Loading judgment…
Facts
The assessee engaged in trading of coal and coal related products declared income. The case was reopened based on information that the assessee had taken bogus sales and purchases. The Assessing Officer made additions for bogus sales and estimated commission. The assessee filed various documents like ledger extracts, invoices, bank statements, and e-way bills to substantiate the sales.
Held
The Tribunal held that the Assessing Officer made additions based solely on a statement without corroborative material. The assessee provided sufficient documentary evidence to support the genuineness of the sales. The Assessing Officer also failed to dispute the evidence provided by the assessee.
Key Issues
Whether the addition made by the Assessing Officer for bogus sales and commission is sustainable when the assessee has provided documentary evidence to support the transactions?
Sections Cited
68, 69C, 147, 148, 148A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the Revenue against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 15.01.2025 for the AYs2016-17 & 2017-18.
As the facts and circumstances are similar in both the appeals in hence, we will take the facts of for A.Y. 2016-17 and decide the issue.
The only issue raised by the Revenue in various grounds of appeal is against the deletion of addition by the ld. CIT (A) of ₹1,59,13,085/- in respect of bogus sales u/s 68 of the Act and
The facts in brief are that the assessee filed the return of income on 21.09.2016, declaring total income at ₹2,15,330/-. The assessee is engaged in the business of trading of coal and coal related products. The case of the assessee was selected for scrutiny based on the risk profiling of the assessee’s case conducted by the Risk Management system of the Department an information is received that assessee has taken bogus Sales & Purchases to the tune of ₹15,99,000/-. Accordingly, the case was reopened u/s 147 of the Income-tax Act, 1961 (the Act) by issuing notice u/s 148 of the Income-tax Act, 1961 (the Act) on 29.06.2021 after recording the reasons to belief. After the decision of the Hon'ble Apex Court in the case of Union of India Vs. Ashish Agarwal in Civil Appeal No. 3005/2022, Vide order dated 04.05.2022, the CBDT has issued instruction on implementation of the decision in exercise of powers u/s 119 of the Act. Pursuant to the decision of the Hon'ble Apex Court and subsequent instructions of the CBDT, opportunity was provided to the assessee by issuing notice u/s 148A(b) of the act on 23.05.2022 and assessee filed the reply thereto and thereafter order u/s 148A(d) of the Act was passed. Again, notice u/s 148 of the Act was issued on 08.07.2022 and the assessee filed the return of income on 11.11.2022, declaring the same income. The ld. AO after examination of the documentary evidences filed by the assessee came to the conclusion that assessee has bogus sales to the tune of ₹1,59,13,085/-. According to the ld. AO, the assessee has actually involved in doing paper trading without doing any actual business and without any movement of goods and therefore, the same
In the appellate proceedings, the ld. CIT (A) deleted the addition after taking into account the submission and contentions of the assessee. The ld. CIT (A) noted that in the appellate proceedings, the assessee has filed all the evidences qua the said sales comprising ledger extracts, sales register, sales invoices of the bank statement, e-way bill issued by VAT department, transport vehicle details, VAT return etc. and also noted that the assessee has duly recorded these sales in the books of account. The ld. CIT (A) also noted that following on search action was conducted in the case of M/s Maharaja Shree Agrasen Jee Aapno Ghar Pvt. Ltd. group of cases on 16.11.2017, in which Shri Rohit Sharma was also covered and post search investigation revealed that some coke manufactures in Dhanbad who availed the benefit of linkage coal at a cheaper rate from BCCL sold some component of the linkage coal clandestinely at a higher rate in cash in the open market which were unaccounted sales. So, this is how Shri Rohit Sharma treated as beneficiary of bogus sales transactions. The ld. CIT (A) further noted that the assessee discharged primary onus by filing the supporting documents to substantiate the nature of transactions. However, the ld. AO merely relied on the statement recorded of Shri Rohit Sharma and made an addition. The ld. CIT (A) specifically referred to the e-way bills issued by the VAT department along with transporter details which
After hearing the rival contentions and perusing the materials available on record, we find that following search conducted on M/s Maharaja Shree Agrasen Jee Aapno Ghar Pvt. Ltd. group of cases on 16.11.2017, on which Shri Rohit Sharma was also part. It was revealed that the some coke manufactures in Dhanbad, who availed the benefit of linkage coal at a cheaper rate from BCCL sold some component of the linkage coal clandestinely at a higher price in cash in the open market and Shri Rohit Sharma was beneficiary and that was the triggering point for reopening the case of the assessee u/s 147 of the Act. In this case, we note that assessee has filed all the evidences before the ld. AO comprising ledger extracts, sales register, sales invoices, bank statement, e-way bills issued by VAT department, transport vehicle details, VAT returns etc. and also noted that the assessee has duly recorded these sales in the books of account. We also note that the addition was made on the basis of statement of Shri Rohit Sharma without there being any corroborative or substantive material being brought on record by the ld. AO. The ld. AO has also not disputed the evidences filed by the assessee such as e-way bills issued by the VAT department of State Government, Transport vehicle details, VAT returns, sales invoices, sale register, bank statement etc. We note that the ld. AO has acted only on the finding given by the investigation wing that Shri Rohit Sharma is a bogus purchaser. Thus, we do not find any infirmity in the order of ld CIT(A). Consequently, we are inclined to dismiss the appeal of the Revenue by upholding the order of the ld. CIT (A).
In the result, both the appeals of the Revenue are dismissed.
Order pronounced in the open court on 26.08.2025.