How the Addition Arose
The reassessment was initiated solely based on information received from the GST Investigation Wing alleging that purchases from M/s Uttam Metals were non-genuine.
The Assessing Officer:
- Treated the entire purchase amount as unexplained expenditure under Section 69C.
- Applied taxation under Section 115BBE.
- Relied primarily on third-party GST intelligence inputs.
The CIT(A) upheld the addition, observing that the assessee failed to prove physical movement of goods.
What Saved the Assessee – The “Golden Chain” of Evidence
Before the Tribunal, the assessee produced a complete and uninterrupted audit trail:
- Purchase invoices
- Supplier confirmation and affidavit
- Bank statements (both sides reflecting transactions)
- Stock register entries
- Lorry weighbridge receipts (inward and outward)
- Corresponding sale invoices and delivery challans
The weighbridge and transport receipts became decisive evidence proving physical movement of goods and directly contradicting the lower authority’s findings.
ITAT’s Key Observations
The Tribunal made several important findings:
- The CIT(A)’s conclusion regarding absence of movement of goods was factually incorrect.
- Once the assessee discharges the initial burden with verifiable documentation, the onus shifts to the Revenue.
- The department produced no contrary evidence:
- No independent inquiry
- No contradictory statement from the supplier
- No GST demand raised against the assessee
- Mere suspicion or third-party information cannot justify addition.
The Tribunal reiterated the fundamental principle that suspicion, however strong, cannot take the place of proof.
Result: Full deletion of ₹76.34 lakh addition.
Why This Ruling Matters in 2025–26
This case reflects a wider judicial trend across ITAT benches in Ahmedabad, Delhi, and Mumbai:
1. GST–Income Tax Data Sharing Surge
Thousands of reassessments are being triggered based on GST intelligence inputs.
2. Mechanical Additions at Lower Levels
Assessing Officers frequently add the entire purchase amount without conducting independent verification.
3. Tribunal-Level Relief
Where buyers maintain proper records, Tribunals are consistently granting full deletion, even when suppliers are later found non-compliant.
This ruling strengthens the defense framework for taxpayers facing bogus purchase allegations.
Section 69C & 115BBE – Legal Insight
Under Section 69C, if an assessee cannot satisfactorily explain expenditure, it may be treated as income.
However:
- The burden initially lies with the taxpayer.
- Once discharged through credible documentation, the burden shifts to the department.
Taxation under Section 115BBE (higher rate) becomes irrelevant if the primary addition fails, as seen in this case.
Practical Compliance Strategy for Businesses
To safeguard against bogus purchase additions, maintain the following documentation chain every year:
Invoice → Transport Proof (GR / Weighbridge / E-way Bill) → Stock Entry → Sale Invoice → Bank Payment
Additional safeguards include:
- Obtaining supplier confirmations annually
- Maintaining stock reconciliation
- Preserving transport receipts carefully
- Highlighting absence of GST demand against your entity if the supplier is flagged
- Filing complete documentation at the assessment stage itself
Weighbridge receipts and transport documents often become decisive evidence in such cases.
Broader Jurisprudence Trend
Recent rulings indicate:
- Even if the supplier later becomes non-traceable, the buyer is protected if records are clean.
- Third-party investigation reports cannot substitute independent inquiry.
- The burden of proof shifts once primary evidence is established.
This strengthens the evidentiary foundation required in GST-triggered reassessments.
Final Takeaway
The ITAT Ahmedabad ruling in Dineshchandra Laddha reinforces a clear principle in tax jurisprudence: documentation outweighs presumption.
For businesses maintaining transparent accounting and complete records, this decision offers strong judicial support amid increasing GST and Income Tax coordination scrutiny.
If you are facing a bogus purchase notice under Section 69C, reassessment triggered by GST input, or addition under Section 115BBE, a structured documentation strategy and timely representation can significantly influence the outcome.