ITO, YAMUNA NAGAR vs. RAMAN KOHLI, YAMUNA NAGAR

5. Whether on facts and circumstances of the case, Ld. CIT(A)/NFAC was justified in deleting the addition made by the AO at Rs. 10,15,06,765/- on account of non-genuine purchase on the ground that the sales aspect has not been questioned by the AO.

6. Whether on fact and circumstances of the case, the Ld. CIT(A)/NFAC was justified in deleting the addition made by the AO at Rs. 10,15,06,765/- on account of non-genuine purchases as the vendors had failed to provide the relevant details as called for by the AO.

7. It is prayed that the order of the Ld. CIT(A) be set-aside and that of the AO be restored.

3.2 The assessee also made purchases of Rs.128.61 Lacs from Ish Rolling Mills to whom notice u/s 133(6) was issued by Ld. AO. Shri Ankush Kohli of that firm could not provide the requisite details as called for by Ld. AO. Similarly, the Assessee made purchases of Rs.62.25 Lacs from Shri Balaji Metal to whom similar notice was issued but the requisite details as called for by Ld. AO were not supplied by that firm. The Ld. AO alleged that the assessee failed to substantiate the purchases. Finally, aggregate purchases of Rs.1015.06 Lacs were added to the income of the assessee as alleged bogus purchases. Appellate Proceedings 4.1 During first appeal, the assessee assailed the action of Ld. AO by way of elaborate written submissions and referred to various case laws on the issue of alleged bogus purchases. After due consideration of the same, Ld. CIT(A) made pertinent observations in the impugned order. 4.2 The assessee pointed out that it filed detailed replies to Ld. AO on various dates along with sufficient documentary evidences to substantiate these purchases. The same were simply ignored by Ld. AO. Further, the purchases were in regular course of business with suppliers which were having PAN, Bank Account and GST registration to conduct the business. All the payments to the suppliers were through banking channels. The assessee discharged its onus by filing detailed documentation along with point-wise replies and therefore, the action of Ld. AO in making the addition was not justified.

4.3 The Ld. CIT(A), inter-alia, concurred that Ld. AO did not allege any collusion between the suppliers and assessee. There was no allegation that the funds were routed back or the delivery of goods had not happened. The Assessee would have no control over the suppliers to provide the required documents/ details as called for by Ld. AO. The Ld. AO ignored the quantitative details and did not point out any defect in the purchase or sale as carried out by the assessee. The sales were accepted and therefore, purchases could not be disallowed. The AO disallowed purchases of Rs.10.15 Crores out of total purchases of Rs.14.99 Crores which resulted into substantial disallowance of purchases of more than 40%. However, the sales were not questioned by Ld. AO. Without purchases, there could not be any sales. Further, disallowance has been made only because certain parties have not responded to the notices as issued by Ld. AO and also merely because the suppliers did not have email Ids or did not file their respective Income Tax Returns. No case was made out that the parties have not undertaken the transactions with the Assessee. The assessee duly discharged its onus by providing complete details of purchases. Therefore, the disallowance was on assumptions rather on concrete evidences. On these facts, the impugned addition as made by Ld. AO was deleted. Aggrieved, the revenue is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the assessee is engaged in manufacturing and trading of non-ferrous metal. It is quite logical that without purchases, there could not be any sales. The sales turnover of the assessee has duly been accepted by Ld. AO. Merely because few of the suppliers have not filed their Income tax returns or the fact that they did not have any valid email Ids, the purchases could not be disallowed. In two cases, the purchases have been doubted merely because in response to notices u/s 133(6), requisite details were not filed by these two parties. However, none of the parties is found to be non-existent. The assessee would have no control over third party suppliers. When the transactions have been carried out, all the suppliers were having valid PAN, GST registrations and Bank Account. All the payments to the suppliers are through banking channels only. The assessee duly substantiated these purchases before Ld. AO by filing various documentary evidences which include purchase invoices. Ledger extracts and GST registration details of all the suppliers. The copies of bank statement would reveal that all the payments by the assessee are through banking channels only. The assessee has maintained quantitative details and no defect has been pointed out in the books of the assessee. The Ld. AO has made substantial disallowance of purchases which is more than 40% of total purchases as made by the assessee. The financial results of the assessee, for this year, are in line with financial results of earlier years and no abnormality could be noticed in the same. The Net Profit Rate for this year is not abnormally low. Considering all these facts, the adjudication of Ld. CIT(A) could not be faulted with. We order so. The appeal of the revenue stand dismissed.