AKHIL PARASMAL SHAH,AHMEDABAD vs. THE ITO, WARD-1(2)(1), AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.205/Ahd/2026 (Assessment Year: 2018-19) Akhil Parasmal Shah, Vs. Income Tax Officer, 7, Bhimnath Society, Circuit House, Ward-1(2)(1), Shahibaug, Ahmedabad-380004 Ahmedabad [PAN No.AKRPS3494B] (Appellant) .. (Respondent) Appellant by : Shri Shailesh J Shah, CA Respondent by: Shri Sudhakar Verma, Sr. DR 23.03.2026 Date of Hearing Date of Pronouncement 20.04.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 30.12.2025 passed for A.Y. 2018-19.

“[1] The Learned Assessing Officer Ward-l(2)(l), Ahmedabad erred on the facts and in law by initiating reassessment proceedings u/s.148 by the jurisdictional assessing officer therefore, resultant re-assessment is invalid moreover, the re- assessment framed is without jurisdiction bad in law to be quashed. The impugned order under section 147 r.w.s. 144B of the Income Tax Act, is bad in law and on the fact of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed. [2] The Learned Commissioner of Income Tax (Appeals), Income Tax Department has erred in law as well as in facts in confirming of addition made on account of variation in respect of unexplained cash credit under section 68 of Act, which is

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contrary to the provision of law and facts in the present case and hence the same deserves to be quashed. Consequently, the impugned addition of Rs.3,25,92,545/- deserves to be deleted in full. [3] The Learned Assessing Officer / National Faceless Appeal Centre seriously erred in law as well as fact of the case in note adhering to the mandatory procedure statutorily prescribed under section 144B of the Act, hence, the impugned order so passed deserves to be quashed being in violation thereof. [4] The Learned Commissioner of Income Tax (Appeals), further erred in law as well as on the facts of the case by not issuing any show cause notice for making addition under section 69 of the Act. [5] On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals), has erred in law as well as in facts in confirming the addition u/s. 68 of the Act, rejecting the contention of the assessee that the initiation of the re- assessment proceedings and the re-assessment order are bad, both on the facts and in law as the Income has been assessed without rejection of Books as unreliable u/s. 145 of the IT Act and liable to be quashed, as statutory conditions and procedure prescribed under the statute have not been complied with. [6] The Learned Commissioner of Income Tax (Appeals), has grievously erred in making addition of variation in respect of unexplained cash credit u/s. 68 of the IT Act, on the basis of statement recorded at the back of assessed could not be used against him, without confronting the same to the appellant. Thus, reassessment order made by Assessing Officer, without providing assessee to cross - examine the witness, a violation of principals of natural justice and there by violation of natural principal of "AUDI ALTERAM PARTEM" and accordingly, not sustainable in eyes of law. [7] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case, that the reopening is on the basis of borrowed information by the A.O. from the Investigation by the anti-evasion wing of the COST Commissionerate, Kutch (Gandhi Dham) against M/s. Preet Enterprise, Shree Industries, Shiva International and Hem Alloys Exim, without applying his independent mind, and not conducting further enquiry in that regard was invalid liable to set-aside. [8] The Learned Commissioner of Income Tax (Appeals), has accepted sales as genuine, no addition can be made u/s. 68 saying that, purchases are not genuine, as the appellant has furnished quantitative reconciliation, gross profit rate is comparable to earlier and subsequent years, suppliers are income tax assessee having GSTN, and suppliers have shown sales in GSTR-1, sales of the suppliers have not been treated as bogus by their Assessing Officer, payment are by account payee cheques and other evidence was available, hence the purchases cannot be treated as bogus. [9] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case, by upholding addition u/s.68 bogus purchases though it was supported by bills, all payments are made by Account payee cheques, the suppliers has

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confirm the transactions, there is no evidence to show that the purchase consideration has come back to the assessee in cash, the sales out of purchases have been accepted and the supplier has accounted for the purchases made by the assesse and paid taxes thereon. [10] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case by not considering marked distinction between 'onus of proof and burden of proof while making addition in section 68 of the act. The appellant has already submitted required documents for purchases and discharged its burden / obligations and prove the nature and source of credit entries to the Assessing Officer satisfaction. However, the learned Assessing Officer failed to conduct an independent inquiry to verify the genuineness of the credit entries. [11] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case, by making addition u/s. 68 of the Act, by re-opening on the basis of information received from investigation wing, and there was no independent application of mind by assessing officer before such re-opening. [12] The Learned Commissioner of Income Tax (Appeals), failed to appreciate the fact that without no specific information about conversion of black money in to white money by the appellant the addition has been made u/s.68 of the Act which is contrary to the law. [13] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case by not rejecting the corresponding sales against alleged bogus purchase. [14] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in the facts of the case by taking approval from PCIT Ahmedabad-1 on the alleged wrong escaped income of the appellant. Therefore, notice issued under section 148 is on discrepancy between amount shown in Form for sanction of approval and sanction order and the amount shown in Books of Account in regards to the amount of purchase. [15] The Learned Commissioner of Income tax (Appeals), not justified in upholding the addition of Rs. 3,25,92,345/- on Account of alleged bogus purchases and he completely ignored the submissions of the appellant. That the CIT (A) failed to appreciate that, no trading additions could have been made by the A.O. without pointing out any defect in the Audited Books of Account and without rejection of the same. [16] (a) That the Learned Commissioner of Income Tax (Appeals) / NFAC Delhi has erred in ignoring the documentary evidence of the genuine being purchases made by the assessee like tax invoice of the parties. Making of payment through Banking channel and all other evidence, which proves the genuineness of purchases made by the assessee. (b) That the Learned Commissioner of Income Tax (Appeals) / NFAC Delhi has ignored the documentary evidence of the goods and service tax returns and

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 4– confirmation of the same by Form GSTR-2A of the Assessee without assigning any reasons. [17] Without prejudice to ground raised above, both A.O. and CIT(A) failed to appreciate that, if all any addition was to be made it could have been made on the net profit arising out of the alleged bogus purchases and not the entire amount. [18] The Learned Commissioner of Income Tax (Appeals), further erred in law as well as on the fact of the case in imposing tax, surcharge, cess, etc. as per provision of section 115BBE of the Act. The invoking of section 115BBE is contrary to the provision of law, on facts and without jurisdiction. The appellant totally denies its liability. The tax liability so created, kindly be deleted in full. [19] The Learned Commissioner of Income Tax (Appeals), erred in law as well as in facts of the case in charging the levy of interest under section 234A, 234B and 234C. The Levy of interest being charge, is contrary to the provisions of law and facts, kindly be deleted in full. [20] That the appellant has not committed default of Section 271AAC(1) of the IT Act and therefore proceedings initiated deserves to be cancelled./ [21] The appellant prays your honour indulgences to add, amend, or alter of or any of the grounds of the appeal on or before the date of hearing.” 3. The brief facts of the case are that the assessee is an individual engaged in the business of trading in metals and his case was reopened under section 147 of the Act based on information received from the office of the DDIT (Investigation), Gandhidham. The information was based on investigation carried out by the CGST authorities wherein it was found that certain entities controlled by one Shri Gurkamal Singh were engaged in issuing fake invoices without actual supply of goods and passing on input tax credit. The assessee was identified as one of the beneficiaries who had allegedly obtained bogus purchase invoices from four such entities namely M/s Ham Alloys Exim, M/s Mahadev Trading Co., M/s Shree Industries and M/s Shiva International. Accordingly, notice under section 148 was issued and during the course of reassessment proceedings, the assessee

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 5– filed return of income and furnished certain details such as ledger accounts and bank statements evidencing payments through banking channels.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 6– 6. The Ld. CIT(Appeals), while adjudicating the jurisdictional grounds, upheld the validity of reopening by observing that the information received from the Investigation Wing was specific, credible and directly linked to the assessee, thereby forming a valid “reason to believe” that income had escaped assessment. Reliance was placed on judicial precedents to hold that at the stage of reopening only prima facie material is required and detailed enquiry is not necessary. The contention regarding borrowed satisfaction was rejected by holding that the Assessing Officer had independently applied his mind. The objection regarding approval under section 151 was also dismissed by holding that proper sanction was obtained and even if there was minor discrepancy in quantum, it would not invalidate the proceedings as substantial escapement existed. The ground relating to jurisdiction of faceless assessment was also rejected on the reasoning that no prejudice was caused to the assessee and the assessment was ultimately completed through faceless mechanism.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 7– rejecting entire books. The contention that sales were accepted was also dismissed by holding that bogus purchases can be used to regularize unaccounted goods and therefore acceptance of sales does not prove genuineness of purchases.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 8– 11. Before us, the Counsel for the assessee has taken multiple Grounds of Appeal some of which are repetitive in nature and hence the order is being passed in light of arguments taken before us during the course of hearing.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 9– relevant facts of the case much prior to grant of approval. It was further held that where draft assessment orders along with case records are placed before the approving authority, the mere fact that approval is granted on the same day cannot lead to the conclusion that such approval is mechanical. The Tribunal also observed that in group cases, joint or common approval does not vitiate the proceedings when the authorities are fully aware of the facts and no prejudice is caused to the assessee.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 10– Paper Book, that the purchases from M/s Shree Industries amounting to Rs.51,27,867/- and M/s Shiva International amounting to Rs.90,51,250/- do not pertain to the year under consideration but relate to the succeeding assessment year 2019-20. We observe that this contention goes to the root of the addition, as it directly impacts the year of taxability of the alleged transactions.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 11– International and decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is also directed to furnish all necessary documentary evidences in support of his claim.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 12– position to demonstrate the complete quantitative trail of such purchases and corresponding sales to various parties.

ITA No. 205/Ahd/2026 Akhil Parasmal Shah vs. ITO Asst. Year –2018-19 - 13– 25. Accordingly, in the interest of justice, we deem it appropriate to set aside the impugned order on this issue also and restore the matter to the file of the Assessing Officer for de-novo consideration. The Assessing Officer is directed to examine the quantitative details, stock records, purchase and sales registers and any other supporting evidences that may be furnished by the assessee and thereafter decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is also directed to fully cooperate and furnish complete details to substantiate his claim.

Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/04/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad