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Facts
The assessee filed an appeal against the CIT(A)'s order upholding the disallowance of purchases amounting to Rs. 2,23,71,136. The Assessing Officer reopened the assessment based on information suggesting that the vendors from whom purchases were made were fictitious.
Held
The Tribunal held that in the interest of justice and fair play, the case should be remanded back to the Assessing Officer for a de novo reassessment. The assessee should be given a reasonable opportunity to present evidence and make submissions.
Key Issues
Whether the disallowance of purchases was justified when the assessee claimed they were for goods and not covered by Section 37. Whether the assessee should be granted another opportunity for reassessment.
Sections Cited
250, 37, 148, 143(2), 142(1), 147, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, 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 2018-19 dated 05.06.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that the Ld CIT(A) erred in law and in fact to uphold and confirm disallowance of purchase of Rs.2,23,71,136/- by applying the provisions of section 37 when the said amount was claimed as purchase of goods and the provisions of section 37 were not applicable.
For that the Ld CIT(A) was not justified to uphold and confirm disallowance of purchase of Rs.2,23,71,136/- when there was no dispute about the corresponding sale of the goods so purchased and there could not I.T.A. No.: 1567/KOL/2024 Assessment Year: 2018-19 Gyan Prakash Gupta. have been any sale unless such goods was purchased and further the assessee earned reasonable profit on sale of goods so purchased goods.
For that on the facts of the Ld. CIT(A) erred in law and in fact to uphold and confirm disallowance of purchase of Rs. 2,23,71,136/- by applying the provisions of section 37 when the goods so purchased was proved with reference to the bills and payment by account payee cheques and further from their GST Portal where the seller himself has accepted the sale of goods, therefore, there was no basis to doubt about the parties simply because the parties were not available on the given address at the time when the Ld AO initiated the enquiry
For that on the facts and in the circumstances of the case confirming the addition of Rs. 2,23,71,136/- by the Ld. CIT(A) was not in accordance with law.
For that the appellant craves leave to add and/or to modify any grounds of appeal.”
Brief facts of the case are that the assessee is an individual and the return of income for the AY 2018-19 was filed on 22.09.2018 showing total income of ₹17,31,310/-. Subsequently, information was received by the Assessing Officer (“the Ld. AO”) through Insight Portal from DDIT (Inv), Unit-1(1), Kolkata to examine the genuineness of assessee's transactions with M/s. Virika Marketing Pvt. Ltd., M/s. Hitakrit Trading Pvt. Ltd., M/s. Daania Trading Pvt. Ltd., M/s. Adarsh Vanijya Udyog and also M/s. Rajbhar Trade Commercial. Based on the information, the assessment was re-opened by issue of notice u/s 148 of the Act, in response to which the assessee filed the return of income showing total income of ₹17,30,280/-. Notices u/s 143(2) & 142(1) of the Act were issued, in response to which the assessee furnished the details called for. On perusal of the details made available, the Ld. AO noted that the five entities from whom the assessee had made purchases of waste paper were fictitious and bogus/fake invoices were issued. Hence, the Ld. AO disallowed the purchases made from those I.T.A. No.: 1567/KOL/2024 Assessment Year: 2018-19 Gyan Prakash Gupta. five entities to the tune of ₹2,23,71,136/- and added the same as business income. The Ld. AO completed the assessment u/s 147 r.w.s. 144B of the Act by assessing the total income at ₹2,41,01,416/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who perused the assessment order and the written submissions filed by the assessee. The Ld. CIT(A) found that the assessee could not submit any reasonable and acceptable explanation in support of the grounds taken by the assessee, upheld the order of the Ld. AO and dismissed the appeal of the assessee.
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.
At the outset, the Ld. AR drew our attention to para 5.5 of the order of the Ld. CIT(A) and stated that the required evidence could not be filed before the Ld. CIT(A). It was submitted that the assessee did not appear before the the Ld. AO as well and requested for another opportunity so that the required evidence could be filed. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Bench was of the view that in the interest of justice and fair play, the request of the assessee to remand 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 I.T.A. No.: 1567/KOL/2024 Assessment Year: 2018-19 Gyan Prakash Gupta. set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. AO for making the reassessment 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 its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are 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 30th December, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 30.12.2025 Bidhan (Sr. P.S.) I.T.A. No.: 1567/KOL/2024 Assessment Year: 2018-19 Gyan Prakash Gupta. Copy of the order forwarded to:
Gyan Prakash Gupta, 419, Rabindra Sarani, Kolkata, West Bengal, 700005. 2. I.T.O., Ward-43(1), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order