Non-Response to Section 133(6) Notices by Suppliers Cannot Alone Render Purchases Bogus: ITAT Pune Ruling in Favour of Liquor Trading Firm
Overview of the Judgment
The Income Tax Appellate Tribunal, Pune Bench, delivered a significant ruling in Ramakant Bhuvan Vs ITO (ITAT Pune) concerning the treatment of purchases as bogus solely on the ground that suppliers failed to respond to notices issued under Section 133(6) of the Income Tax Act, 1961. The Tribunal held that where the assessee maintains comprehensive and credible documentary evidence supporting the genuineness of transactions, the mere non-compliance of suppliers with statutory notices cannot serve as the sole basis for treating purchases as inflated or fictitious.
This ruling carries substantial implications for assessees engaged in regulated trade sectors — particularly those dealing with excise-controlled commodities — who are often exposed to additions during assessment proceedings due to factors entirely beyond their control.
Background and Facts of the Case
Nature of the Assessee's Business
Ramakant Bhuvan is a partnership firm engaged in the liquor trading business. For the Assessment Year 2022-23, the firm filed its return of income declaring a total income of Rs. 29,72,490/-.
Scrutiny Assessment and Addition Made
The case was picked up for scrutiny, and notices under Section 143(2) and Section 142(1) of the Income Tax Act, 1961 were duly issued. The Assessing Officer (AO), in order to verify the purchases declared by the assessee, issued notices under Section 133(6) to six liquor suppliers from whom purchases had been made during the relevant year.
Out of the six suppliers contacted, only one responded. The remaining five suppliers did not reply to the notices. On this basis alone, the AO concluded that purchases worth Rs. 3,68,43,991/- (approximately Rs. 3.68 crore) made from these five non-responding suppliers were unverified and consequently treated them as inflated purchases, adding the entire amount to the assessee's income under Section 37(1) of the Income Tax Act, 1961.
As a result, the assessed income ballooned to Rs. 3,98,16,481/- as against the returned income of Rs. 29,72,490/-, effectively representing an addition of nearly Rs. 3.68 crore — solely on account of supplier non-compliance.
First Appellate Proceedings Before CIT(A)/NFAC
The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [CIT(A)/NFAC]. During the course of appellate proceedings, the assessee:
- Submitted extensive documentary evidence in support of the purchases
- Filed a request for admission of additional evidence under
Rule 46Aof the Income Tax Rules - Made a written request for an opportunity to present its case through video conferencing
Despite these efforts, the CIT(A)/NFAC:
- Confirmed the addition made by the AO
- Ignored the additional evidence filed under
Rule 46Awithout any reasoned consideration - Denied the opportunity for a video conference hearing
Aggrieved by the first appellate order dated 31.12.2025, the assessee preferred a second appeal before the ITAT Pune.
Grounds of Appeal Before ITAT
The assessee raised the following grounds before the Tribunal: