AEGIS AUTOMATION INDIA PRIVATE LIMITED,SECUNDERABAD vs. ACIT, CENTRAL CIRCLE - 1(1), HYDERABAD

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ITA 387/HYD/2026Status: DisposedITAT Hyderabad29 July 2026AY 2019-208 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the purchases were supported by documentary evidence like tax invoices, e-way bills, and banking channel payments, and the supplier had GST registration. The Revenue failed to provide independent material to prove the purchases were fictitious, thus the addition was deleted.

What were the facts?

The assessee company purchased goods worth Rs. 25,00,000 from M/s Newness Industries. The Assessing Officer (AO) initiated reassessment proceedings under Section 147, treating these purchases as non-genuine based on an investigation report alleging M/s Newness Industries was a paper company.

What were the issues?

Whether purchases supported by documentary evidence can be disallowed solely based on an investigation report without independent verification by the Revenue. Whether reassessment proceedings were validly initiated and approved.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 149,Section 151A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

For Respondent: Shri K Prasad, Sr-AR

आयकर अपीलीय अिधकरण, हैदराबाद पीठ�, हैदराबाद INCOME TAX APPELLATE TRIBUNAL, HYDERABAD BENCHES, HYDERABAD BENCH: B BEFORE SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER ITA 387/HYD/2026 िनधा�रण वष�/Assessment Year: 2019-20 AEGIS AUTOMATION INDIA ACIT, PRIVATE LIMITED CENTRAL CIRCLE - 1(1) 69 AND 74, STREET NO. 2, AAYKAR BHAVAN, SATYA SAI ENCLAVE, BASHEER BAGH, OPP LB Vs. MANOVIKAS NAGAR, STADIUM, HYDERABAD- SECUNDERABAD-500009, 500004, TELANGANA TELANGANA अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAECS9281Q

अपीलाथ� �ारा/Appellant represented by: Shri Sashank Dundu, Advocate ��थ� �ारा/Respondent represented by: Shri K Prasad, Sr-AR

सुनवाई की तारीख / Date of conclusion of hearing: 13-July-2026 घोषणा की तारीख / Date of pronouncement: 29-July-2026 आदेश / ORDER PER RAVISH SOOD, JM:

The present appeal filed by the assessee company is directed against the order of the Commissioner of Income Tax (Appeals), Hyderabad-11 [for short, “CIT(A)”], dated 16/12/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under Section 147 of the Income-tax Act, 1961 (for short, " Act") dated 03/03/2025 for Assessment Year (AY) 2019-20. The assessee company has assailed the impugned order on the following grounds of appeal: “1. The order passed by the learned CIT(A), Hyderabad is bad in law in as much as the factual matrix of the case was not taken into consideration properly. 2. The learned CIT(A) ought to have noticed that the purchases made by the appellant from the proprietary concern M/s Newness Industries is supported by e-way bills, all payments were made through banking channels and the invoices were uploaded on the GST portal by the supplier and hence the genuineness of the purchases could not have been doubted. 3. The FAA ought to have noticed that vide purchase order dated 12.01.2018 the appellant, in the normal course of business, purchased MS steel Tubes and the purchase has been made from a concern which has GST registration and address i.e., M/s Newness Industries, 4, Adi Banstalla Lane, Kolkata-700007, the AO could not have initiated reassessment proceedings particularly when copy of GSTR 3B, GSTR 2A, GSTR 1 forms are available in the portal. 4. The learned CIT(A) confirmed the order passed by AO without application of mind which is reflected from para 6.3.1 of his order wherein it was assumed that M/s Newness Industries (proprietary concern Sri Krishna Shah) is a paper company. 5. The learned CIT(A) erred in law and on facts in sustaining the disallowance of purchases of Rs.25,00,000 by merely relying on the investigation report alleging that M/s Newness Industries is a “paper company”, without confronting the Appellant with the underlying material by providing the alleged investigation report which is in gross violation of principles of natural justice. 6. The AO in fact erred in initiating proceedings u/s 148 of the Act overlooking the fact that section 151A of the Act mandates issuance of the notice by the FAO and not by the JAO. 7. For these and other grounds that may be argued at the time of hearing, the appellant submits that the order passed by FAA deserves to be set aside and the addition deleted, apart from quashing the assessment order itself, being contrary to the procedure prescribed in section 151A of the Act.” Also, the assessee company vide its letter, dated 11/07/2026 has raised the following grounds of appeal:

“1. That the notice issued u/s 148 on dt. 10.04.2023, despite the fact that the alleged escapement of income is only 25 lakhs, is barred by limitation as per the First proviso to section 149 of the Act. 2. That the Assessing Officer having issued a notice u/s 148 on 10.04.2023, which is admittedly beyond the period of 3 years from the end of the previous year relevant to the Assessment Year 2019-20, whether the Assessing Officer is justified in obtaining approval from the PCIT ignoring the fact that initiation of proceedings beyond the period of 3 years has to be under the approval of the Principle Chief Commissioner and not the Principle Commissioner and thus the initiation of reassessment proceedings are bad in law. 3. That the proceedings having been initiated prior to dt. 31.03.2026, the provisions of section 151A, as it existed at that point of time ought to have been followed in which event JAO has to authority to initiate reassessment proceedings and in fact the newly inserted provisions of Section 147A being substantial provision which was inserted only w.e.f. 31.03.2026, it is operative prospectively; in fact the provisions of section 151A having not been amended, the judgment of the Jurisdictional High Court still holds the field and cannot be made applicable to the appellant’s case.”

2.

Succinctly stated, the assessee company, which is engaged in the execution of fire protection and automation projects, had filed its return of income for AY 2019-20 on 26/10/2019, declaring an income of Rs.1,41,50,080/-.

3.

Thereafter, the AO, based on information received from the Investigation Wing that M/s Newness Industries, Kolkata, from whom the assessee company had purchased goods worth Rs.25,00,000/-, was allegedly engaged in providing accommodation entries, initiated proceedings under Section 148A of the Act. The AO, after treating the purchases made by the assessee company from the aforesaid concern as non-genuine and making an addition of Rs.25,00,000/-, framed the assessment vide his order passed under Section 147 of the Act, dated 15/07/202, determining the income of the assessee company at Rs. 1,66,50,080/-.

4. Aggrieved, the assessee company carried the matter in appeal before the CIT(A), who upheld both the validity of the reassessment and the addition made by the AO.

5.

The assessee company being aggrieved with the CIT(A) order has carried the matter in appeal before us.

6.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by the Ld. AR to drive home his contentions.

7.

As observed by us hereinabove, the AO had made an addition of Rs.25 lacs towards alleged bogus purchases. Ostensibly, the AO disallowed the entire purchases primarily relying upon the Investigation Wing report and observing that the assessee company had failed to establish actual physical receipt of goods. However, we find that the AO did not dispute that the purchases were supported by tax invoices, e-way bills, payments through banking channels, GST registration of the supplier and reflection of the invoices in GSTR-2A. Also, it is a matter of fact borne from record that the corresponding contract receipts have been accepted and no defect has been pointed out in the books of account maintained by the assessee company.

8. We are of the view that as per the settled legal position, suspicion or doubt, however strong, cannot substitute evidence. In our view, as the subject purchases are supported by documentary evidence and the corresponding sales or contract receipts have been accepted, the burden shifted to the Revenue to establish that the said transactions were sham. Although the Investigation Report may constitute tangible material for initiating proceedings, we are afraid that the addition cannot be sustained solely on that basis without bringing independent material on record to demonstrate that no goods were actually received by the assessee company.

9.

In the present case, the AO, except for relying upon the Investigation Wing report and drawing an adverse inference from the alleged failure of the assessee company to produce transport documents and delivery acknowledgments, had neither carried out any independent inquiry nor made any attempt to verify the utilization of the materials in execution of the assessee's contracts or to establish that the purchases were fictitious. On the contrary, the documentary evidence produced by the assessee company, including purchase invoices, e-way bills, bank payments and GST records, had not been found to be fabricated or false. Further, the Revenue has accepted the contract receipts arising from the execution of the projects for which the materials were allegedly purchased. We are of firm conviction that in such circumstances, disallowance of the entire purchases cannot be sustained merely on the basis of general observations contained in the Investigation Report.

10. We may herein observe that the CIT(A) had relied upon the decision of the Hon'ble Supreme Court in State of Karnataka Vs. Ecom Gill Coffee Trading Pvt. Ltd., Civil Appeal No. 230 of 2023 (arising from SLP (Civil) No.2572/2022), dated 13/03/2023, but the said decision was rendered in the context of input tax credit under the indirect tax laws where the statutory requirements and burden of proof are materially different. For the sake of clarity, we may herein observe that the said case concerned the burden of proving the genuineness of purchases for claiming Input Tax Credit under the Karnataka VAT Act. In the said case, the Hon’ble Apex Court observed that merely producing tax invoices and proof of payment is not always sufficient; the purchasing dealer must discharge the statutory burden under Section 70 of the KVAT Act where the genuineness of the transactions is questioned. In our view, the said decision having been rendered in a different context cannot be applied mechanically to income-tax proceedings without independently examining whether the expenditure claimed under the Act is genuine. In the case before us, the facts are distinguishable, particularly when the purchases are supported by documentary evidence which had not been proved by the Revenue to be false and the corresponding business receipts have been accepted.

11.

We thus are of a firm conviction that having regard to the totality of the facts and circumstances, it can safely be concluded that the Revenue has failed to establish that the subject purchases made by the assessee company from M/s

Newness Industries, Kolkata are fictitious or non-genuine. Accordingly, we are unable to persuade ourselves to concur with the view taken by the authorities below and, thus, the addition of Rs.25,00,000/- sustained by the CIT(A) is directed to be deleted.

12.

As we have vacated the impugned addition of Rs. 25 lac (supra), we refrain from adverting to the other grounds of appeal based on which the validity of the jurisdiction assumed by the AO for framing the impugned assessment has been assailed before us, which, thus, are left open.

13.

In the result, the appeal of the assessee company is allowed in terms of our aforesaid observations.

Order pronounced in the open court on 29th July, 2026.

Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated: 29th July, 2026. OKK/SPS Copy to: AEGIS AUTOMATION INDIA PRIVATE LIMITED, 69 AND 74, STREET NO. 2, 1 SATYA SAI ENCLAVE, MANOVIKAS NAGAR, SECUNDERABAD-500009, TELANGANA ACIT, CENTRAL CIRCLE - 1(1), AAYKAR BHAVAN, BASHEER BAGH, OPP 2 LB STADIUM, HYDERABAD-500004, TELANGANA 3 THE PCIT, CENTRAL CIRCLE, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE

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