AMAN KHETAWAT,KOLKATA vs. ITO, WARD 43(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.244/KOL/2026 Assessment Year: 2018-19 Aman Khetawat................................................................................................Appellant 3rd Floor, 135A, C.R. Avenue, Kolkata- 700007. [PAN No. AKGPK0799N] Vs. I.T.O. Ward 43(1)..................................…………..…………………....……….Respondent 3, Government Place, Kolkata- 700001 Appearances by: Manish Tiwari, FCA, appeared on behalf of the Appellant. Manas Mondal, Sr. DR,appeared on behalf of the Respondent. Date of concluding the hearing : July 07, 2026 Date of pronouncing the order : August 14 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 28.11.2025 of the National Faceless Appeal Centre (NFAC), passed under Section 147r.w.s143(3) of the Assessment Year 2018-19 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

ITA No.244/Kol/2026 Assessment Year- 2018-19 from investigation wing that the assessee had made bogus transaction as fictitious purchases/bogus sales from various shell companies to the tune of Rs. 1,12,18,804/- issued notice u/s 148 along with order u/s 148A.The assessee challenged the aforesaid order u/s 148AD and notice u/s 148 of the Act before the Kolkata High Court by filing writ petition, Kolkata High Court passed an order by setting aside the order dated 148A(d) and remanded back to the Assessing Officer to pass a fresh order after considering the objection of the petitioner. After passing an order of the Kolkata High Court the JAO issued notice u/s 149A(b) and after considering the reply passed an order u/s 148A(d) of the Act. The Ld. Assessing Officers after considering the submission made by the assessee passed an order u/s 147/143(3) read with section 144B of the Act by making addition of Rs. 74,76,990/- as unexplained u/s 69C of the Act and provisions of section 115BBE.

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

Being aggrieved by and dissatisfied the assessee preferred appeal before us.

ITA No.244/Kol/2026 Assessment Year- 2018-19 3. The Ld. AR in course of argument did not press his ground No. 1 in which he challenges the issuance of notice and initiation of re-assessment proceedings and argued the mater on merit in which CIT(A) confirmed the action of JAO for an addition of Rs. 74,76,999/- by treating the purchases as fictitious. The Ld. AR submits that in response to the notice assessee submitted various documents such as bank statements, copy of the audit accounts, computation of income and tax audit report and further provided the detail party wise purchase information including their name, PAN addresses of the parties, bill date, bill no, amount, GST and other details of sales and purchase. The Ld. AR further submits that the assessee has also provided copies of the bank statement highlighting payments for purchases over Rs. 1,00,000/-,for the FY 2017-18, but he Ld. AO did not consider the same. The Ld. AR further submits that assessee had made purchase transaction from those business concerns who have a valid PAN, and GST No. etc, and purchases made during the year is substantiated with the copy of purchase invoices, ledger copies of purchase, invoices, GST returns, etc. The Ld. AR submits that Assessing Officers has ignored all the evidences filed by the assessee and made erroneous addition. The Ld. AR submits that entire purchase

ITA No.244/Kol/2026 Assessment Year- 2018-19 cannot be disallowed and only the profit embedded in the corresponding sell can be subjected to the tax and assessee has already offered for tax. The Ld. AR brought the decision of the Gujarat High Court and Kolkata High Court which are as follows:-

CIT v. Simit P. Seth [ 38 Taxman.com385] and PCIT, Burdwan V. Subarna Rice Mill [2018] 96 taxman.com286Kolkata

Contrary to that Ld. DR supports the impugned order.

SI NO. Name of Company Amount (Rs.) 1 M/s Virika 13,76,963/- Marketing Pvt. OLtd. 2 M/s Rajbhar Trade 10,51,268/- Commerical

ITA No.244/Kol/2026 Assessment Year- 2018-19 3 M/s Hitakrit Trading 13,13,575/- Pvt. Ltd. 4 M/s Daania Trading 8,91,938/- Pvt. Ltd. 5 M/s Adarsh Vanijya 10,84,425/- Udyog 6 M/s. Saraf 8,90,230/- Enterprises 7 Sakchi Sureka 8,68,600/- Total 74,76,999

4.1. The submission of the AR is that there is no suppression of sale and undisclosed sale by the assessee and transaction with the aforementioned companies are normal business transaction substantiated with supporting documentary evidence. The assessee has filed the copies of purchase ledger, purchase invoices along with the bank statement in support of transaction made with the aforesaid companies. The assessee has also provided the detailed party wise purchase including their name and PAN, address of the parties, bill No. Amount, GST, etc. It is pertinent to mention here that by providing copies of the bank

ITA No.244/Kol/2026 Assessment Year- 2018-19 statement assessee established that the transaction is not bogus. Assessee has been able to establish that business concerns are the genuine business and cannot be said to be a shell company. Purchase was recorded in the books of accounts and the accounts are audited and there are no adverse comments have been made by the auditor against the said purchase or stockers. Further, we find that it is settled law the entire purchases cannot be disallowed and only the profit embedded in the corresponding sell can be subjected to tax. The Ld. AR submits a chart of net profit of the assessee which is as below: -

AY 16-19 AY 17-18 AY 16-17 Turnover 5,98,14,234 4,79,98,927 3,69,77,199 Net Profit 10,15,269 6,49,536 5,65,750 NP% 1,70% 1,.35% 1.53%

4.2. Further, we have gone through the order passed by the Hon’ble Gujarat High Court in CIT VS Simit P. Seth and the Hon’ble Court has held thus:-

Now the question arises that in the event of appellant not proving that it had purchased goods/materials from above

ITA No.244/Kol/2026 Assessment Year- 2018-19 referred dealer/ party whether entire such bogus purchases can be disallowed. The Ld. AC has accepted the sales/works made by the appellant and since there cannot be sales without corresponding purchases, so entire purchases cannot be rejected without disturbing the sales or works carried out. The appellant has submitted that the purchases under consideration were 'spare parts and in respect to the same he has raised bills to the customers charging cost of said spare parts and profit margin thereon. The facts of the case suggests that the appellant has not made purchases under consideration from above referred parties, but from somebody else, probably from grey market and may be without any bills. Any person indulging in the practice of purchasing the goods from the grey market and obtaining bogus bills of some of the parties would do so for getting some benefits and what would be the magnitude of the benefit would depend upon the facts of the case. Hence, the purchase price mentioned in the alleged sales bills cannot be accepted. The obvious reason is that the assesse did make purchases but at a lower price so as to increase its overall profits. In these circumstances, the entire amount of alleged bogus purchases cannot be

ITA No.244/Kol/2026 Assessment Year- 2018-19 disallowed/ added, but only profit element embedded therein needs to taxed."

Accordingly, the appeal of the assessee is hereby allowed.

Kolkata, the 14th August , 2026.

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

DC Dated:. 14. 08.2026.

ITA No.244/Kol/2026 Assessment Year- 2018-19 Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Deputy Registrar, Kolkata Benches