rs.14,50,800/-.
Aggrieve with the assessment order, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) has also upheld the view taken by the AO. Now, the assessee is in further appeal before the Tribunal.
Ld. AR submitted that the assessee mainly trading in metals scrap materials. The assessee had shown purchases to an extent of Rs.14,50,800/- from M/s. Hiraani Suppliers Pvt. Ltd and Niraj Nathani. It was submission that the assessee had responded stating that the assessee had purchased lead ingot from M/s Hiraani Suppliers Pvt. Ltd. and no purchases had been made by the assessee from Niraj Nathani. The purchases had been made through bank statements. It was submission that the AO was in the position of certain information in respect of verification through the inspector of the Investigation Unit who had mention that the said company Hiraani Suppliers Pvt. Ltd. did not exist at the address given. It was submission that consequently the AO had treated the purchases from Hiraani Suppliers Pvt. Ltd. as bogus purchase on the basis of a statement given by Shri Niraj Nathani, allegedly to be a person, who has controlled the said Hiraani Suppliers Pvt. Ltd.. It was submission that all the purchases have been recorded in the books of accounts of the assessee and the sales were also specifically shown. The payments were through bank account. It was submission that even the tax invoices cum challan had been reduced before the AO. It was the submission that the assessee was carrying on business in the name and style of Global International and on 04.09.2017 the assessee had purchased 4,905,000 kg of lead Ingot from M/s Hiraani Suppliers Pvt. Ltd. and the same was sold to Raj Finoxide Pvt. Ltd. The ld. AR drew my attention at pages 24 & 25 of the paper book which reads as under :-
6. The assessee had also purchased 5170 kgs of lead ingut on 5th September, 2017 and had sold the same to Raj Finoxide Pvt. Ltd.. The invoice for the same have been shown at pages 27 & 28 of the paper book. It was the submission that the assessee had purchased the items and had also sold the items on the same date. It was the submission that the transaction being genuine, the purchases could not be treated as bogus. It was further submitted that even if the purchases are deemed to be bogus, then it is only the GP in regard to the said bogus transaction which would be considered and not the entire purchases.
On the other hand, ld. Sr. DR supported the orders of lower authorities and submitted that the statement of Shri Niraj Nathani, the person who is controlling M/s Hiraani Suppliers Pvt. Ltd., had been recorded and it was admitted by said Shri Niraj Nathani that the transactions were clearly bogus. It was the submission that the assessee had not been able to show how the goods were transported from M/s Hirani Suppliers Pvt. Ltd. to the assessee. There was also no evidence and receipt nor any dispatch register. It was the submission that the assessee having no proved the purchases, the same is liable to be reted as bogus purchases. Accordingly, the ld. Sr.DR prayed for upholding the order passed by the ld. CIT(A).
I have considered the submissions of both the parties and perused the material evidence available on record. A perusal of invoice which has been extracted above, shows that in respect of supplies from M/s Hiraani Suppliers Pvt. Ltd. to the assessee, the tax invoice-cum-challan does not contain any buyer number or purchase order, vehicle number. There is no details from where the products have been lifted. A perusal of the tax invoice-cum-challan issued by the assessee to Raj Finoxide Pvt. Ltd. shows the vehicle number, challan number, purchase order number. This clearly shows that the purchase made by the assessee from M/s Hiraani Suppliers Pvt. Ltd is clearly a bogus purchase. The assessee has only attempted to cover up the sales to Raj Finoxide Pvt. Ltd. by the said bogus purchases. The assessee has also not produced the stock book to show the movement of stock. If it is to be assumed that material has gone directly from M/s Hiraani Suppliers Pvt. Ld. to Raj Finoxide Pvt. Ltd., then obviously the address of the place from which the stock has been lifted would be available, this has also not been shown. This coupled with the fact that the Inspector’s report is available which shows that the existence of the company was not found, therefore, clearly shows that such scraps never have been stored in the said premises. This too goes against the preponderance of the probabilities. This being so, as the assessee has been unable to prove the purchases from M/s Hiraani Suppliers Pvt. Ltd., the said purchases would be deemed to be not-proved and bogus. Consequently, the addition as made by the AO and as confirmed by the ld.CIT(A) is liable to be upheld and I do so.
With regard to claim of the assessee that the GP is liable to be added does stand to reason insofar as when the sales are fully disclosed and the purchases are not disclosed from the parties are bogus, the source for the purpose goes into the question and as the purchases remained unproved, such bogus purchases are to be treated as the unexplained income of the assessee. Thus, I do not find any reason to interfere in both the orders of the lower authorities and I uphold the same.
Accordingly, appeal of the assessee is dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 21/11/2025.