The legal principle established is that mere reliance on third-party statements and documentation is inadequate; the taxpayer must provide substantively verifiable evidence of actual transactions to justify expenditure claims.

ORDER

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. ’CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 25.09.2024, which has been passed against the assessment order passed u/s 147 r.w.s 144B of the Act, dated 21.03.2023.

2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“(a) For that the Ld. CIT(A) has committed an error in interpreting the provisions of Sec.69C of the IT Act, 1961, holding the third-party statement collected by the investigating wing of the department as concrete evidence to treat the purchase as bogus and unexplainable.

Referred Sec.69C-Unexplained Expenditure etc."-Wherein any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the assessing officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.

Provided that, notwithstanding contained in any other provision of this act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income."

It is pertinent to mention here that the assessee has provided sufficient explanation along with documentary evidences before the AO as well as CIT(A) substantiating the genuineness of purchases made by them. Under the circumstances, the Ld. CIT(A) is not justified upholding the contentions of the AO as unexplained expenditure. The contentions of the Ld. CIT(A) are perverse and is liable to be set aside in the ends of justice.

(b) For that the Ld. CIT(A) failed to appreciate the contentions of the assessee that inputs have been delivered at the factory premises of the appellant and transporters documents were submitted for verification and payment details were provided before the AO which mentioned in the face of the Assessment Order. Further, the assessee has shown the mode of payment made to the supplier of goods which are through banking channel. Under the circumstances, the assessee has proved the genuineness of the purchase and the Ld. CIT(A) has not considered the facts and documents available on records and simply uphold the observation and finding of the AO. The impugned Order-in-Appeal is perverse, not sustainable in law and is liable to be set aside in the ends of justice.

(c) For that the department has not verified and confirmed the supply of goods directly from the concerned person rather, received incomplete information from third party which is not tenable in law. It is settled by the Hon’ble Apex Court, wherein it has been held in the case of Commissioner of Income Tax Vs. Odeon Builders Pvt. Ltd. , reported in (2019) 418 ITR 315 (SC), which is squarely applicable in this present case in hand, wherein the Hon’ble Apex Court has held -

Para-4 "the case of the revenue was that during the course of the assessment proceedings, the Assessing officer observed that the assessee had entered into purchase transact