“Purple Suppliers Pvt Ltd” Borrowed Satisfaction fails

The dispute arose from reassessment proceedings initiated against M/s Purple Suppliers Pvt. Ltd. based on information received from the Investigation Wing alleging that transactions with Sancheti Diamonds Pvt. Ltd. represented bogus purchases and accommodation entries. 

The Assessing Officer reopened assessments for multiple years and made additions under Section 69C on the ground that purchases from Sancheti Diamonds were not genuine.

The Tribunal quashed the reassessment proceedings after finding that the Assessing Officer merely reproduced allegations contained in the Investigation Wing report without independently examining whether income had genuinely escaped assessment due to failure by the assessee to fully and truly disclose material facts. 

The Tribunal further observed that while purchases from Sancheti Diamonds were doubted, corresponding sales transactions involving the same party had been fully accepted by the Revenue.