INCOME TAX OFFICER, MEERUT vs. DEEPAK MITTAL, MEERUT

6. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating that the "the amount reported by as having been involved in accommodation entry is Rs. 18.29,000/- whereas the amount assessed by the AO is Rs. 11,70,560/-ignoring part of the bogus sales booked in preceding assessment year.

7. That the appellant craves leave to add, modify, amend OR DLEETE any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. ”

ITA No.- 5269/Del/2025 Deepak Mi�al “ That the assessee had made the sale of cement to the said party namely M/s ZHONGMAO INTERNATIONAL PROJECT PVT LTD and the material was delivered to the party through the sale invoices along with the e-way bill generated at the time of sale. All the aforesaid documents is in the possession of the assessee and the same are enclosed herewith as Annexure-1 The payment is also being received in advance from the said party through banking channel. Photocopy of the relevant portion of bank statement is also enclosed herewith as Annexure-2 Therefore claim of department for accommodation entry is inappropriate The assessee has not paid any commission as alleged by your good-self and therefore the proposed addition of Rs.1,28,761/- as unexplained expenditure is illegal & unwarranted. In view of above, it is submitted that the proposed addition of Rs 12.99.321/-as unexplained credit and as of unexplained expenditure in the hands of the assessee is totally illegal and unwarranted and therefore the same may kindly be worked out after considering the submission of the assessee and documents on record. If your good-self is not agreed with the documents and submission of the assessee, it is humbly requested your good-self to kindly provide us the information/documents/statements in your possession for rebuttal the same, on which your good-office has relied that the assessee is indulge in providing accommodation entries.”

3.3 The AO did not accept the above explanation of the assessee and added a sum of Rs. 11,70,500/- u/s 68 r.w.s. 115BE of the Act. Further, the AO added a sum of Rs. 1,28,761/- u/s 69C being the commission paid for the said entry of Rs. 11,70,560/-. The relevant extract of the assessment order is reproduced as under: “4.5 Point wise rebuttal of reply of the assessee including analysis of any case law relied upon: 4.5.1 The submission made against the show cause notice and the documents furnished with it perused and duly considered but found unacceptable for the reasons mentioned below. The assessee requested to treat the sale made to parties mentioned above genuine on the basis of purchase/sale bills, payment from banking channels etc. This part of reply cannot be accepted as it is well established that the transaction made with these parties are not genuine and the documents viz. purchase/sale bills, stock register, use of banking channel are all part of modus operandi mentioned above. 4.5.2 The reply of the assesse is not accepted. The search and seizure action was carried out on the M/s Oppo Mobiles India Pvt. Ltd. M/s Mobitech Creations Pvt. Ltd., M/s PacetelSystem Pvt. Ltd and Shri Mohinnder Singh Malik & Super distributors of M/s 4 ITA No.- 5269/Del/2025 Deepak Mi�al Mobiel India Pvt. Ltd., and its suppliers parties including M/s Genome Optech Ltd and M/s Kiunsham Micreolectronices India Pvt. Ltd. During the course of the search proceedings, the residential premises of Shri Avinash Kumar, Director M/s Genomne Optech Pvt. Ltd. Was covered at C-84, 2nd Floor, C- Block, Section 33, Near NTPC Society, Noida. From the analysis of the digital evidence from the mobile of Mr. Avinash Kumar, Several incriminating evidences were found that indicated that he was an entry provider that facilitated accommodation entries to various beneficiary companies through the fictitious entities controlled by him like M/s Saaransh Associates Pvt. Ltd., M/s Zhongmo Interenatioal Projects Private Ltd. Incriminating documents related to unaccounted cash transactions have been found that reflet that Mr. Avinash along with his related persons engaged in ahwala transactions and giving entries from shell companies as bogus purchases on which commissioner was earned by Mr. Avinash Jha. During the search several incriminating documents were found on the basis of which it was established that M/s Zhongmao International Projects Pvt. Ltd. is a shell company. Shri Avinash Jah in his statements accepted the modus operandi. M/s Zhongmao International Projects Pvt. Ltd. Was providing accommodation entries of bogus sales to M/s CCTEB India. Pvt. Ltd. In the report of the Investigation Unit it is established the scheme of accommodation entries beyond doubt, hence there was not need to further investigate the matter. The assesse Shri Deepak has confirmed the sale transaction to M/s Zhongmao International, who is only a papery company. 4.6.1 Considering the facts and circumstance of the case, material available on record the amount of Rs. 11,70,560 reported as payment received for sale to M/s Zhongmao International are treated bogus transactions. 4.6.2 Therefore, Rs. 11,70,560/- is added to the total income of the assessee u/s 68 of the Income-tax Act, 1961 as unexplained credit. Tax is also charged u/s 115BBE of the Income-tax Act, 1961. Penalty proceedings under section 271AAC of the Income Tax Act, 1961, are also initiated separately. 4.6.3 Further as per the Investigation Report commission @ 9.25% to 11% is being charged for providing accommodation entries. Therefore, Rs. 1,28,761/- being commission @ 11% on the accommodation entry of Rs. 11,70,560/- is being added to his total income as unexplained expenditure u/s 69C of the IT Act, 1961. Therefore, the commission paid for getting entry of bogus sales is Rs. 1,28,761/-(11% of 11,70,560) and is also being proposed to be added back in total income of the assessee as unexplained expenditure u/s 69C r.w.s. 115BBE of the IT Act. Penalty proceedings under section 271AAC of the Income Tax Act, 1961, are also initiated separately.”

ITA No.- 5269/Del/2025 Deepak Mi�al 4. Aggrieved with the said order, the AO filed an appeal before the Ld. CIT(A).

Furthermore in Tax Audit Report in clause 35ja), no quantitative details of principal items of goods traded have been added. The relevant part of the Tax Audit Report is placed as under: c) In invoices raised by assessee to ZIPPL significantly, therein there is no mention of brand of cement and quantitative details of goods traded This amply shows the unrealness of the said invoices. For reference, relevant part of one of the invoices is placed as under:

ITA No.- 5269/Del/2025 Deepak Mi�al d) In so called e-way bills there is no mention of transporter id or name. The relevant part of one of the e-way bills is placed as under: e) Despite specific request in respect of transactions with ZIPPL' not a single freight bill has been furnished, though for other transactions, certain freight bills have been furnished but the same does not justify specific transactions of assessee with ZIPPL. f) The stand of assessee is contradictory as vide reply dated 29.11.2023, during the assessment proceedings, it has been submitted that goods were transported by truck and tractors owned by assessee and whereas freight bills as submitted were mainly in the name of M/s Jai Nirvana Road Carriers and other entities which are not owned by assessee. g) Significantly, for alleged transactions with ZIPPL' it has been stated that cement was transported by truck and tractors owned by the sole proprietorship firm of assessee, it has observed that, no truck or tractors have been declared in Tax Audit Report as owned by assessee's sole proprietorship firm. h) It has been verified from Vahann app that vehicles numbers mentioned on e-way bills are agricultural tractors and to transport the alleged cement bags to about 90 kilometre away on agricultural tractors is improbable particularly in the absence of delivery challans, weighing bridge receipts etc. as specifically called for.

ITA No.- 5269/Del/2025 Deepak Mi�al i) It is seen in the invoices there is no mention of receipt of goods or payment of freight etc. j) Allegedly cement has been stated to be sold by assessee to 'ZIPPL, however, business code in Tax Audit Report & ITR has been shown as 09027 & 09028 & same is not pertaining to cement or construction material. k) Assessee has made reliance on generation of e-way bills. Here, it is mentioned that its mere existence does not validate a transaction, especially in the case of a bogus billing. It is well known that bogus billing (also known as fake invoicing or circular trading) involves issuing invoices without the actual supply of goods or services. In such cases, e- way bills might be generated to create a false impression of genuine transactions and to facilitate fraudulent Input Tax Credit (ITC) claims. In the report received in this case there is mention of all these things. Various Hon'ble Courts and Tax authorities have repeatedly held that merely possessing an e-way bill, tax invoice, or even proof of payment through banking channels is insufficient to prove the actual physical movement of goods and the genuineness of a transaction. The emphasis is on proving the actual receipt of goods or services. This is crucial for claiming Input Tax Credit (ITC) under Section 16 of the CGST Act, 2017. It is worth mentioning that in cases where the genuineness of transactions is doubted, authorities and courts expect taxpayers to provide additional evidence beyond just the e-way bill and invoice. This can include a) Proof of freight charges paid b) Acknowledgement of taking delivery of goods c) Toll receipts d) Evidence of warehousing e) Verification of the vehicle used for transport. All of these aspects are missing in this case. l) It is significant to mention that Jurisdictional Hon'ble Allahabad High Court in the case of M/s Anil Rice Mill Versus State of U.P. And 2 Others in writ Tax No 886 of 2023 on 14.08.2024 has held that the tax invoices, e-way bills are not enough to avail Input Tax Credit (ITC) under Goods and Service Tax (GST) The bench of Lordship Justice Piyush Agrawal has observed that the petitioner in that case has only brought on record the tax invoices, e-way bills, and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus, in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established. The Hon'ble Jurisdictional High Court while dismissing the petition held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Submitting a tax invoice, e-way bill, payment details is not sufficient. m) The impugned transactions in itself shows that the same have not been taken place in normal course of business as lump sum amount of Rs 20 lacs have been shown to be received as early as on 29.01.2021 and part of cement shown to be supplied to said company on 31.01.2021 and thereafter after a lag of more than 4 months in June 2021 between period of 12.06.2021 to 25.06.2021. There is no other transaction with such a lag during the year under consideration. Cement is not a scarce commodity for which an entity would give advance of Rs 20 lacs and then would wait for such a long period for ITA No.- 5269/Del/2025 Deepak Mi�al goods to be supplied from such a far-flung distance of about 90 kms away, when such a commodity is available in Noida at competitive prices. It clearly appears that accommodation entry has been received in round figure of Rs 20 lacs and then bogus sales have been debited squaring of such accommodation entry to last paisa spreading the same to two financial years. n) The FAA has given the impression in its order that the AO has merely relied on the report of Investigation Wing. It is to be appreciated that in Income Tax Department, Investigation Wing' has been assigned task to detect organized tax evasion like of extending/receiving accommodation entries and if an AO with an independent mind after going through records as in the case is concurring with findings of Investigation Wing it cannot be termed as merely reliance on the Wing's report rather at the best, it is to be treated as sharing of satisfaction with Investigation Wing. Respectfully, it is submitted for appreciation at the end of the appellate authorities & Hon'ble Court that for an AO particularly in faceless regime and otherwise too, it is really hard and almost impossible to detect an organized tax evasion like of extending/receiving accommodation entries at his end with concrete findings as for busting these sorts of tax evasion & economic crimes, considerable amount of investigation is required and mandate and resources for doing the same is with Investigation Wing. It is submitted with anguish that for the kind consideration of Hon'ble Courts that as a great detriment to the cause of revenue as soon as the report of investigation report of Wing comes into scene, disregarding its meticulousness, there come the cut and dried salvo of 'borrowed satisfaction' invariably from the learned counsels of assessee's to undo the entire assessment(s). In case, the AO has applied his mind to said report and finding the same as more than credible held that tax has been evaded as in the case under consideration then it is great injustice to delete additions on venial and flimsy grounds of reliance on report of Investigation Wing, particularly in a case where assessee failed to provide requisite documents as discussed and other material findings as pointed out. However, it is worth mentioning that in many cases, Hon'ble Courts have held reliance on investigation reports of Investigation Wing as valid for instance sake in case Priya Blue Industries (P.) Ltd Vs ACIT [2021] 130 taxmann.com 492 (Gujarat), Hon'ble High Court, Gujarat has laid down that where Assessing Officer had reason to believe that income chargeable to tax had escaped assessment as assessee was beneficiary of accommodation entries and basis for formation of such belief were several inquiries and investigation by Investigation Wing that there had been escapement of income of assessee, reopening and addition was justified. Notably, SLP against this order is also dismissed [2022]138 Taxmann.com 69(SC). o) The FAA has not appreciated the facts properly in observing that the 'the amount reported by as having been involved in accommodation entry is Rs. 18,29,000/- whereas the amount assessed by the AO is Rs. 11,70,560.' as part of the bogus sales booked in preceding assessment year. The order of NFAC is not acceptable due to the facts and legal aspects narrated above. Although the tax effect involved in this case of Rs. 10,13,470/-, which is below the monetary limit prescribed by the CBDT's Circular No. 09/2024 dated 17.09.2024 for ITA No.- 5269/Del/2025 Deepak Mi�al filing appeal before Hon'ble ITAT, further appeal in this case is recommended as the instant case is covered by exception clause(h) of para 3.1.of CBDT's circular 05/2024 dated 15.03.2024. (emphasis supplied by us)

7.1 The facts as brought on record by the PCIT, especially the duly highlighted by us has not been examined by the Ld. CIT(A), while passing his order and deleting the additions made by the AO. Examination of these facts are necessary to arrive at the conclusion regarding the genuineness of the claim of the assessee regarding its purchase of cement amounting to Rs. 11,70,560/- from ZIPPL and the alleged payment of commission of Rs. 1,28,761/- by the AO for the above bogus purchase. We, therefore, set aside the order of the Ld. CIT(A) and restore the matter to his file to adjudicate the issue afresh keeping in view of the facts brought on record by the Ld. PCIT, Ghaziabad as referred above, after giving a reasonable opportunity of being heard to the assessee and in accordance with law. 7.2 Further, the assessee will also be at liberty to furnish any details / evidence in support of his claim.