INCOME TAX OFFICER WARD 1(2), JODHPUR, JODHPUR vs. PRATAP ENGINEERING WORKS, JODHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 824/Jodh/2025 (Assessment Year – 2018-19) Income Tax Officer Ward Pratap Engineering Works 1(2), Jodhpur A-9, PEW, Light Industrial Area Estate, Jodhpur, Rajasthan-342001 PAN No. AADFP4713C Assessee by Shri G.S. Mehta, C.A. (Physically) Smt. Swapnil Parihar JCIT (Virtually) Revenue by Date of Hearing 30 / 04 / 2026. Date of Pronouncement 29 / 07 / 2026. ORDER PER: SUDHIR PAREEK, J.M. The aforetitled appeal has been preferred by the assessee/appellant against the order dated 16 July 2025 u/s 143(3)/147 of the Income Tax Act, 1961 (in short referred as ‘the Act’) passed by National Faceless Appeal Centre (NFAC), Delhi [for the sake of convenience, hereinafter referred to as CIT(A)] by which appeal filed by the assessee was dismissed.

2 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 M/s Preet Enterprises, Prop. Sh. Gurkamal Singh (PAN CFXPG7711N) without actual purchase & supply of goods. The information flagged in this case is received from the Deputy Director of Income Tax (Inv.), Gandhidham Kutch which is originated from the investigation conducted by the anti-evasion wing of CGST Commissionerate, Kutch (Gandhidham) The case of the assessee is also flagged under the category "High Risk CRIU/VRU Information" in Insight Portal in accordance with the Risk Management Strategy. As per the information, the assessee has taken purchase bills of Rs. 14,47,648/- from a bogus firm M/s Preet Enterprises, Prop. Sh. Gurkamal Singh (PAN CFXPG7711N) without actual purchase & supply of goods, and accordingly, the assessee has inflated expenses of purchase. In response to the show cause notice, the assessee furnished detailed reply and denied the contents of the information. The assessee furnished copies of purchase bills, transportation bilty, account statement etc. to substantiate its claim that it received goods from M/s Preet Enterprises and made payment through banking channel. The assessee has stated that there was actual supply of the goods and payment was made through banking channel. The assessee has furnished various documents to

3 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 substantiate its claim. However, as per the investigation conducted by the anti-evasion wing of the CGST Commissionerate, Kutch (Gandhidham), Shri Gurukamal Singh created 18 bogus firms including M/s Preet Enterprises in the name of different persons including himself which are involved in issuing only invoices to different recipients without supply of goods or services, showing GST amount and facilitating the receipt to avail ITC. Shri Gurukamal Singh fraudulently obtained the documents of different persons such as PAN, Aadhar card etc., and used the same for GST registration of the said bogus firms. Further, the bank accounts in the name of bogus firms were also opened in different banks. However, these firms were not operational at the said addresses and addresses of some firms were not found traceable. Hence, in view of the investigation conducted by the GST department, it is obvious that all the documents furnished by the assessee are colourable documents to establish the fake transaction as genuine transaction and the amount of Rs. 14,47,648/- was proposed to be added to the income of the assesse as unexplained expenditure for the relevant assessment year.

4 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 3. Heard rival submissions and carefully perused the material available on record.

5 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 purchase. In this regard, the Ld. CIT(A) observed that while the reassessment proceedings were initiated based on information from a specialized anti-evasion agency, the Assessing Officer failed to conduct an independent inquiry and relied mechanically on the investigation report without providing the full report or allowing cross- examination to the appellant. This constitutes a violation of the principles of natural justice. The AO's failure to consider the appellant's detailed replies and the precedent of an identical case (Baba Bearings Pvt Ltd) further undermines the procedural validity of the assessment. On merits, despite the CGST findings regarding bogus firms, the appellant provided a comprehensive chain of documentary evidence, including purchase orders, invoices, transport bilties, and bank payments, to substantiate the genuineness of the transactions. The appellant's sales were accepted, and it is a settled legal position that sales cannot occur without corresponding purchases. The AO failed to bring any specific, cogent, and convincing evidence on record to rebut the appellant's documentary proofs or to establish that the transactions were indeed bogus, beyond mere suspicion. As held in Ashok Kumar Rungta vs. Income Tax Officer (Supra), the burden of proof lies on

6 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 the Revenue, and a full addition can only be made on the basis of proper proof of bogus purchases, which was lacking in this case. Furthermore, the AO made the addition without rejecting the appellant’s duly audited books of accounts under Section 145, which is legally untenable when sales are accepted. The initiation of penalty proceedings also appears to be procedurally flawed due to the alleged non-compliance with Section 144B(xv).

Order pronounced on 29 / 07 / 2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules,1963. Sd/- Sd/- (DR. MITHA LAL MEENA) (SUDHIR PAREEK) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 29 / 07 / 2026. Pritesh Vaishnav PS

7 ITA No. 824/Jodh/2025 Asst. Year: 2018-19 True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,