INCOME TAX OFFICER, WARD-1, NADIAD vs. OMPRAKASH DEVILAL SHAH, NADIAD

CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 The appeal filed by the Revenue and Cross Objection filed by the assessee are against the order dated 29-06-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2018-19.

Appeal challenging the order is made is not justifiable in law and fact need to be dismissed.

Respondent crave leaves to add amend or withdraw in view of just on or before hearing of appeal Total Tax Effect Rs. Rs. 45,31,864”

The assessee is an individual and filed his return of income u/s. 139 for A.Y. 2018-19 on 29-09-2018 declaring total income of Rs. 4,74,880/- after claiming deduction under Chapter VI-A of Rs. 1,60,094/-. The A.O. observed that the assessee entered into sham/bogus transaction for an amount of Rs. 58,50,000/- with M/s. Bright Corporation, Ahmedabad. The case was selected under scrutiny u/s. 147 of the Income tax Act with prior approval of the concerned authority. Notice u/s. 148 dated 31- 03-2022 was issued to the assessee which was duly served. In response to the notice u/s. 148, the assessee filed invalid return of income on 27-04-2022 as mentioned by the Assessing Officer in assessment order. Thereafter, the Assessing Officer noted that in absence of valid return u/s. 148, notices u/s. 143(2) could not be issued and therefore the notices u/s. 142(1) of the income Tax Act, 1961 was issued to the assessee. The assessee has not responded show cause notice u/s. 144 dated 21-12- 2022 but has replied show cause notice dated 28-01-2023 vide response dated 25-01-2023 and 27-01-2023. After taking into account the reply, the Assessing Officer observed that M/s. Bright Corporation was involved in availment and utilization of input tax credit fraudulently on the basis of fake invoices and subsequently passing on the same by issuing fake invoices to the end users and manufacturers. The Assessing Officer held that since the assessee has not explained the purchases of Rs. 58,50,000/- and therefore the same amount to unexplained CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 expenditure of the assessee and therefore made the addition u/s. 69C of the Income Tax Act and treated the said amount as undisclosed/unexplained expenditure.

The A.R. submitted that the CIT(A) has rightly allowed the appeal of the assessee since the assessee has furnished all the invoices of purchase, delivery challans and party ledgers with bank statements on 25-01-2023 to the Assessing Officer. The Assessing Officer has not at all taken into account these evidences and simply observed that the assessee has not explained the expenditure of purchases. The ld. A.R. further submitted that the Assessing Officer accepted that the actual supply took place but has only on the presumption basis held that the assessee involved in fraudulent transfer of credit without further investigating the same and totally ignored the delivery challan on purchase made from Bright Corporation CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 during financial year 2017-18. The ld. A.R. submitted that the assessee has also given the details regarding entry and exit vehicles relating to purchases made from Bright Corporation relevant lorry receipts and log book of warehouses. Thus, the ld. A.R. submitted that the CIT(A) has rightly allowed the appeal of the assessee.

We have heard both the parties and perused all the material available on record. It is pertinent to note that the assessee is in the business of purchasing of copper scrap for which the assessee has given the item-wise register thereby showing the purchase as well as sale details from various parties including that of Bright Corporation. The Assessing Officer has not at all taken into account the details filed by the assessee vide reply dated 25-01-2023 and 27-01-2023. These details reveal that the assessee has given the details of ledger account of Bright Corporation in assessee’s books account invoice issued from Bright Corporation, delivery challan issued by Bright Corporation, inventory register regarding goods received and goods sold as well as bank statement clarifying the payment made either through NEFT/RTGS transfers. The assessee has also given the details of inward and outward entry and exit of vehicles regarding purchases made from Bright Corporation as well as lorry receipts and log books of warehouses as well. These documents were totally ignored by the Assessing Officer and has not at all disputed by the A.O. at any point of time. Besides this, cancellation of GST registration was w.e.f. 01- 01-2019 and the purchases made by the assessee from Bright Corporation was prior to the said date i.e. 01-01- 5 CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 2019. Therefore, the Assessing Officer was not right in making addition when the assessee has explained all the expenditure related to the purchase. The CIT(A) has rightly allowed the appeal of the assessee. There is no need to interfere with the findings of the CIT(A). Hence, the appeal filed by the Revenue is dismissed.

As regards CO no. 43/Ahd/2025 filed by the assessee is delayed by 175 days and in support of the order of the CIT(A). Hence the delay is condoned and the CO is allowed.

In the result, the appeal of the Revenue is dismissed and the Cross Objection filed by the assessee is allowed.