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Facts
The assessee company claimed lorry hire charges of Rs. 1,06,02,158/- paid to M/s. Jagannath Enterprise. The Assessing Officer (AO) reopened the assessment, suspecting bogus expenditure, as the payee's bank account showed high value RTGS credits immediately followed by cash withdrawals. The AO treated the expenditure as bogus and added it to the assessee's income.
Held
The Tribunal noted that some grounds were not pressed. Regarding the main issue of bogus expenditure, the Tribunal observed that the assessee's sub-contractor, proprietor of M/s. Jagannath Enterprise, could not appear earlier due to medical reasons. The Tribunal, in the interest of justice, decided to set aside the order and remit the matter back to the AO for fresh assessment.
Key Issues
Whether the expenditure claimed as lorry hire charges was genuine and for business purposes, and whether the reassessment proceedings were validly initiated and conducted.
Sections Cited
147, 148, 143(2), 142(1), 151A, 151, 133(6), 131, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH AT KOLKATA
Before: SHRI GEORGE MATHAN & 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 2011-12 dated 21.11.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that, on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in passing an ex-parte order without giving reasonable opportunity of hearing.
(a) For that the Ld. CIT(A) ought to have held re-opening proceedings u/s 147/144 to be invalid and was liable to be quashed. (b) For that the Ld. CIT(A) failed to consider that the Juri ictional A.O. lacked juri iction to issue notice u/s 148 in view of the provisions of section 151A r.w.s. notifications issued there under, thereby vitiating the reassessment order. ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd.
For that the Ld. CIT(A) ought to have held that the re-assessment order is vitiated in law inasmuch as there was absolutely no independent application of mind and no independent enquiry on the part of the A.O. in respect of the purported information received by him.
For that the Ld. CIT(A) ought to have held re-opening proceedings to be bad in law due to the fact that the purported sanction u/s 151 was not obtained or was not in accordance with law which vitiated the reopening process.
For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have deleted the addition of Rs. 1,06,02,158/- made by the A.O. on account alleged bogus expenditure and expenditure not laid out for the purpose of business.
The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.”
Brief facts of the case are that the assessee filed the return of income for AY 2011-12 showing total income of ₹7,12,840/- which was processed u/s 143(1) of the Act. Information was received by the Assessing Officer (hereinafter referred to as Ld. 'AO') from the DDIT (Inv.), Unit-1(2), Kolkata that the bank account of M/s. Jagannath Enterprise, proprietor Anirudha Mondal had high value debit transactions immediately followed by 100% withdrawal of cash. On perusal of the information and belief that income had escaped assessment, the Ld. AO reopened the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act. Notices u/s 143(2) and 142(1) of the Act were also issued and in response to the said notices, the assessee filed various documents. The Ld. AO noted that the assessee company had paid ₹1,01,00,000/- to M/s. Jagannath Enterprise during the FY 2010-11 against lorry hire charges of ₹1,06,02,158/-. The same amount was withdrawn on the same day or the very next day. Since the genuineness of the transaction was not established, the Ld. AO treated the transaction as bogus expenditure and added back the same to the total income of the assessee and assessed the total income of the ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd. assessee at ₹1,13,14,998/- u/s 147/144 of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who perused the material available on record and the assessment order and dismissed the appeal of the assessee by holding as under: “5.4 a) During the assessment proceedings, the case of the appellant was reopened u/s 148 of the Act on the basis of the information received that M/s Jagannath Enterprises Prop. Anirudha Mondal providing accommodation entries to various parties by way of bogus bills and the appellant company is one of the beneficiary who received accommodation entry by way of bogus bills/expenses during the year under consideration. Subsequently, the case of the appellant company was assessed u/s 147/144 of the Act at an income of Rs. 1,13,14,998/- after making addition on account of disallowance of bogus expenses of Rs. 1,06,02,158/-. During the assessment proceedings, the appellant submitted the ledger account M/s Jagannath Enterprises. On perusal of the same it was found that the appellant company had paid Rs. 1,01,00,000/- to M/s Jagannath Enterprises during the F.Y. 2010-11 against lorry hire charges of Rs. 1,06,02,158/-. It was also observed from the bank account of M/s Jagannath Enterprises which was called for by the AO u/s 133(6) of the Act that there was high amount of RTGS credits immediately followed by cash withdrawal. The funds were withdrawn on the same day or the very next day which clearly indicate that the payments made by the appellant company was against sham transaction and hence the same were withdrawn in cash by M/s Jagannath Enterprise. b) During the appellate proceedings the appellant filed response vide letter dated 15.07.2024 on juri ictional grounds and relying upon the various case laws but the appellant was unable to justify his contention on merits of the case. c) The Assessing Officer, during the assessment proceedings had made detailed verification and enquiry by issuing notice u/s 133(6) of the Act and also by issuing summons u/s 131 of the Act to the Director of the appellant company. Moreover, the AO has appropriately and in detail explained the reasonings behind additions made. The AO has made verification and enquiry before the addition made and the relevant part of the assessment order is reproduced here below :- "9 From the ledger account of Jagannath Enterprises as submitted by the assessee, it is observed that the assessee company had paid Rs 101,00,000/- to Mis Jagannath Enterprise during the FY 2010-11 against lorry hire charges of Rs. 1,06.02.158/. It is seen from the ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd. Bank account of Mis Jagannath Enterprise (obtained from bank by issuing notice u/s 133(6)) that there was high amounts of RTGS credits (from the assessee company) followed by immediate cash withdrawal The funds were withdrawn on the same day or the very next day which clearly indicate that the payments made by the assessee company was against sham transaction and hence the same were withdrawn in cash by M/s Jagannath Enterprise The returned income of Rs 2.33.203/- shown by Shri Aniruddha Mondal (Prop M/s Jagannath Enterprise) as against gross receipt of Rs 6,40.97.560/- also establish that the receipts from assessee company were not for genuine business purpose. Moreover, the copies of bills submitted by the assessee company does not have any details as regards truck number, date of transportation, quantity transported etc. and as such, the genuineness of the expenditure claimed is not established. Therefore, it is evident that the assessee company has obtained bogus billing/expenses amounting to Rs 1,06,02,158/-during the FY 2010-11 as lorry hire charges in the name of M/s. Jagannath Enterprise. Moreover, the genuineness and creditworthiness of the transactions made by the assessee company is not established, though sufficient opportunities were given to the assessee company. In view of the above, the expenditure claimed amounting to Rs 1,06,02,158/- through bogus billing is treated as bogus expenditure and not laid out for the purposes of business and hence disallowed and added back to the total income of the assessee." d) In view of the above facts and circumstances and after taking into consideration the reply of the appellant, I am in agreement with the finding of the Assessing Officer and hold that the appellant is unable to substantiate its claims and is not able to controvert the assessment order. The addition made by the Assessing Officer is therefore confirmed.
5 The appellant has not been able to defend the grounds raised. Hence, grounds raised are rejected.
In the result, the appeal is Dismissed.”
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made have been examined. ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd.
Ground Nos. 1 to 4 were not pressed, hence, are dismissed as not pressed.
Ground No. 5 relates to the Ld. CIT(A) erring in confirming the addition of ₹1,06,02,158/- made by the Ld. AO on account of alleged bogus expenditure and the expenditure not being laid out for the purpose of business. The assessee is a transporter and it had sub- contracted part of the work. The Ld. AO held that the bills were not correct and the expenditure claimed was bogus. Our attention was drawn to page 2 para 5 of the assessment order and also para 7 on page 28 of the appellate order. It was stated that the Ld. CIT(A) passed a four- line order and decided the appeal. The Ld. AR requested that the matter may be remanded to the Ld. AO and assured that Shri Anirudha Mondal would be produced before the Ld. AO as he could not be produced earlier. The contract was executed by the assessee with M/s. Jagannath Enterprise, proprietor Anirudha Mondal whose father had appeared before the Ld. AO as the sub-contractor had undergone brain surgery and therefore, could not appear. A query was raised whether TDS was deducted on the payment made to the sub-contractor to which the Ld. AR expressed his inability to answer.
We have considered the facts of the case, the submissions made and the documents filed. In the interest of justice and fair play it was considered that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. AO with a direction that as assured Sh. Anirudha Mondal be produced by the assessee before the Ld. AO to substantiate ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd. the claim of the expenditure to the sub-contractor and the required evidence would be produced justifying the claim and thereafter, the assessment order should be made de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of the relief claimed and justifying the expenditure and shall not seek unnecessary adjournments. Accordingly, all the grounds taken by the assessee in its appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 2nd April, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 02.04.2026 Bidhan (Sr. P.S.) ITA No(s). 3/KOL/2025 Assessment Year(s) 2011-12 Arya Roadways Company Pvt. Ltd. Copy of the order forwarded to:
Arya Roadways Company Pvt. Ltd., C/o. Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata, West Bengal, 700069. 2. I.T.O., Ward-12(1), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order