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Facts
Information was received indicating the assessee company made bogus purchases to reduce taxable income. A search on a related person revealed the assessee might be a beneficiary. The Assessing Officer made an addition of ₹19,73,886 based on alleged purchases from M/s. Durga Commodeal Pvt. Ltd.
Held
The tribunal held that the CIT(A) erroneously disposed of the appeal by referring to a rectification order instead of the assessment order. The tribunal found that the addition made by the Assessing Officer was unsustainable in law and on facts due to lack of evidence.
Key Issues
Whether the CIT(A) correctly adjudicated the appeal, and whether the addition made by the Assessing Officer for bogus purchases was substantiated with evidence.
Sections Cited
147, 143(3), 132, 148, 143(2), 142(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2014-15 Krypton Industries Ltd.…………………..……..…………………....Appellant Plot 31 and 32, Sector-1, Falta, 24 North Parganas, W.B – 743504. [PAN: AABCK0868N] vs. DCIT, Circle-1(1), Kolkata……………....…..………………….…..... Respondent Appearances by: Shri Akkal Dudhwewala & Vidhi Ladia, AR, appeared on behalf of the appellant. Smt. Ranu Biswas, Addl. CIT- Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 31, 2025 Date of pronouncing the order : July 31, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], Kolkata, dated 31.03.2025, passed against the assessment order under Section 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2014–15.
Brief facts of the case are that information was received from the Investigation Wing, Kolkata, indicating that the assessee-company had taken bogus purchases from one Shri Sanjiw Kumar Singh to reduce its taxable income. A search under section 132 of the Act was conducted on the said person, and his statement was recorded. Based on the appraisal report and material found during the search, it was alleged that the assessee was one of the beneficiaries of such bogus Krypton Industries Ltd transactions. Based on this information, a proposal under section 147 of the Act was approved by the Additional CIT, and a notice under section 148 was issued. The assessee filed its return of income disclosing ₹2,29,700 in response. Subsequently, notices under section 143(2) and 142(1) were issued. During the assessment proceedings, the Assessing Officer noted that in the Financial Year 2013–14, the assessee allegedly made purchases from M/s. Durga Commodeal Pvt. Ltd and three other company. The assessee was asked to furnish complete details, and in response, submitted bills, ledgers, and other supporting documents. However, the Assessing Officer did not receive any explanation relating to transaction M/s. Durga Commodeal Pvt. Ltd of and made an addition of ₹19,73,886, thereby assessing the total income at ₹22,03,586.
Aggrieved, the assessee filed an appeal before the Ld. CIT(A). However, while disposing of the appeal, the Ld. CIT(A) has erroneously disposed of the appeal of the assessee by referring to the rectification order passed under Section 154 dated 30.11.2022, whereas the appeal filed by the assessee was specifically against the assessment order dated 22.11.2018 passed under Section 143(3) read with Section 147 of the Income-tax Act, 1961 for the Assessment Year 2014–15. Instead of adjudicating the grounds raised in the appeal against the reassessment order, the learned CIT(A) confined the discussion to the rectification order, which was not the subject matter of the appeal before him. This indicates a serious procedural lapse, resulting in non-adjudication of the issues actually contested by the assessee in appeal. The assessee contended that it had categorically denied any transaction with M/s. Durga Commodeal Pvt. Ltd. and had submitted an affidavit dated 21.11.2018 along with written submissions and documentary evidence Krypton Industries Ltd before the Ld. CIT(A). Copies of the same, including acknowledgement by the NFAC, were also placed before us. It was pointed out that the Ld. CIT(A) neither considered the affidavit nor the written submissions and erroneously narrated irrelevant facts of a different assessment year.
On the other hand the Ld. DR, fairly submitted that there appears to be a bona fide mistake in the order of the Ld. CIT(A), and that a rectification application under section 154 could have been filed. However, considering the present appeal, the matter can be adjudicated on merits.
We have heard both parties and perused the material available on record. It is clear that the assessee filed detailed submissions before the Ld. CIT(A) including evidence to demonstrate that it had not made any purchases from M/s. Durga Commodeal Pvt. Ltd. during the relevant financial year. Despite this, the Ld. CIT(A) erroneously disposed of the appeal based on a different assessment year and different facts, thereby not addressing the core issue of the assessee’s case. In our considered view, the order passed by the Ld. CIT(A) is vitiated due to non- application of mind, as it fails to deal with the issue raised by the assessee for Assessment Year 2014–15. Moreover, the addition made by the Assessing Officer is also unsustainable in law as no specific date or supporting material was brought on record to substantiate the alleged purchase of ₹19,73,886 from the said entity. The affidavit filed by the assessee, coupled with the submissions, clearly negates the claim of any such transaction during the relevant year. Accordingly, we hold that the addition of ₹19,73,886 made by the Assessing Officer is unsustainable in law and on facts, and the same is hereby deleted. The impugned order of the Ld. CIT(A) is also set aside.
In the result, the appeal of the assessee is allowed. Kolkata, the 31st July, 2025.