Whether purchases can be treated as bogus solely on the ground that suppliers are not traceable if the assessee has paid by a/c payee cheques and produced the income-tax and sales-tax documents and bank statements of the suppliers?

Last updated: 20 November 2014

Court :
ITAT Mumbai

Brief :
Assessee is a proprietor of M/s Gururaj Metals in the business of supply of Ferrous and non-ferrous metals to SSIs. AO disallowed certain purchases on the ground that suppliers are not traceable. The assessee furnished ledger copy of purchases, signed by the respective parties and copies of sample purchase bills along with a few delivery challans and claimed that the purchases are genuine. Assessee submitted additional evidences under Rule 46A of the Income Tax Rules, 1962 in the form of TIN allotment letter, Sales Tax Acknowledgement of E-return, challans, certificates under VAT etc in respect of purchases in question. AO further submitted that bank statements of the parties shows that they have withdrawn the amounts in cash as soon as the cheques issued by the assessee were realised. Payments were made by account payee cheque. Thus the assessee had discharged the primary onus of proof by proving the identity of party and genuineness of the transactions . Held that purchases cannot be treated as bogus solely on the ground that suppliers are not traceable if the assessee has paid by a/c payee cheques and produced the income-tax and sales-tax documents and bank statements of the suppliers.

Citation :
Shri Ganpatraj A Sanghavi– Appellant – Versus - Assistant Commissioner of Income Tax – Respondent