DHMT LOGISTICS,KOLKATA vs. ITO, WARD 22(2),, KOLKATA

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ITA 1358/KOL/2026Status: DisposedITAT Kolkata16 October 2026AY 2018-201913 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal set aside both the orders of the AO and the CIT(A). Regarding the validity of reassessment proceedings, while the reopening was based on tangible information from CGST regarding bogus purchases, the Tribunal noted that the assessee's purchases related to spare parts for the repair and maintenance of dozers, which were given on hire. The Tribunal found merit in the assessee's argument that at most, the disallowance could be considered under Section 37(1) of the Act, as the expenses related to repair and maintenance of machinery. The Tribunal remanded the issue to the AO to examine the nature of the claim, the final findings of the CGST Department on the allegation of bogus bills, and whether the expenditure was revenue or capital in nature. The AO was directed to allow the claim under Section 37(1) read with Section 31 of the Act as per law, given the assessee's claim that the purchases were for spare parts for repair and maintenance and no sales were made out of these purchases. Grounds 4 and 5 were partly allowed for statistical purposes.

What were the facts?

The assessee, DHMT Logistics, filed its return for AY 2018-19. The Assessing Officer (AO) initiated reassessment proceedings based on information from the CGST department indicating that three suppliers from whom the assessee recorded purchases of ₹53,32,755/- were involved in generating fake GST invoices without actual supply of goods. The assessee failed to provide independent confirmations or sufficient evidence of physical delivery. The AO treated the purchases as unexplained expenditure under Section 69C and made an addition of ₹53,32,755/-, assessing total income at ₹54,99,255/-. The Commissioner of Income Tax (Appeals) - NFAC confirmed the addition, finding the suppliers to be non-existent and involved in accommodation entries, and holding that mere banking channel payments did not discharge the assessee's burden of proof. The assessee appealed to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 read with Section 148A of the Income Tax Act, 1961, are illegal and void ab initio, and consequently, the addition of ₹53,32,755/- deserves to be deleted? - Assessee's contention: The reassessment proceedings are illegal and void ab initio due to non-compliance with provisions, including insufficient notice period (6 days instead of 7) under Section 148A(b), failure to provide information, and not considering the assessee's objections. The AO's notice under Section 143(2) is also alleged to be invalid. - Revenue's contention: The Ld. DR relied on the order of the Ld. CIT(A). 2. Whether the Ld. CIT(A) erred in confirming the addition of ₹53,32,755/- by invoking Section 69C of the Income Tax Act, 1961, when it was not applicable, and in confirming the disallowance of expenditure despite the assessee explaining the source and nature of expenditure? - Assessee's contention: Section 69C is not applicable as payments were made through banking channels, accounts were audited, and no adverse findings were made by the AO. At most, disallowance could be considered under Section 37(1) as expenses related to spare parts for repair and maintenance of dozers. - Revenue's contention: The Ld. DR relied on the order of the Ld. CIT(A).

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 148A(b),Section 148A(d),Section 143(2),Section 69C,Section 37(1),Section 31,Section 250,Section 144B

AI-generated summary — verify with the full judgment below

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

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

आयकर अपीलीय अधिकरण कोलकाता ‘ए’ बेंच कोलकाता मे IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH AT KOLKATA Before SHRI YOGESH KUMAR US, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s). 1358/KOL/2026 Assessment Year(s) 2018-19 DHMT Logistics ITO, Ward-22(2), Kolkata 19, B.T. Road, Rathtolla, 169, A.J.C. Bose Road, Vs. Kolkata, West Bengal, 700056 Bamboovilla, Kolkata, West Bengal, 700014 (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) स्र्थायी खाता संख्या/PAN: AAIFD7569H उपधथिधत/Appearance: अपीलार्थी के ओर से/ Assessee represented by (AR) : Ankit Jalan, Advocate. प्रत्यर्थी के ओर से/ Department represented by (DR) : Kalyan Kumar Das, Sr. DR. सुनवाई की तिति/ Date of concluding the hearing : 06.10.2026 आदेश उद्घोषणा की तिति/ Date of pronouncing the order : 16.10.2026 आदेश/ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [Ld. 'CIT(A)'] passed u/s 250 of the Act for AY 2018-19 dated 06.03.2026. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

9.

As regards Ground Nos. 4 and 5, the Ld. AR submitted that the assessee is not in the trading business and had earned rental income on account of hire charges by providing dozers on rent. Our attention was drawn to page 20 of the paper book in support of the claim that the machinery parts were purchased which were spare parts for the repair of the dozers and the same is extracted as under:

10.

It was argued that there was no application of mind by the Ld. AO and a mechanical finding has been given on the basis of the information supplied. Our attention was drawn to the provisions of section 69C of the Act that the same is applicable where the assessee fails to explain the source of expenditure made. In the case of the assessee, the payments were made through banking channels, the accounts were duly audited and no adverse finding was made by the Ld. AO nor the

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