RAMLAL RUPCHAND,CUTTACK vs. ITO, WARD 44(2), KOLKATA

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ITA 1341/KOL/2026Status: DisposedITAT Kolkata03 September 2026AY 2022-20237 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee should be given an opportunity to present its case before the AO. The AO was directed to properly verify documents and allow the assessee to cross-examine the persons whose statements were recorded.

What were the facts?

The assessee, a partnership firm dealing in wholesale garments, declared a total income of Rs. 18,08,190/-. The Assessing Officer (AO) made an addition of Rs. 39,78,118/- based on alleged bogus purchases from M/s JM Jain LLP, citing investigation wing reports and third-party statements.

What were the issues?

Whether the addition made by the AO based on third-party information without proper verification and opportunity for cross-examination is sustainable. Whether the assessee was denied a fair opportunity to present its case and cross-examine adverse witnesses.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No 1341/KOL/2026 Assessment Year- 2022-23 Ramlal Rupchand...........................................................................................Appellant Nandi Shai, Choudhary Bazar, Cuttack, Odisha- 753001 [PAN No. AAGFR7933R]

Vs. Jao ITO Ward 44(2)...........................................,..……………....……….Respondent 3, Government Place Kolkata, West Bengal- 700069 Appearances by: Vikas surana, AR, appeared on behalf of the Appellant. Praveen Das Chowdhury, (Sr. D.R), appeared on behalf of the Respondent. Date of concluding the hearing: August 18, 2026 Date of pronouncing the order: September 03 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 23.03.2026 of the National Faceless Appeal Centre (NFACT) , Delhi passed under Section 143(3) of the Assessment Year 2022-23 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”).

2.

The brief facts of the case is that assessee being a partnership firm under the name of M/s. Ramlal Rupchand and his business is wholesale Trading of Housery Garments. During the relevant assessment year the assessee filed

ITA No.1341/Kol/2026 income tax return declaring total income of Rs. 18,08,190/- the reason for the scrutiny statement was alleged bogus purchase from M/s JM Jain LLP worth of Rs. 1,59,12,474/- based on the report of investigation wing and the statement of the third party. The Ld. AO after going the documents and submission made by the assessee at the time of assessment proceedings passed order u/s 143(3) read with section 144B by making an addition of Rs. 39,78,118/- i.e 25% bogus purchase of Rs. 1,59,12,474/-.

Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed.

3.

The Ld. AR submits that the order passed by the AO confirmed by the CIT(A) solely on the material founds during the search proceedings u/s 132 of the case of a third parties and failed to appreciate that no incriminating material whatsoever was found from the possession of control of the assessee. The Ld. AR submitted that Ld. Assessing Officers did not verify the documentary evidences properly nor assessee has been given an opportunity to cross- examine to verify the statement of the persons whose information were proposed to be relied upon by the Assessing Officers. The Ld. AR filed a written submission before us which is as follows:-

1 The Appellant is a wholesale trader of hosiery garments at Cuttack having business turnover of Rs 12.96 crores. It made purchases of jackets worth Rs 1,57,680/- from M/s JM 2

ITA No.1341/Kol/2026 Jain LLP, Delhi, Paper book page 1. A search and seizure action u/s 132 of the Income-tax Act, 1961 was conducted on 28/05/2022 against M/s JM Jain LLP at Delhi. During search, the Income Tax Department allegedly found certain data in a so-called "parallel server", which according to the department contained details of alleged unaccounted cash transactions. Based on such data, the department alleged that M/s JM Jain LLP had affected sales outside the regular books of accounts by undervaluing sales in regular books and recording alleged cash transactions in the parallel server.

As far as present appellant is concerned, it has been further alleged that a customer ID CEA000435 appearing in the said server pertains to the appellant ie., M/s Ramlal Rupchand and that alleged unaccounted transactions aggregating to Rs. 1.59,12,474/- were carried out with M/s JM Jain LLP.

Based on the above allegation alone, scrutiny proceedings u/s 143(3) were initiated in the case of the assessee and the Ld AO has estimated addition Rs 3978118 towards profit @ 25% on alleged unaccounted purchases of Rs. 1,59,12,474/-, without rejection of audited books of accounts

2.

At the outset, it is respectfully submitted that no incriminating material whatsoever has been found either during search in the case of M/s JM Jain LLP or during assessment proceedings in the case of the assessee to establish that the assessee had actually made purchases through JM Jain LLP outside its regular books of accounts. The entire allegation is merely based upon certain electronic data allegedly found in the server of 3rd party M/s JM Jain LLP.

Further, no corroborative evidence has been brought on record wrt the alleged unaccounted purchases of Rs. 1,59,12,474/-such as: 3

ITA No.1341/Kol/2026 (b) delivery challans,

(a) any purchase bills/invoices raised in the name of the assessee

(c) transport receipts/e-way bills;

(d) lorry receipts,

(c) weighment slips,

(stock movement records from Delhi to Cuttack

(g) inward register entries;

(h) payment trail,

The prayer of the AR is that appeal of the assessee be remitted back to the file of the AO with a direction to pass a fresh order after proper verification of the documents, after hearing the assessee by giving an opportunity to cross- examine the persons.

Contrary to that the Ld. DR supports the impugned order by submitting that there is no infirmity in the impugned order as the order passed by the AO confirmed by the CIT(A) is based on the documents and after hearing the assessee.

4.

Upon hearing the submission of the counsel of the respective parties and on perusal of the written submission filed by the assessee, we find that an opportunity should be given to the assessee to place his case before the 4

ITA No.1341/Kol/2026 Assessing Officers. Assessing Officers directed to hear the assessee, verify the documents properly and given opportunity to the assessee to cross-examine the persons whose statement has been recorded.

In the result, the appeal of the assessee is allowed for statistical purpose.

Kolkata, the 03rd September, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 03.09.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Manish Bhoi Deputy Registrar Kolkata Benches

ITA No.1341/Kol/2026

ITA No.1341/Kol/2026

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