SANGEET AGARWAL,SILIGURI vs. ITO, WARD 1(3),, SILIGURI

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ITA 3039/KOL/2025Status: DisposedITAT Kolkata16 April 2026AY 2019-20206 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee had raised legal issues regarding the reopening proceedings that were not properly addressed before the CIT(A). Therefore, the Tribunal set aside the CIT(A)'s order and remanded the case back for fresh adjudication.

What were the facts?

The assessee's case was reopened to examine the genuineness of purchases from M/s. Lavender Enterprises. The Assessing Officer made an addition for alleged bogus purchases, which was confirmed by the CIT(A). The assessee appealed to the ITAT, raising several legal grounds regarding the reopening proceedings.

What were the issues?

Whether the reopening proceedings under Section 147 were valid and whether the assessment framed under Section 147 read with Section 144B was bad in law due to procedural violations.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151,Section 144B,Section 151A,Section 68,Section 69C,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 2019-20 dated 17.11.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. For that the Ld. CIT(A) ought to have held that the re-opening proceeding initiated u/s 147 was bad in law and was liable to be quashed.

2.

For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have quashed the reassessment framed u/s 147 read with sec. 144B of the Act vide an order dated 03.02.2025. 3. For that the Ld. CIT(A) ought to have quashed the re-opening proceedings on the ground 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 re-opening proceedings was liable to be quashed inasmuch as the same was barred by the law of limitation.

5.

For that the re-opening proceedings was otherwise not valid in the eyes of law inasmuch the same was conducted in violation of the provision of sec. 151A r.w. notification issued thereunder.

6.

For that on the facts and in law, the Id. CIT(A) ought to have considered that the A.O. erred in framing the assessment u/s 147 r.w.s 144B of the I. T. Act 1961, without first making a draft assessment order and providing opportunity to the appellant to respond to such draft assessment order as mandated by section 144B of the I.T Act, 1961 and therefore, the procedure of faceless assessment as well as principles of natural justice stood breached and for this reason alone, the assessment framed u/s 147 r.w.s 144B be held to be bad-in-law, void-ab-initio and quashed

7.

For that the Ld. CIT(A) was not justified in confirming the disallowance of Rs.25,39,568/ made by the A.O. on account of alleged bogus purchases made from M/s. Lavender Enterprises.

8.

For that the assessee craves for leave to add, modify, withdraw any ground of appeal and to submit further additional grounds/evidences in course of hearing of appeal.”

3.

Brief facts of the case are that the assessee is engaged in the business of trading in school bags, lunch boxes, pencil boxes, umbrella and other gift items and had filed its original return of income for AY 2019-20 showing total income of ₹6,63,240/-. The case was reopened u/s 147 of the Act and a notice u/s 148 of the Act dated 06.04.2023 was served upon the assessee; the reason for reopening been to examine the genuineness of purchases of ₹21,70,499/- made during the FY 2018-19 from M/s. Lavender Enterprises. During the course of the assessment proceedings, the assessee submitted copy of ITR acknowledgment, computation of income, balance sheet, P&L account, GST returns, bank statement, ledger copy of M/s. Lavender enterprises, purchase invoices, e-way bills etc. and the Assessing Officer (hereinafter referred to as Ld. 'AO') conducted a detailed examination of the documents and submissions filed by the assessee and made the addition on account of bogus purchase to the tune of ₹25,39,568/- and added the same the total income of the assessee and completed the ITA No(s). 3039/KOL/2025 Assessment Year(s) 2019-20 assessment u/s 147 r.w.s. 144B of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who, vide order dated 17.11.2025, dismissed the appeal of the assessee by giving his findings as under:

“6. Decision: I have considered the facts of the case, written submission and case laws relied upon by the appellant as against the observations and findings of the AO in the assessment order. The submissions and contentions of the appellant are discussed and decided as under:

6.

1 Ground No.1: In this ground the appellant has challenged the addition worth Rs.2539568/- as bogus purchases from M/s Lavender Enterprises. This case was reopened u/s 147 of the Income Tax Act on the basis of information from the GST Department that M/s Lavender Enterprises is a concern which is providing bogus accommodation entry of bogus purchases in lieu of commission. The AO relied upon the investigation report of the GST and provided various opportunities to the appellant to explain the genuineness of the transaction, but the appellant failed to do so, hence the AO made the addition. 6.1.1 Now before me in the appellate proceedings, the appellant has filed written submission. The appellant has stated that the genuine transaction has taken place. It has been further mentioned that the transactions are not bogus. The appellant submitted the bank statement and the ledger of both the parties. The appellant has hence pleaded that the transactions are genuine. The contention of the appellant cannot be accepted as this is a clear cut case of accommodation entries as per the statements of the persons concerned. Recently Hon. Bombay High Court in the decision of PCIT vs. M/s. Kanak Impex dated 03.03.2025, analysed various decisions of various Courts including decision of Hon. Gujrat High Court in the case of M/s. N. Shanti Jain. Hon. Bombay High Court in the above mentioned decision held that entire bogus entry has to be disallowed and Hon. Court went against percentage addition. Recently Hon. Bombay HC in the case of PCIT vs M/s Drisha Impex Ltd has further confirmed the addition on account of bogus purchases, and this decision of Bombay HC has been further confirmed by Hon. SC in the month of September, 2025. Hence, the addition of the AO is ITA No(s). 3039/KOL/2025 Assessment Year(s) 2019-20 confirmed as per the decisions of Hon. Bombay High Court, Hon Gujarat High Court and Hon. Calcutta High Court.

6.

2 The remaining Grounds are consequential and general in nature and are not required to be adjudicated.

7.

The appeal of the appellant is 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. In the grounds of appeal, the assessee has taken the ground that the reopening proceedings are bad in law and is liable to be quashed and the Ld. CIT(A) ought to have quashed the reopening proceedings u/s 147 of the Act. It is also one of the grounds that the purported sanction u/s 151 of the Act was not obtained or was not in accordance with law which vitiated the reopening proceedings and the proceedings were barred by law of limitation. It is further assailed that the same was not conducted in accordance with the provisions of section 151(1A) of the Act. The Bench also went through the grounds of appeal raised before the Ld. CIT(A) and was of the view that in Form No. 35 no such ground of appeal had been taken by the assessee in respect of the assessment order u/s 147 r.w.s. 144B of the Act. The remaining grounds were consequential and general in nature and were not adjudicated upon.

6.

The Ld. DR relied upon the order of the Ld. CIT(A).

7.

We have considered the facts of the case, the submissions made and the documents filed. The Bench was of the view that since the assessee has raised legal issues which require verification of facts and record and were not raised before the Ld. CIT(A), in the interest of justice and fair play, one more opportunity may be provided to the assessee.

Therefore, the order of the Ld. CIT(A) is hereby set aside and the appeal is remanded to him to be done afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in accordance with law and shall decide the legal issue as well. For statistical purposes, the appeal of the assessee is allowed.

8.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 16th April, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 16.04.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Sangeet Agarwal, Lawgical Consultants, 29D, Bentick Street, Unite - A, B & C, 3rd Floor, Kolkata, West Bengal, 700001. 2. ITO, Ward-1(3), Siliguri.

3.

CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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