ITAT Restores Bogus Purchase Issue of Rs. 30.76 Crore to AO for Fresh Verification
The ITAT set aside the Rs. 30.76 crore bogus purchase addition and remanded the matter to the AO for fresh verification. The Tribunal held that the issue was not properly examined earlier and directed a detailed re-assessment after giving due opportunity to the assessee.
Ashvinbhai Keshvlala Patel has filed the present appeal against the ITO in the Income Tax Appellate Tribunal (ITAT) in Ahmedabad “D” Bench, challenging an order passed by the NFAC, Delhi, dated March 12, 2025, for the assessment year 2021-22 in the proceeding under section 143(3) of the Income Tax Act, 1961.
The assessee had filed his return of income for the A.Y. 2021-22 on January 15, 2022 declaring a total income of Rs 887,380. But the case was selected for investigation under CASS.
The assessee is the proprietor of M/s. Anand Corporation and engaged in the business of trading gold and bullion. AO found that the assessee had made purchases of Rs 30,76,08,006 from M/s. Yoro Bullion Pvt. Ltd, who had not filed a return of income. AO also issued notices under section 133(6) asking to report all required details. The assessee had, however, submitted that all purchases from M/s. Yoro Bullion Pvt. Ltd were backed with proper invoices wherein the GST number was correctly mentioned.
AO further noticed that the GST number mentioned in the invoices was cancelled on November 25, 2019, whereas all the bills brought on record by the assessee were subsequent to that date.
AO then transferred the case to the verification unit for physical verification. On verification, it found that there was no such company and the digital proof of the company was also not available. AO then treated the entire purchase worth Rs. 30,76,08,006 made from the company as a fake purchase.
Being aggrieved with the order of the AO, the assessee filed an appeal before CIT(A). The CIT(A) confirmed the addition of the fake purchase through the impugned order.
The assessee further approached ITAT. During the hearing, AR pointed out that at the time when the assessee entered into transactions with M/s. Yoro Bullion Pvt. Ltd., the GST registration of the said party was valid and had not been cancelled. The cancellation of the GST registration was done at a later stage and was given retrospective effect from November 25, 2019. Therefore, on the date of the transactions, the assessee was dealing with a duly registered GST entity. Considering all these facts, AO was not correct in treating the entire purchase made from the company as fake. DR submitted that AO made enquiries and M/s.Yoro Bullion Pvt. Ltd was not found traceable at the mentioned address.
The Income Tax Appellate Tribunal (ITAT) felt that the issue relating to the purchases worth Rs 30,76,08,006 from M/s Yoro Bullion Pvt. Ltd. was not fully and properly examined earlier. Since these purchases were treated as bogus during assessment, the Tribunal decided that the matter needs a fresh and detailed verification. Therefore, the case is being sent back to the Assessing Officer for re-examination.
The Tribunal has instructed the AO to reconcile the Input Tax Credit (ITC) claimed by the assessee under GST law for these disputed purchases. If required, the AO can directly obtain information from GST authorities, including GST returns and ITC status. Tribunal also directed the assessee to co-operate fully in the fresh proceedings. After completing all verifications and hearing the assessee, the AO must pass a speaking and reasoned order. As a result, ITAT allowed the assessee’s appeal for statistical purposes.