RIYA EXIM PRIVATE LIMITED,SOLA vs. ITO WARD 3(1)(2), VEJALPUR

The present appeal preferred by the Assessee is directed against the Order, dated 16/01/2026, passed by the National Faceless Appeal Centre (NFAC) [hereinafter referred to as ‘the CIT(A)’, whereby the Learned CIT(A) had upheld the assessment framed on the Assessee under Section 147 read with Sections 144 and 144B of the Income- tax Act, 1961 [hereinafter referred to as ‘the Act’] for Assessment Year 2018-2019. 2. When the appeal was taken up for hearing the Learned Authorised Representative for the Assessee pressed into service Ground No.3 raised in the present appeal and advanced submissions challenging the merits of addition made by the Assessing Officer which were confirmed by the Learned CIT(A). We have heard both the sides on Ground No.3 raised in the present appeal which reads as under:

We have given thoughtful consideration to rival submissions and have perused the material on record.

The relevant facts as emerging from record are that the Assessee is a private limited company engaged, inter alia, in the business of trading in raw materials required for manufacturing medicine. For the Assessment Year 2018-2019, the Assessee filed return of income for declaring ‘Nil’ income, which was processed under Section 143(1)(a) and income of the Assessee was determined at INR.2,99,577/-. Subsequently, on the basis of information flagged on Insight Portal and material received from Goods & Service Tax (GST) Authorities to the effect that that Cannonball Trading Pvt. Ltd (CTPL). was engaged in giving bogus purchase bills without actual supply of goods. Since the Assessee had also shown purchases of INR.76,62,500/- from CTPL, the Assessing Officer reopened the assessment under Section 147 of the Act by issuing notice under Section 148 on 29/03/2022. In the course of reassessment proceedings, the Assessee furnished copies of purchase orders, invoices, delivery notes, Form-403, goods receipt notes, bank statements and GST records to substantiate the purchases from CTPL and subsequent sales made to M/s Prachem Laboratories, Gandhinagar. However, the Assessing Officer was not convinced. Relying upon report received from GST Authorities and the statements recorded in the case of Germanium Trading Group, noting non-compliance of notices issued under Section 133(6) by CTPL and Prachem Laboratories, and highlighting the deficiencies in Form-403 filed by the Assessee to support movement of goods, the Assessing Officer treated the entire purchases of INR.76,62,500/- as bogus and disallowed the same under Section 37(1). The Assessing Officer completed the reassessment vide Assessment Order, dated at assessed income of INR.79,62,077/- [INR.76,62,500/- + INR.2,99,577/-]

Being aggrieved, the Assessee preferred appeal before the Learned CIT(A), and challenged the above addition made on account of alleged bogus purchases. In appeal, the Ld. CIT(A) affirmed the action of the Assessing Officer by holding that mere invoices, banking payments and GST entries were insufficient to prove genuineness when the surrounding circumstances created doubt about actual movement of goods, and accordingly upheld the full addition made on account of alleged bogus purchases.

Now the Assessee in appeal before this Tribunal the order passed by the Learned CIT(A) confirming the addition made by the Assessing Officer on account of alleged bogus purchases. While the Learned Authorised Representative for the Assessee reiterated the submission made before the Assessing Officer and the CIT(A) challenging the addition on merits. The thrust of the arguments was on the prayer to restrict the additions to the profit element embedded in alleged bogus purchases. On the other hand, while the Learned Departmental Representative relied upon the order passed by the Assessing Officer and the CIT(A), the Leaned Departmental Representative failed to controvert the submission of the Assessee that the sales corresponding to the alleged bogus purchases were not disturbed by the Assessing Officer.

On perusal of record it is evident that the purchases from CTPL were recorded in the books of account of the Assessee, payments had been made through banking channels, and the corresponding transactions were reflected in the GST records of the Assessee. In the present case the Assessee had also furnished documents/challans showing movement of goods, though discrepancies were highlighted by the Assessing Officer in some of the aforesaid documents. is also not in dispute that the Assessing Officer has neither rejected the books of account nor disturbed the corresponding sales/turnover disclosed by the Assessee.

In the result, the appeal of the Assessee is partly allowed.

""यथ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु"(अपील) / The CIT(A) 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण/ DR, ITAT, 6. गाड"फाईल /Guard file. आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.