DAYAL COMMERCIAL CO. PRIVATE LIMITED,KOLKATA vs. ITO, WARD 3(1), KOLKATA

FOR THAT the Ld. CIT(A) failed to exercise the co-terminus appellate powers vested under Section 251, as settled by the Hon'ble Supreme Court in CIT v. Kanpur Coal Syndicate and CIT v. Ambala Flour Mills, and could not have dismissed the appeal without deciding it on merits.

FOR THAT the summary ex-parte dismissal is contrary to settled judicial law, including Shri Shanmugam Senthilkumar v. ITO, wherein it has been held that even in ex-parte proceedings, the appellate authority is duty-bound to decide the appeal on merits by passing a speaking order.

FOR THAT the ex-parte dismissal has caused serious prejudice to the Appellant and has resulted in denial of the statutory right of first appeal, rendering the appellate order unsustainable in law.

FOR THAT the reassessment proceedings u/s 147 r.w.s. 144B are invalid as the reopening was initiated solely on unverified and borrowed information alleging bogus purchases of ₹2,65,13,019/-, without any independent application of mind by the AO or tangible material to form belief of escapement of income.

FOR THAT the NFAC failed to appreciate that all five suppliers had reported the corresponding outward supplies in their GSTR-1, duly reflected in the ITA No(s). 3045, 3046 & 3047/KOL/2025 AY(s) 2018-19, 2021-22 & 2022-23 assessee's GSTR-2A, thereby proving movement of goods and tax-paid transactions; hence the allegation of bogus purchases is factually unsustainable.

FOR THAT the AO violated principles of natural justice by not providing opportunity to cross-examine any of the alleged parties and by not issuing notice u/s 131/133(6) to verify the suppliers, despite relying solely on GST portal data and third-party information. Such addition based on third-party material without cross-examination is bad in law.

FOR THAT the addition of ₹2,65,13,019/- as unexplained expenditure u/s 69C r.w.s. 115BBE is erroneous since the purchases were duly recorded, supported by invoices, accounted in stock records, and paid through banking channels. Purchases recorded in the books cannot be treated as unexplained expenditure.

FOR THAT the AO mechanically presumed transactions to be bogus merely because (i) three suppliers' GST registrations were cancelled subsequently, and (ii) Hitkari Trading Pvt. Ltd. allegedly had mismatched GST data. The NFAC failed to appreciate that cancellation of a supplier's GST registration at a later date or non-filing of ITR by suppliers cannot invalidate genuine purchases of the assessee.

FOR THAT the NFAC erred in ignoring the assessee's consistent explanation that e-way bill requirements were not applicable for the relevant period (FY 2017-18), and transport/GRN evidences were filed, thereby establishing receipt of goods.

FOR THAT the NFAC erred in upholding the addition without considering the binding judicial precedents relied upon by the assessee before the AO, including Odeon Builders (SC), Howrah Shackle Centre (ITAT Kolkata), and Swastik Construction (Guj.), which categorically hold that additions cannot be made on the basis of third-party GST information without verification or cross-examination.

FOR THAT the NFAC failed to exercise appellate juri iction by merely reproducing the AO's findings and mechanically affirming the addition without any independent inquiry, thereby rendering the order perverse and non-speaking.

FOR THAT the AO further erred in alleging that the assessee made purchases from itself (M/s Hitkari Trading Pvt Ltd) on the basis of incorrect GST portal correlation, an inference factually incorrect and made without confronting the assessee; the NFAC failed to consider this grave factual error.

FOR THAT the estimation of entire purchases as bogus is arbitrary, excessive, contrary to settled law, and liable to be deleted in the absence of ITA No(s). 3045, 3046 & 3047/KOL/2025 AY(s) 2018-19, 2021-22 & 2022-23 any evidence showing inflation, non-movement of goods, accommodation entries, or cash-back.

FOR THAT without prejudice, even if any irregularity was suspected at the supplier-end, the remedy lies against the suppliers and not the bona-fide purchaser; denial of genuine purchases to the assessee is against Articles 14 and 19(1)(g) of the Constitution and contrary to the ratio of D.Y. Beathel Enterprises (Madras HC).

FOR THAT the reopening and consequential addition stand vitiated as the foundational premise of "bogus purchases" is factually incorrect, legally unsustainable, and unsupported by evidence.

FOR THAT the Appellant craves leave to add, alter, modify or withdraw any ground at the time of hearing.” II. ITA No. 3046/KOL/2025; AY 2021-22:

FOR THAT the Ld. CIT(A) failed to exercise the co-terminus appellate powers vested under Section 251, as settled by the Hon'ble Supreme Court in CIT v. Kanpur Coal Syndicate and CIT v. Ambala Flour Mills, and could not have dismissed the appeal without deciding it on merits.

FOR THAT the summary ex-parte dismissal is contrary to settled judicial law, including Shri Shanmugam Senthilkumar v. ITO, wherein it has been held that even in ex-parte proceedings, the appellate authority is duty-bound to decide the appeal on merits by passing a speaking order.

FOR THAT the ex-parte dismissal has caused serious prejudice to the Appellant and has resulted in denial of the statutory right of first appeal, rendering the appellate order unsustainable in law.

FOR THAT the assessment order u/s 143(3) r.w.s. 144B is bad in law as the Ld. AO mechanically treated 25% of purchases (4,05,28,888 out of 25,86,60,414) as bogus without conducting any enquiry, verification, or cross-examination, and without rejecting the books of account.

FOR THAT the Ld. AO failed to appreciate that all purchases were supported by tax invoices, e-way bills, stock records, GSTR-2A reconciliation, AY(s) 2018-19, 2021-22 & 2022-23 and bank payments, thereby fully establishing genuineness of the transactions; mere non-filing of returns or low turnover by suppliers cannot render purchases bogus.

FOR THAT having accepted the sales (which are back-to-back with purchases) and the very low net profit margin of 0.2% in this line of business, the Ld. AO could not make an arbitrary 25% addition which results in an impossible and commercially unrealistic profit ratio.

FOR THAT denial of purchases without first examining or proceeding against the suppliers is contrary to settled law, including D.Y. Beathel Enterprises (Madras HC), which mandates that action must be taken against the seller before penalising a bona fide purchaser.

FOR THAT, without prejudice, even if any doubt existed (which is denied), the Hon'ble Supreme Court in Pramod Kumar Tekriwal has held that only profit element can be added, and not an arbitrary percentage of purchases such as 25%.

FOR THAT the addition of ₹4,05,28,888 is unjustified, excessive, made on suspicion and surmise, and liable to be deleted in full.

FOR THAT the Appellant craves leave to add, alter, modify or withdraw any ground at the time of hearing.” III. ITA No. 3047/KOL/2025; AY 2022-23:

FOR THAT the Ld. CIT(A) failed to exercise the co-terminus appellate powers vested under Section 251, as settled by the Hon'ble Supreme Court in CIT v. Kanpur Coal Syndicate and CIT v. Ambala Flour Mills, and could not have dismissed the appeal without deciding it on merits.

FOR THAT the summary ex-parte dismissal is contrary to settled judicial law, including Shri Shanmugam Senthilkumar v. ITO, wherein it has been held that even in ex-parte proceedings, the appellate authority is duty-bound to decide the appeal on merits by passing a speaking order.

FOR THAT the ex-parte dismissal has caused serious prejudice to the Appellant and has resulted in denial of the statutory right of first appeal, rendering the appellate order unsustainable in law.

FOR THAT the NFAC erred in law in dismissing the appeal for alleged non- prosecution without adjudicating the grounds on merits, even though the assessee had already placed substantial evidences before the AO such as ledgers, bank statements, invoices, GSTR-2A, e-way bills and documentary proof of movement of goods. Reliance on dismissal in limine is unjustified.

FOR THAT the assessment u/s 143(3) r.w.s. 144B is bad in law as the Ld. AO mechanically applied 25% profit rate to alleged "bogus purchases" of 86,52,71,411 without any independent verification, without rejecting books of account u/s 145(3), and solely relying on unrelated judgments such as N.K. Proteins.

FOR THAT the addition of 21,63,17,853/- as unexplained expenditure u/s 69C r.w.s. 115BBE is arbitrary and without basis, especially when all purchases were duly recorded in the books, all payments were made through banking channels, goods were consumed in the ordinary course of business, and stock records reconciled.

FOR THAT the NFAC failed to appreciate that all suppliers' outward supplies were duly reflected in GSTR-1, which in turn appeared in the assessee's GSTR-2A, thereby confirming tax-paid transactions and movement of goods; hence the allegation of bogus purchases is factually incorrect.

FOR THAT the AO violated the principles of natural justice by not providing cross-examination of any of the alleged suppliers, despite using third-party information as the sole basis for adverse inference. No notices u/s 131 or 133(6) were effectively pursued, which vitiates the entire addition.

FOR THAT non-response of certain suppliers to notices u/s 133(6) cannot be a ground for making additions when the assessee had furnished ledgers, invoices, e-way bills, bank evidence, and GST trail confirming genuine transactions. Multiple decisions including Kesha Appliances, UEM India, Phool Singh hold that 133(6) non-compliance by third parties cannot penalize the assessee.

FOR THAT the NFAC ignored the legal position that ITC was fully allowed by the GST authorities, and denial of corresponding purchases under the Income-tax Act is contradictory, perverse, and contrary to the law laid down in D.Y. Beathel Enterprises (Madras HC) and other High Courts which hold that action should first be taken against non-compliant sellers, not bona fide purchasers.

FOR THAT the AO wrongly shifted the burden to the assessee by alleging "creditworthiness of suppliers not proved", although suppliers' creditworthiness is irrelevant for purchase transactions where goods have been received and payments made.

FOR THAT the NFAC erred in upholding a purely estimation-based addition without rejecting books of account, making stock discrepancies, or proving inflation of purchases.

FOR THAT without prejudice, even if any doubt existed, the Hon'ble Supreme Court in Pramod Kumar Tekriwal [2023] 154 taxmann.com 142 (SC) has held that only the profit element embedded in alleged bogus purchases can be added and not the entire or an arbitrary 25% thereof. The NFAC and AO erred in ignoring this binding principle.

FOR THAT the NFAC erred in mechanically affirming the order without independent reasoning and without dealing with the evidences placed on record. The order suffers from non-application of mind and is unsustainable.

FOR THAT the addition is based on suspicion, conjecture, and borrowed satisfaction from GST data, without any corroborative enquiry by the AO. No finding was made that purchases were fictitious, inflated, or non-existent.

FOR THAT the reliance on N.K. Proteins is misplaced because that case involved proven accommodation entries and cash-back, whereas in the present case, there is complete documentary evidence of receipt and consumption of goods.

FOR THAT the entire disallowance is liable to be deleted as it is contrary to law, facts, and judicial precedents and results in high-pitched, punitive, and unjust assessment, contrary to CBDT Instruction No. 17/2015 regarding fairness in scrutiny assessments.

FOR THAT the Appellant craves leave to add, alter, modify or withdraw any ground at the time of hearing.”

1 On perusal of records, it is noticed that during the course of appellate proceedings, appellant had not filed or uploaded any response and written submissions in the office of the undersigned to substantiate its claim made in the statement of facts and grounds of appeal. Only he remained silent since filing this appeal to till date. The non-compliance of the appellant in response to the notices issued u/s 250 of the Act on various dated is summarized as under: Sr. Notice Date fixed Way of Service Source of Status

Considering the non-compliance as detailed above by the appellant, it seems that the appellant is not interested to pursue his appeal. Therefore, it cannot be kept pending adjudication for indefinite period. The appellant has not bothered to comply to the notices issued during the course of appellate proceedings. This shows that the appellant is not interested in pursuing his appeal and/or he has no defence against the additions made by the AO. If the appellant is not availing opportunities given, they cannot allege contravention of principles of natural justice. Therefore, the appeal of the appellant is liable for dismissal. Such view is further supported by the following judicial pronouncements: - 6.2.1 The Hon'ble Supreme Court in the case of CIT Vs B. N. Bhattacharjee & Others [1979] 10 CTR 354 (SC) observed that preferring an appeal, means effectively pursuing it. The Hon'ble M.P. High Court in the case of Estate of Late TukojiraoHolkar Vs CWT [1979] 223 ITR 480 (MP) dismissed the reference filed at the instance of the assessee for default and for not taking necessary steps. Considering the conduct of the appellant in the present proceeding, I am of the view that the appellant is not interested in pursuing the appeal. This view has been affirmed by the ITAT Delhi Bench in the case of CIT Vs Multiplan India Pvt. Ltd. [1991] 38 ITD 320 (Del) wherein the ITAT had dismissed the appeal filed by the assessee for want of persuasion. Under ITA No(s). 3045, 3046 & 3047/KOL/2025 AY(s) 2018-19, 2021-22 & 2022-23 these circumstances, the present appeal of the appellant is liable to be dismissed. 6.2.2 The Hon'ble Supreme Court in the decision pronounced on October 25, 2019 in the case of PCIT Vs. NRA Iron & Steel Pvt. Ltd in Civil Appeal No. of 2019 (Arising out of SLP (Civil) No. 29855 of 2018) has held that if a notice is duly served upon the litigant through its authorized representative, and it was provided sufficient opportunity to appear before the Court and contest the matter but the litigant chooses to let the matter proceed ex-parte, the order cannot be recalled. In the case of the present appellant, the notices to the appellant u/s 250 of the I.T. Act, 1961, have been issued online through the ITBA software, as is required under the Faceless Assessment & Appeals now in practice. 6.2.3 The decision of the Hon'ble High Court of Mumbai in the case of M/s. Chemipol v/s. Union of India [Central Excise Appeal No.62 of 2009] clearly states, that every court judicial body or authority, which has a duty to decide a matter AADPK4913D- JEGNA ARVIND KARIYA A.Y. 2005-06 ITBA/NFAC/S/250/2022-23/1051458933(1) between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in case of Nandramda warkadas, AIR 1958 MP 260, is reproduced below: "Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses." 6.2.4 The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. NallaThampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under:- "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi-judicial body. In the absence of the complainant, therefore, the court will be will without its juri iction to dismiss the complaint for non prosecution. So also, it would have the inherent power and juri iction to restore the complaint on good cause being shown for the non-appearance of the complainant."

Dayal Commercial Co. Private Limited, 50b, Muktaram Babu Street, Kolkata, West Bengal, 700007. 2. ITO, Ward-3(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata, West Bengal, 700069. 3. CIT(A)-NFAC, Delhi.