PRAKASH SURANA,UDAIPUR vs. INCOME TAX OFFICER, WARD - 2(2), GUWAHATI

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ITA 191/GTY/2026Status: DisposedITAT Guwahati06 October 2026AY 2018-196 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the case was reopened after duly recording reasons and obtaining approval. The assessee had made purchases of Rs. 22,33,300 from M/s Devyansh Dealcom (P) Ltd. During the appellate proceedings, the assessee filed documents, and the CIT(A) called for a remand report from the AO. This report was sent to the assessee for comments, but no reply was received. Considering the totality of the facts and the paper book filed by the assessee, the Tribunal decided to remit the issue back to the file of the CIT(A) for fresh examination and decision as per law. The assessee is directed to substantiate its case with cogent documents, and a reasonable opportunity of being heard is to be given. The Tribunal did not decide the merits of the additions or the validity of the assessment proceedings but rather remanded the matter for a proper adjudication.

What were the facts?

The assessee, Prakash Surana, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2018-19. The Assessing Officer (AO) reopened the case under Section 147/148 of the Income Tax Act, 1961, based on information that the assessee had purchased goods amounting to Rs. 22,33,300 from M/s Devyansh Dealcom (P) Ltd. without actual delivery. The AO treated these purchases as bogus and made an addition of the entire amount. The assessee's appeal before the CIT(A) was dismissed, with the CIT(A) finding the submitted documents not genuine. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT). The procedural history includes the issuance of a notice under Section 148, the assessee filing a return, and a final show cause notice. The AO noted that the return was e-verified late, preventing the issuance of a Section 143(2) notice.

What were the issues?

1. Whether the order passed by the CIT(Appeals) under Section 250 of the Income Tax Act, 1961, is bad in law and on facts. (Mixed law and fact) 2. Whether the CIT(Appeals) erred in treating purchases of Rs. 22,33,300 from Devyansh Dealcom Private Limited as bogus without impartially evaluating the submitted documentary evidence, including invoices, bank statements, GST returns, and transporters' certificates. (Mixed law and fact) 3. Whether the CIT(Appeals) erred in upholding a 100 percent addition of the purchase amount instead of restricting it to the Gross Profit margin, ignoring precedents where subsequent sales were not doubted. (Mixed law and fact) 4. Whether the assessment is null and void due to the mandatory Notice under Section 143(2) of the Income Tax Act, 1961, not being issued. (Mixed law and fact) 5. Whether the addition of Rs. 22,33,300 was made without specifying the relevant section of the Income Tax Act, 1961, rendering it without jurisdiction. (Mixed law and fact) 6. Whether the reassessment proceedings initiated by the AO are bad in law for failing to furnish material and information relied upon, such as the Insight Portal report and Risk Management Strategy, despite reliance in the notice under Section 148A(b). (Mixed law and fact) 7. Whether the CIT(Appeals) erred in sustaining the addition by relying on a non-speaking and mechanical remand report from the AO, failing to deal with detailed evidences and rejoinder, thereby violating principles of natural justice. (Mixed law and fact) Assessee's Contentions: The assessee argued that comprehensive documentary evidence was submitted to the lower authorities, including invoices, bank statements, GST returns, and transporters' certificates, which were not properly appreciated. They also contended that the addition should have been restricted to the Gross Profit margin, citing judicial precedents. Furthermore, the assessee argued that the assessment was void due to the non-issuance of a Section 143(2) notice and that reassessment proceedings were bad in law for non-disclosure of relied-upon material. The assessee also claimed the CIT(A)'s order was vitiated by reliance on a mechanical remand report and violation of natural justice. Revenue's Contentions: The Revenue relied on the orders of the lower authorities. The learned DR strongly referred to the remand report submitted by the AO, arguing that mere filing of documents is insufficient. The case was reopened based on recorded reasons, and M/s Devyansh Dealcom (P) Ltd. was identified as providing accommodation entries. The Revenue contended that both lower authorities examined the issue in detail and were not satisfied with the assessee's explanation, requesting confirmation of the lower authorities' orders.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(2),Section 147,Section 148,Section 148A(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “DB” BENCH, GUWAHATI

For Appellant: Shri R.K. Karnani, FCA
For Respondent: Shri Santosh Karnani, Addl. CIT
Hearing: 27.08.2026Pronounced: 06.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, GUWAHATI (Through Virtual hearing at Kolkata) SHRI DUVVURU RL REDDY, VICE PRESIDENT SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No. 191/GTY/2026 Assessment Year: 2018-19

Prakash Surana, Vs. Income Tax Officer, Ward 2(2), 56, Bapu Bazar, Udaipur - Aayakar Bhawan, 313001 Christian Basti, G.S. Road, Guwahati - 781005 PAN: AGSPS1061R APPELLANT RESPONDENT

Assessee by : Shri R.K. Karnani, FCA Revenue by : Shri Santosh Karnani, Addl. CIT

Date of hearing : 27.08.2026 Date of Pronouncement : 06.10.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER This is an appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the Ld. CIT(A)] dated 23.02.2026, DIN & Order No. ITBA/NFAC/S/250/2025-26/1086414938(1) for the assessment year 2018-19 on the following grounds of appeal.

“1. That the order under Section 250 of the Income tax Act, 1961 1 passed by the CIT (Appeals) is bad in law and on facts.

2 ITA No. 191/GTY/2026 Prakash Surana 2. That the CIT (Appeals) erred in treating the purchases of Rs 22,33,300 from Devyansh Dealcom Private Limited as bogus and failing to impartially evaluate the comprehensive documentary evidence submitted, including invoices, bank statements, ledgers, consignment notes, GST returns, stock details, subsequent sale invoices and transporters certificates. 3. That the CIT (Appeals) erred in upholding a 100 percent addition of the purchase amount instead of restricting it to the Gross Profit margin, thereby ignoring binding judicial precedents WHARE subsequent sales were not doubted. 4. That the CIT (Appeals) erred in not quashing the assessment despite the mandatory Notice under Section 143(2) of the Income tax Act, 1961 not being issued during the assessment proceeding, which renders the entire assessment null and void. 5. That the CIT (Appeals) erred in making an addition of Rs 22,33,300 without specifying the relevant section of the Income 5 tax Act, 1961 under which such addition has been purportedly made, thereby rendering the impugned addition without jurisdiction, bad in law. 6. That the reassessment proceedings initiated by the Ld. AO are bad in law and liable to be quashed, as the Ld. AO failed to furnish the material and information relied upon, including the Insight Portal report and Risk Management Strategy, despite specifically relying upon the same in the notice issued under Section 148A(b) of the Income tax Act, 1961. 7. That on the facts and in the circumstances of the case and in law, the Learned CIT (Appeals) has erred in sustaining the impugned addition by relying upon a non speaking and mechanical remand report submitted by the Assessing Officer, who, despite calling for and receiving detailed evidences during remand proceedings, failed to examine OR deal with the same and merely reiterated 7 the original assessment findings and further, the Learned CIT (Appeals) has passed the impugned order without considering OR adjudicating upon the detailed rejoinder filed by the Appellant against such remand report, thereby vitiating the appellate proceedings and rendering the order bad in law as being in violation of the principles of natural justice and liable to be set aside. 8. That the appellant craves leave to put any additional grounds and/or modify any ground before the hearing and /or at the time of hearing.” 2. Briefly stated the facts of the case are that the assessee filed return of income on 11.10.2018 declaring income of Rs. 9,30,570/- as per specific information, the assessee has purchased goods amounting to Rs. 22,33,300/- from M/s Devyansh Dealcom (P) Ltd. without actual delivery of the goods during F.Y. 2017-18. Subsequently, the case was reopened under Section 147/148 of the Act for reopening with prior approval of

3 ITA No. 191/GTY/2026 Prakash Surana the competent authority. Accordingly, notice under Section 148 of the Act dated 30.03.2021 was issued. Accordingly, the assessee filed return of income on 28.04.2022 and other statutory notices were issued to the assessee, the assessee furnished part reply and final show cause notice was issued to the assessee on 13.03.2023 and reply was issued on 19.03.2023. In response to the questionnaire issued by the AO, the assessee furnished reply. However, the AO was not satisfied and purchased made from M/s Devyansh Dealcom (P) Ltd. was treated as bogus purchase without any actual delivery of goods.

3.

Considering the totality of the facts and relying on various judgments, the AO treated the entire amount of Rs. 22,33,300/- as bogus purchase and made addition. He also noted that the assessee after filing return of income e-verified on 01.03.2023 which is almost 11 months later. Accordingly, notice under Section 143(2) of the Act could not be issued, because return was e - verified after due date and it became invalid.

4.

Aggrieved from the order of AO, the assessee filed appeal before the Ld. CIT(A). During the course of appellate proceeding, the assessee filed detailed written submission, the Ld. CIT(A) called remand report from the JAO the remand report was sent to assessee for comments but no reply was received from the assessee. Accordingly, the appeal of the assessee was decided on merits. As per the assessment order and remand report available with the Ld. CIT(A) and he noted that documents

4 ITA No. 191/GTY/2026 Prakash Surana produced by the assessee do not appear to be genuine. Accordingly, he dismissed the appeal of the assessee.

5.

Aggrieved from the above order, the appeal filed before ITAT.

6.

The Ld. Counsel reiterated the submission made before the lower authorities and he referred to the paper books filed containing page No. 276. He further submitted that the entire documents were furnished during the course of assessment proceeding and appellate proceeding viz. copy of invoice, bank account, delivery challan, transportation receipts issued by Gateway Roadlines copy of ledger etc., but the ld. CIT (A) has not properly appreciated on records.

7.

On the other hand, the Ld. DR relied on the order of lower authorities. He strongly referred to the remand report submitted by the AO which is incorporated in the CIT(A) and submitted that the merely file of documents is not sufficient the case of the assessee was opened on the basis of reasons recorded for reopening the case of the assessee. It has ben held that M/s Devyansh Dealcom (P) Ltd. providing accommodation entry and he requested that both the authorities below have examined the issue in details and they are not satisfied from the explanation submitted by the assessee. Accordingly, he requested that the order of lower authorities should be confirmed.

8.

Considering the rival submissions and perusing the entire material available on record and orders of authorities below. We noted that the

5 ITA No. 191/GTY/2026 Prakash Surana case of the assessee was reopened after duly recording the reasons for reopening the case as per section 147/148 of the Act and duly approval taken from the competent authority. It was notice that the assessee has made purchase from M/s Devyansh Dealcom (P) Ltd. for Rs. 22,33,300/- and during the course of appellate proceeding the assessee filed documents. Accordingly, the Ld. CIT(A) called remand report and AO has furnished remand report which was also sent to the assessee but the assessee did not furnish any reply. Considering the totality of the facts and circumstances of the case and paper book filed by the assessee, we are remitting this issue back to the file of Ld. CIT(A) for fresh examination of the issue and decision as per law after giving a reasonable opportunity of being heard to the assessee and assessee is directed to substantiate its case with cogent documents.

9.

In the result, appeal of the assessee is partly allowed for statistical purposes.

Order pronounced on 06.10.2026. Sd/- Sd/-

(Duvvuru RL Reddy) (Laxmi Prasad Sahu) Vice President Accountant Member Dated: 06.10.2026 AK, Sr. P.S.

6 ITA No. 191/GTY/2026 Prakash Surana Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//TRUE COPY// (MANISH BHOI) DEUPTY REGISTRAR KOLKATA BENCHES, KOLKATA

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