AANYA SUPPLIERS PRIVATE LIMITED,AHMEDABAD vs. INCOME TAX OFFICER - WARD 4(1)(1), AHMEDABAD

The brief facts of the case are that the assesse had filed its return of income for A.Y. 2019-20 on 24.10.2019 declaring income of

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

Shri Sunil Talati, the Ld. AR of the assessee did not press the Ground Nos. 1 and 2. Hence both these grounds are dismissed.

Ground No. 3 & 4 pertain to reopening of the case u/s. 148 of the Act and addition of Rs.1,44,60,644/- on account of bogus purchases. The Ld. AR submitted that the AO had reopened the case to examine the accommodation entry taken from M/s. M K Traders and M/s. Luxmi Agency. The assessee had informed the AO, in response to notice u/s. 148A(b) of the Act, that no transaction was carried out by it with M/s. M K Traders and M/s. Luxmi Agency. Still the AO had continued with the proceedings and made addition in respect of purchases made from other concerns namely M/s G.K Trading Co., M/s. Lotus Enterprises and M/s Balaji Trading Co. The Ld. AR submitted that the reopening done by the AO was on the basis of incorrect information and thus the reopening was invalid and unsustainable in law. The Ld. AR further submitted that no addition could have been made in respect of the purchases from other parties, which were not the basis for reopening, when the AO did not make any addition in respect of the two parties for which the case was reopened. The Ld. AR further submitted that purchases made by the assessee from the three parties viz. M/s. G.K Trading, M/s. Lotus Enterprises & M/s. Balaji Trading company were genuine and all evidences in this respect were brought on record before the AO.

We have considered the rival submissions. It is found that the case was reopened by the AO to examine the purchases made from M/s. M. K Traders and M/s. Luxmi Agency. The AO, however, did not make any addition in respect of any purchase from these two concerns. According to the assessee, no purchase was made from these two concerns and this fact was brought to the knowledge of the AO in response to notice u/s. 148A(b) of the Act. The AO, without verifying the submission of the assessee, had mechanically passed order u/s. 148A(d) of the Act, to examine the bogus purchase made from M/s. M.K Traders and M/s. Luxmi Agency. Be that as it may, the fact remains that no addition was made by the AO in respect of any purchase made from M/s. M.K Traders or M/s. Luxmi Agency. The Hon’ble Gujarat High Court has held in the case of Commissioner of Income Tax vs. Mohmed Juned Dadani [335 ITR 172], that when no addition was made on the reopened issue, the AO cannot make addition on any other issue. Under the circumstance, the AO was not justified in making addition in respect of purchases made from three different parties namely M/s. G.K Trading, M/s. Lotus Enterprises, M/s. Balaji Trading Company, which were not part of satisfaction recorded by the AO. It is further noticed that the PAN No. of these three concerns were totally different and did not match with the PAN No. with M/s. M.K Traders and M/s. Luxmi Agency, for which the case was reopened.

In view of the above facts, not only the reopening made by the AO is found to be incorrect but the addition made in respect of purchases from

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