Bogus Purchase Addition Deleted for Lack of Evidence | HC

Case Details: Principal Commissioner of Income-tax vs. Sunil Devkishan Panwar [2026] 185 taxmann.com 638 (Gujarat)

Judiciary and Counsel Details

• A.S. Supehia & Pranav Trivedi, JJ.
• Karan G Sanghani for the Appellant.

Facts of the Case

The assessee filed his return of income for the relevant assessment year. The Assessing Officer (AO) completed the assessment under section 143(3). Subsequently, based on the information received from the Investigation Wing, a notice under section 148 was issued. The AO made additions to the assessee’s income, contending that the assessee was engaged in bogus purchases and sales of goods.

The matter was carried to the Tribunal, which deleted the additions made by the AO. The Tribunal held that the assessee furnished all the details of purchases and sales. The assessee also furnished the purchase and sale bills, and the VAT was duly paid. The assessee also furnished the sales tax assessment, and the input credit was also allowed in favour of the assessee. There was no adverse material brought on record to substantiate the allegation that the assessee had shown purchases from the impugned party.

The AO made the addition without rejecting the books of account and recasting the trading results. Thus, the assessee had discharged the onus cast upon him. The aggrieved AO filed an appeal to the Gujarat High Court.

High Court Held

The High Court held that the AO made the additions based on the information received from the Investigation Wing. The assessee had contended that the reopening of the assessment was not justified, as it was based on information received from the Investigation Wing. However, no material was supplied to him, and no opportunity for cross-examination was also allowed.

The CIT(A) allowed full relief, accepting the assessee’s contentions. The same was challenged before the Tribunal, and after considering the respective submissions, the Tribunal held that the CIT(A) allowed full relief to the assessee by appreciating the facts in the right perspective. Thus, the High Court held that the CIT(A) deleted the entire addition based on the appreciation of facts and affirmed the order of the Tribunal.

List of Cases Reviewed

• ITO v. Sunil Devkishan Panwar IT Appeal No.61/srt/2024, Dated 28-6-2024 (para 8) Affirmed