ETHICS COMMERCIALS PRIVATE LIMITED,KOLKATA vs. DCIT, CIRCLE 11(1),, KOLKATA

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ITA 3040/KOL/2025Status: DisposedITAT Kolkata12 May 2026AY 2011-20126 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding that the reopening was justified due to new information and that the assessee failed to prove the genuineness of the purchases. The addition made by the AO was confirmed.

What were the facts?

The assessee's assessment for AY 2011-12 was reopened based on information that a supplier was a shell company providing accommodation entries. The Assessing Officer (AO) added back purchases from this supplier, which was upheld by the CIT(A).

What were the issues?

The primary issues were the validity of the reopening proceedings under Section 147 and the genuineness of the purchases made from a supplier identified as a shell company.

Which sections of the Income-tax Act were involved?

Section 147,Section 151,Section 69C,Section 143(3),Section 131,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2011-12 dated 26.11.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. For that the Ld. CIT(A) was not justified in upholding the validity of re- opening proceedings u/s 147 which is barred by limitation and bad in law and is liable to be quashed.

2.

For that the Ld. CIT(A) ought to have held that the re-assessment order is vitiated in law inasmuch as there was absolutely no independent application of mind and no independent enquiry on the part of the A.O. in respect of the purported information received by him.

3.

For that the Ld. CIT(A) was not justified in upholding the validity of re- opening proceedings inspite of the fact that the purported sanction u/s 151 was not obtained or was not in accordance with law which vitiated the reopening process.

4.

For that the Ld. CIT(A) ought to have considered that re-opening of the assessment is not permissible based on mere change of opinion.

5.

For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs.49,68,333/- made by the A.O. by applying profit rate of 7.89% on the total purchases of Rs.6,29,70,000/- made from M/s. Wishnet Tracom Pvt. Ltd. by invoking the provisions of sec. 69C of the Act.

6.

The appellant craves leave to add, alter or delete all or any of the grounds of appeal at the time of hearing.”

3.

Brief facts of the case are that the assessee is a company, had filed its return of income for AY 2011-12 on 30.09.2011 declaring total loss of ₹1,64,79,480/-. The original assessment u/s 143(3) of the Act was completed on 12.06.2013 determining the loss at ₹1,62,49,480/-. Subsequently, the assessment was reopened u/s 147 of the Act on 23.03.2018. Based on the information available with the Department and the responses filed by the assessee, the Assessing Officer (hereinafter referred to as Ld. 'AO') completed the assessment by determining the total income of the assessee at ₹49,68,333/- u/s 143(3) of the Act after making an addition of ₹49,68,333/- u/s 69C of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who vide order dated 26.11.2025 dismissed the appeal of the assessee as per his findings as under:

“4. Ground Nos.1, 2 & 3: reopened without recording any reasons to believe that the income chargeable to tax Appellant submitted that the assessment was had escaped assessment. The reasons recorded were invalid and improper. The assessment was reopened on mere change of opinion on the same set of facts.

4.

2 Appellant's submissions were carefully considered. In para 2 of the assessment order dated 22/11/2018, AO had clearly mentioned the reasons for reopening. The department was in possession of information that the appellant company received accommodation entry for purchases from Wishnet Tracom Pvt Ltd, amounting to Rs.6,29,70,000/- for AY 2011-

12.

Thus, there was specific information available with the AO, subsequent to the assessment made u/s 143(3) of the Act. Since, there was new information available it cannot be said that reopening was done on mere change of opinion. AO had reason to believe that income had escaped assessment based on the new information available with the department. Reliance is placed on the decision in the case of Jugal Kishore Paliwal Vs JCIT (2022) 140 taxman.com 336 (Chattisgarh). The Hon'ble HC held as under: Where Assessing Officer issued a reopening notice on ground that an information was received from ITO (Inv.) that assessee had obtained bogus purchase bills of certain amount from several parties and thereby income had escaped assessment, since there was tangible material available to Assessing Officer in form of an information of suspicious transactions received from ITO (Inv.) which was sufficient to initiate proceedings at stage of issuance of reopening notice, impugned reopening was justified In view of the above, appellant's submission that reopening of the assessment was not valid, cannot be accepted. Appeal on these grounds is dismissed.

5.

Ground Nos.4,5 & 6: (Addition on account of bogus purchase- Rs.49,68,333/-) The information received from the investigation wing Kolkata, revealed that Wishnet Tracom Pvt Ltd was a shell company, involved in providing accommodation entries to various beneficiaries, in lieu of commission. It was controlled by one Shri. Mayank Daga.

5.

2 Based on the information available with the department, AO required the appellant to furnish the details of purchases of silk fabrics from Wishnet Tracom Pvt Ltd amounting to Rs.6,29,70,000/-. Appellant filed the copy of the ledger account, purchase invoices and bank statement reflecting the transactions. AO issued summons u/s 131 of the Act on 03/09/2018 to Wishnet Tracom Pvt Ltd. There was no reply received from the company. AO also observed that the speed post could not be served on the company and the summons was returned unserved.

5.

3 Based on the above findings, AO held that the purchases booked in the name of Wishnet Tracom Pvt Ltd was bogus. Appellant might have made purchases from open market without bills and had inflated the purchases. AO decided to disallow certain percentage of the expenditure on account of bogus purchases. By determining the percentage of bogus purchases with respect to total purchases made in FY 2010-11, and adding such percentage to the average gross profit in the past years, AO determined the income for AY 2011-12 at Rs.49,68,333/-.

5.

4 During the course of appeal proceedings, appellant submitted that the AO made the addition without basis and there was no justification in making the addition. AO had accepted the books of accounts in the original assessment and the addition was made on adhoc basis in the reopened assessment. Appellant had produced copy of the ledger account, bank statement and purchase invoices etc. AO had not considered these evidences and made the addition u/s 69C of the Act. Appellant requested that the addition made u/s 69C of the Act, determining the income at Rs.49,68,333/- may be deleted.

5.

5 Appellant's submissions were carefully considered. AO was in possession of the information that Wishnet Tracom Pvt Ltd was a shell company and provided accommodation entries to the beneficiaries. Appellant was one such beneficiary and had shown purchases of Rs.6,29,70,000/- from Wishnet Tracom Pvt Ltd. The summons issued by the AO to Wishnet Tracom Pvt Ltd returned unserved. Now, the appellant had to furnish the fresh details of Wishnet Tracom Pvt Ltd. However, appellant did not furnish any fresh detail with respect to the present address of Wishnet Tracom Pvt Ltd. Appellant could not produce the director or the principal officer of Wishent Tracom Pvt Ltd before the AO, to prove the genuineness of the transactions.

5.

6 The evidences produced by the appellant such as purchase invoices and bank statement were not sufficient to prove that the transactions was genuine. Since, the investigation wing conducted the enquiry and found that Shri. Mayank Daga was operating the company Wishnet Tracom Pvt Ltd, and provided accommodation entries, the onus to prove the genuineness, shifted to the appellant. However, appellant had not discharged the onus. Even during the course of appeal proceedings, appellant simply reiterated the submissions made before the AO. Appellant could not furnish any fresh evidence to prove the genuineness of the transactions. In view of the above, the addition made by the AO, of Rs.49,68,333/- is confirmed. Appeal on these grounds is dismissed.

6.

Ground Nos.7 & 8: These grounds are consequential in nature and hence not adjudicated separately.

7.

In the result, appeal is treated as dismissed.”

4.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined.

6.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) has rightly upheld that the reopening was justified as the Ld. AO had information relating to the shell company. No evidence has been filed before us that the sanction under section 151 of the Act was not obtained or was not in accordance with law. Hence, there is no reason to interfere with the finding of the Ld. CIT(A) and Ground Nos. 1, 2, 3 and 4 are dismissed as there was no change of opinion and the reopening was justified on the facts and evidence before the Ld. AO.

7.

Ground No. 5 is also dismissed as the Ld. AO has been reasonable in applying the profit rate and it has not been demonstrated before us that the transactions were genuine. The Ld. CIT(A) has amply demonstrated and thereafter concurred as to how the findings of the Ld. AO were to be upheld. We find no reason nor any evidence has been produced before us to interfere with the findings of the Ld. CIT(A) whose order is upheld. Ground No. 6 is general in nature and does not require any separate adjudication.

8.

In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on 12th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 12.05.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Ethics Commercials Private Limited, 29D, Bentick Street, Unit- A, B & C, 3rd Floor, Kolkata, West Bengal, 700001. 2. DCIT, Circle-11(1), Kolkata.

3.

CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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