Important query on vat input

The dealer had taken only ITC on the actual tax paid to the vendor on the VAT invoice. Considering the price after discount when the goods were resold, there was resale at a lesser price. Subsequently the VAT officers are asking for reversal in Input VAT or to consider it in total turnover.

1. Is the action  of the officer sustainable??  

2. Is possible to reverse the input, as these input tax is already paid by the dealer to the vendor while purchasing the goods