SUNRISE STRUCTURALS & ENGINEERING PVT LTD,NAGPUR vs. ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4 NAGPUR, NAGPUR

The assessee submitted the following submissions along with the paper book for consideration. 3.1 Ground No.1: Notice u/s 148 of I.T. Act 1961 is not in accordance with law:- A) Notice u/s 148A(a) of I.T. Act 1961 has been issued on 02/03/2023 (P– 1 & 2) [Vol.-IV]. Detailed documentary evidence was placed on record on 09/03/2023 to explain the various observations made in the notice u/s 148A(a) of I.T. Act demonstrating genuineness and bonafides of purchase transaction (P- 3 to 7) [Vol.- IV). B) A.O. without verification and application of mind has issued notice u/s 148A(b) of I.T. Act 1961 on 10/03/2023 alleging escapement of income (P – 8 to 10) [Vol.- IV]. Voluminous documentary evidence along with submission was uploaded on 21/03/2023 (P- 11 to 228) [Vol. - IV]. In the aforesaid submission it was submitted that on similar information notice u/s 148 was issued in the case of associate company M/s Sanvijay Rolling & Engineering Ltd. in respect to purchases from M/s Dadhichi Iron & Steel Pvt. Ltd. (P– 16) [Vol.- IV]. A.O. in reassessment proceeding for Asstt. Year 2018-19 has verified and accepted purchases from same party as genuine. (P – 148 to 154) (148, 152, 153) [Vol.- IV). C) Order u/s 148A(d) is passed on 31/03/2023 (P – 229 to 335) [Vol.- IV] and notice u/s 148 is issued on 31/03/2023. Facts as found on the basis of evidence on record is noted at para 6 of order u/s 148A(d) (P – 233 & 234) [Vol.- IV]. It is clearly noted that transaction of purchase is corroborated from purchase invoice, GST return, bank statement delivery through E-way bill. Sale of such goods by assessee has fully substantiated 4 (Sunrise Structural & Engineering P. Ltd.) purchase to be genuine. A.O. after noting of incident report and investigation by DGGI has concluded escapement of income. No valid belief of escapement of income can be drawn by any person properly instructed in law. Notice is issued only on borrowed satisfaction. D) A.O. did not appreciate the submissions and documentary evidences filed during 148A proceedings. AO proceeded to reopen the assessment solely for the reason of the information available on insight portal. No information was provided to assessee on the basis of which it was alleged to be bogus transaction (P- 13) [Vol.- IV]. It is not provided in assessment proceedings despite specific request made by assessee. Notices and Order issued u/s 148A are not in accordance with law. Notice issued u/s 148 is bad in law. Reliance placed on: i) 305 Taxman 538 (Delhi) Devat and Ram Company (P) Ltd v. ITO (P – 267 – 279) [Vol.- IV] (275, 276, 278) ii) ITO v. B.C. Enterprises (ITA No.4972/Del/2024) – (P – 237 to 254) [Vol.- IV] (247, 249, 250, 253) E) A.O has not found any fault/defect in the legal evidences placed on record as evident from observation of A.O. on page 5 & 6 of order u/s 148A(d) (P- 229 - 235) (233, 234). No independent enquiry is made before recording satisfaction for escapement of income. Reasons recorded merely on the basis of report of DGGI Zone unit, Nagpur is not in accordance with law. Reopening notice has to be issued by A.O on his own satisfaction and not on borrowed satisfaction. Reliance on: i) (2023) (156 taxmann.com 221) (Bombay HC) Gandhibag Sahakari Bank Ltd vs. DCIT/ACIT (P- 280 – 288) (286) [Vol.- IV] ii) 178 taxmann.com 259) (SC) DCIT vs. GandhibagSahakari Bank Ltd (P- 289 – 290) (290) [Vol.- IV] iv) 422 ITR 520 (Bom) PCIT vs. Vaman International Pvt. Ltd. (P- 116 – 123) (123) [Vol.- III] v) (2019) 104 taxmann.com 216 (Bom.) South Yarra Holdings vs. ITO (P- 167 – 170) (170) [Vol.- II] F) Invocation of section 147 of I.T. Act 1961 (amended) is strictly contingent upon the existence of actual escapement of income chargeable to tax based on the facts and evidence on record. No actual escapement of income chargeable to tax as it emanates from the facts discussed in the order u/s 148A(d) of I.T. Act 1961. Notice issued u/s 148 of I.T. Act 1961 is not in accordance with law. Reliance on: i) Vivaansh Edutech Pvt. Ltd. reported at 181 taxmann.com 873(Guj) vide judgment dated 16/12/2025. (P- 171 – 174) (173, 174) [Vol.- II] G) Reasons recorded are no valid reasons for issue of notice u/s 148. Mere receipt of information is no evidence to form belief of escapement of income. No live link / nexus between belief of escapement and material on record. Reliance on : i) 130 ITR 1 (SC) Ganga Saran & Sons Pvt. Ltd. vs ITO & Ors. (P- 175 – 184) (182) [Vol.- II] ii) 103 ITR 437 (SC) ITO vs Lakhmani Mewaldas (P- 124 - 134) (132, 133) [Vol.- III] iii) [2024] 164 taxmann.com 763 (Bombay)

Ground No.2 to 7: Addition Rs.6,77,58,435/- u/s 69C of I.T. Act 1961 is respect of purchases recorded in books of account. A) Regular books of account maintained duly audited by Chartered Accountants. Tax Audit Report submitted with return of income. Books of accounts accepted - not rejected. B) During assessment proceedings following details of purchases from M/s. Dadhichi Iron & Steel Pvt. Ltd. submitted. i) Ledger account of M/s. Dadhichi Iron & Steel Pvt. Ltd. (P- 141 – 144) [Vol.- I] ii) Relevant extracts of bank statements indicating payment to M/s. Dadhichi Iron & Steel Pvt. Ltd. (P- 145 – 146) [Vol.- I] (Sunrise Structural & Engineering P. Ltd.) iii) Copy of invoices indicating name, address, e-way bill number, PAN, GST Registration Number and consignee name. (P- 147 – 205) (147) [Vol.- I] iv) Details of Transportation Receipts. (P- 206 – 264) (206) [Vol.- I] v) Details of sales made by assessee to M/s. Sanvijay Rolling & Engineering Ltd. (P- 265 – 266) (265) [Vol.- I] vi) GST return filed by assessee. (P- 6 – 101) [Vol.- II] vii) Summary of Trading Stock Register. (P- 104) [Vol.- II] C) Assessee has sufficiently discharged its onus of proving genuineness of purchase of goods from M/s Dadhichi Iron & Steel P Ltd with details and evidences. A.O has not found any fault/defect in supporting details/evidence submitted. Addition is made merely on basis of report of DGGI Zonal Unit, Nagpur. (P-11 of Asstt Order) D) In response to notice u/s 133(6) of I.T. Act 1961 the buyer of goods from assessee M/s. Sanvijay Rolling & Engineering Ltd. has confirmed the transaction of sale of goods by assessee it purchased from M/s. Dadhichi Iron & Steel Pvt. Ltd. No scope for doubting purchase of goods by assessee. (P- 144 – 148) [Vol.- II] Reliance on: i) ITAT order in in the case of Chander Arjandas Manwani vide order dated 25/08/2025. (P- 8 – 27) (26) (Gist) E) Legal documents on record indicate that goods purchased from M/s Dadhichi Iron & Steel P Ltd directly sold to M/s Sanvijay Rolling & Engineering Ltd. The transaction of purchase of goods from assessee has been accepted in assessment of M/s Sanvijay Rolling & Engineering Ltd. – AY 2019-20 (P- 135 – 139) [Vol.- II]. On above facts purchase of goods by assessee from M/s Dadhichi Iron & Steel P Ltd cannot be doubted/disputed. 8 (Sunrise Structural & Engineering P. Ltd.) Transaction of purchase and sales of assessee corroborated in GST returns of assessee and M/s Sanvijay Rolling & Engineering Ltd. F) No shred of adverse evidence brought on record by A.O to discredit legal evidence placed on record. A.O made addition observing assessee has reversed ITC credit on goods purchased hence purchases are not genuine. As seller had not paid GST on sales, assessee on advice of GST authorities agreed to reverse input credit. Mere reversal of input credit is no reason to conclude purchases as not genuine. This position is accepted by revenue in the case of associate company in respect to same party and similar fact position. Contrary view on same facts is not permissible in terms of law laid down by Hon’ble Apex Court in the case of Narendra Doshi reported at 254 ITR 606 (SC). No adverse evidence brought on record to discredit legal evidence placed on record to demonstrate genuineness of transaction. Addition made is on suspicion and is impermissible. G) To verify similar transaction of purchase of goods by group concern M/s Sanvijay Rolling & Engineering Ltd from M/s Dadhichi Iron & Steel Pvt. Ltd. notice u/s 148 was issued for Asstt Year 2018-19 and 2019-20. A.O in re-assessment proceeding of both years has verified and accepted purchases as genuine. (P-135 - 139) [Vol-II] (P – 148 – 154) [Vol. IV). No reason to treat purchase from the same party as not genuine in the case of assessee. H) The reversal of ITC was noted/considered on purchase of goods from M/s. Dadhichi Iron & Steel Pvt. Ltd. in the case of Sanvijay Rolling & Engineering Ltd. and after verification in Asstt Year 2018-19 & 2019-20 it had been accepted, same cannot be disputed in the case of assessee to be not genuine or bonafide. I) During assessment proceeding complete details/legal evidences submitted to explain purchases made from M/s Dadhichi Iron & Steel Pvt. Ltd. A.O. has not found any fault/defect in details submitted. A.O. merely relying on report of DGGI Zonal unit, Nagpur concluded purchases are not genuine. In absence of adverse evidence brought on record by A.O. to discredit evidence adduced by assessee addition u/s 69C for purchases made is highly unjustified and unsustainable. 9 (Sunrise Structural & Engineering P. Ltd.) Reliance on: i) 422 ITR 520 (Bom) PCIT vs. Vaman International P Ltd. (P- 116 – 123) (123) [Vol.- III] ii) Order of Hon’ble ITAT Amritsar in the case of M/s Gujranwala Jewellers in dated 15/05/2024. (TM) (P- 178 – 205) (201, 202, 203, 204) [Vol.- III] J) Assessee has made payment to M/s Dadhichi Iron & Steel Pvt. Ltd. for purchases through proper banking channels (P-145- 146) [Vol- I] no evidence brought on record by A.O to establish that the said payments routed back to assessee. Source of payment from bank account is not disputed. It is not even alleged so. Addition made u/s 69C is unsustainable. Reliance on: i) 422 ITR 520(Bom) PCIT vs. Vaman International P Ltd. (P- 116 – 123) (122) [Vol.- III] K) Assessee sold goods in course of trading activity. Sales of goods are not disputed. Purchases by assessee paid through account payee cheques. Purchases stands satisfactorily explained. Reliance on: i) (2015) 372 ITR 619 (Bom) CIT Vs Nikunj Eximp Enterprises P Ltd. (P- 161 – 164) [Vol.- III] ii) Hon’ble Supreme Court Order in SLA(Civil)…./2013 CC 14828/2013 in the case of Nikunj Eximp Enterprises P Ltd vide order dt 30/08/2013. (P- 160) [Vol.- III] L) Addition made by A.O. is u/s 69C of I.T. Act 1961. Hon’ble Apex Court in the case of Smt. P. K. Noorjahan reported at 237 ITR 570 (SC) (P- 165 - 168 ) [Vol. – III] concluded that provisions of section 69 are not mandatory, ITO is not obliged to treat such source of investment/expenditure as income in every case where the explanation offered by assessee is found to be not 10 (Sunrise Structural & Engineering P. Ltd.) satisfactory. Ratio laid down by Hon’ble Apex Court squarely applies to facts in the case of assessee and addition made by A.O. is unjustified. A.O. ought not to have made addition in view of discretion available with him considering the facts and evidence on record. M) It is settled law that under no circumstances entire amount of purchase of goods to be added. Even in doubtful purchases, element of profit would meet ends of justice. Assessee has already shown 6.15% gross profit, no scope for addition. Reliance on: i) (2024) 167 taxmann.com 429 (Bom.) Ashok Kumar Rungta vs. ITO (P- 28 – 34) (33, 34) (Gist) N) CIT(A) at para 5.2 has referred to screenshot of news paper dated 05/02/2020. At para 5.3 on the basis of online search of extract of the judgement of Hon’ble Chhattisgarh High Court in the case of M/s Dadhichi Iron & Steel Pvt. Ltd. concluded that there is bogus purchase from the said concern and assessee has received accommodation entry. The aforesaid information was not confronted/put to notice to assessee before drawing adverse view in the course of appellate proceedings. The aforesaid observation deserves to be excluded as same are in violation of principles of natural justice. O) Perusal of the extract of judgement reproduced in the appellate order at page 47 indicates that the input credit claimed by M/s Dadhichi Iron & Steel Pvt. Ltd. was being disputed by GST authorities with the said party. As a natural corollary sales made by the aforesaid party cannot be doubted as the input credit disputed by GST authorities was required to be alleged against GST collection made by the said party from assessee. In our humble understanding dispute of input credit of seller of goods is no circumstance to doubt the purchase at the hands of assessee. In fact it substantiate the purchase by assessee and sale by such party. P) In the assessment order at para 4 at conclusion page 11 A.O. has made addition of Rs.6,77,58,435/- by invoking provisions of section 69C of I.T. Act 1961. It is undisputed fact on record 11 (Sunrise Structural & Engineering P. Ltd.) that transaction of purchase is recorded in books of account. Source for payment of such expenditure is working capital/fund available in books of account. Books of account of the assessee are not rejected and have not invited any adverse observation as regard to day to day activity of business. Source of payment through proper banking channel is not alleged to be not explained or remains unexplained at the hands of assessee. Condition precedent for invoking provisions of section 69C of I.T. Act 1961 is absent. Addition made is prima facie arbitrary and unjustified. a) Reliance on judgement of Hon’ble Apex Court in the case of D.N. Singh reported at 454 ITR 595(SC). (P- 185 – 218) (196) [Vol.- II] b) ITAT order in in the case of Ritu Bhandula vide order dated 11/02/2026. (P- 35 – 47) (45, 46, 47) (Gist)

Ld. CIT - DR has placed strong reliance on the orders of Ld. AO and Ld.CIT(A). It is submitted that the purchase made by assessee is from bogus party and therefore it was correctly disallowed in the assessment framed by invoking the provisions of section 69C of the Act. It was submitted that there is no merit in the appeal filed by assessee and therefore addition made by the Ld. AO be sustained and upheld. He further submitted that assessee has submitted letter wherein ground as to validity of notice issued u/s 148 of the Act on the basis of judgement of Hon’ble Jurisdictional High Court in the case of Hexaware Technologies Ltd. in W.P.No.1778/2023 vide judgment dated 03/05/2024 (62 taxmann.com 225 (Bom)) will be not 12 (Sunrise Structural & Engineering P. Ltd.) pressed/addressed. The arguments on the reassessment notice validity be restricted to other submissions than as noted hereinabove. It is submitted that notice issued u/s 148 of the Act is valid on the basis of information available on Insight Portal and there is no infirmity in initiating reassessment proceedings in the case of assessee.

We have given thoughtful consideration to the submissions made by counsel of assessee as well as Ld.CIT-DR. We shall address the addition made by Ld. AO on merits first. Ld. AO in the assessment framed has made addition of Rs.6,77,58,435/- by invoking the provisions of section 69C of the Act. Tax has been levied u/s 115BBE of the Act. Ld. AO has noted that there was incident report received from DGGI Zonal Unit, Nagpur wherein there was transaction made by M/s.Dadhichi Iron & Steel Pvt. Ltd. with assessee without receipt of goods. Assessee reversed ITC claimed at Rs.1,21,96,518/- which implies that corresponding purchases are not genuine. Ld.CIT(A) by referring to the information in public domain on ‘online” search about seller party M/s Dadhichi Iron & Steel Pvt. Ltd. has concluded that the aforesaid corporate entity was (Sunrise Structural & Engineering P. Ltd.) involved in providing accommodation entry of Rs.6,77,58,435/-. Ld.CIT(A) has referred to judicial precedents and surrounding circumstances including proceedings of GST authorities on M/s.Dadhichi Iron & Steel Pvt. Ltd. to conclude that purchase made by the assessee is not genuine. He proceeded to confirm the addition as well as levy of tax u/s 115BBE of the Act.

In assessment order, Ld. AO at page No. 8 has considered the reply and evidence submitted by the assessee. It has been noted in the form of facts of the case during the enquiry-investigation and record in the assessment order as under: 1) The goods purchased form M/s Dadhichi Iron & Steel Pvt. Ltd. were directly sold to M/s.Sanvijay Rolling & Engineering Ltd. and the assessee submitted purchase invoice and tax invoice of the goods. 2) The assessee submitted Tax invoice indicates details of transportation namely Lorry Receipts. Vehicle No. and E-Way Bill which indicates that the goods were delivered directly to the customer M/s Sanvijay Rolling & Engineering Ltd. 3) The transaction of the purchases and sales of the assessee are corroborated from GST return of Assessee Company as well as the customer M/s Sanvijay Rolling & Engineering Ltd. 4) The assessee submitted quantitative wise statement of goods purchased and sold in respect of transaction from M/s Dadhichi Iron & Steel Pvt. Ltd. 5) All the payments made for purchase are through banking channel and the assessee submitted copy of bank statement as well as ledger account of M/s Dadhichi Iron & Steel Pvt. Ltd. which 14 (Sunrise Structural & Engineering P. Ltd.) substantiate the transaction of the purchase of goods by the assessee company. 6) In this case enquiry u/s 133(6) was conducted with DGGI Zonal Unit, Nagpur and a copy of statement of the Director of M/s Sunrise Structural and Engineering Pvt. Ltd. was obtained o 23.03.2023. In reply to question no.5 regarding purchases made from M/s Dadhichi Iron & Steel Pvt. Ltd. the assessee specifically answered that the goods i.e. MS Channels, MS Joist and M/s. ngels have been received from M/s Dadhichi Iron & Steel Pvt. Ltd., Raipur. The reply is quoted as under. “I state that the goods i.e. MS Channels, MS Joist and MS Angels have been received by us from M/s Dadhichi Iron & Steel Pvt. Ltd., Raipur.”

The facts as noted in the assessment order clearly demonstrate that entire documentary evidence has been placed on record before the Ld. AO to substantiate the genuineness of purchase made by assessee. The legal evidence as to sale made by assessee in respect to goods purchased from M/s Dadhichi Iron & Steel Pvt. Ltd. has also been placed on record. Documentary evidence being Tax Invoice, Lorry Receipts, Vehicle Number and E-way Bill fully substantiates the genuineness of transaction of purchases as well as sales of such goods by assessee from M/s Dadhichi Iron & Steel Pvt. Ltd. The aforesaid factual and legal evidence has not been adversely commented in the assessment order or any adverse evidence has been brought on record to discredit the legal evidence available on record. The documentary evidence as placed before AO was also 15 (Sunrise Structural & Engineering P. Ltd.) submitted before CIT(A) and before us in paper books volume-I. The summary of documentary evidence as submitted before us is as under: During assessment proceedings following details of purchases from M/s. Dadhichi Iron & Steel Pvt. Ltd. submitted. i) Ledger account of M/s. Dadhichi Iron & Steel Pvt. Ltd. (P- 141 – 144) [Vol.- I] ii) Relevant extracts of bank statements indicating payment to M/s. Dadhichi Iron & Steel Pvt. Ltd. (P- 145 – 146) [Vol.- I] iii) Copy of invoices indicating name, address, e-way bill number, PAN, GST Registration Number and consignee name. (P- 147 – 205) (147) [Vol.- I] iv) Details of Transportation Receipts. (P- 206 – 264) (206) [Vol.- I] v) Details of sales made by assessee to M/s. Sanvijay Rolling & Engineering Ltd. (P- 265 – 266) (265) [Vol.- I] vi) GST return filed by assessee. (P- 6 – 101) [Vol.- II] vii) Summary of Trading Stock Register. (P- 104) [Vol.- II]

It is noted that sales made by assessee in respect to goods purchased from M/s.Dadhichi Iron & Steel Pvt. Ltd. were claimed to have been sold to M/s Sanvijay Rolling & Engineering Ltd. Documentary evidence placed on record indicates that goods purchased were directly sold to M/s Sanvijay Rolling & Engineering 16 (Sunrise Structural & Engineering P. Ltd.) Ltd. It has been booked in the books of account as sales. In the course of assessment proceedings notice u/s 133(6) of the Act was issued to assessee’s buyer M/s Sanvijay Rolling & Engineering Ltd. The aforesaid corporate entity has confirmed the transaction of purchase from assessee company by adducing legal evidence on record and same is at pages 144 to 148 Volume-II. The chain of evidence to demonstrate genuineness of transaction stands completed on receipt of response to notice u/s 133(6) of the Act. It is further noted that the corresponding purchases made by M/s. Sanvijay Rolling & Engineering Ltd. from the assessee have been accepted as genuine in the assessment framed by the Department for the same assessment year in the order passed u/s 147 r.w.s. 144B of I.T. Act 1961 dated 06/02/2024 as placed in the paper book at page135 – 139 (Vol.- II). This further substantiates the authenticity and genuineness of the transactions under consideration. Sales of trading goods purchased are accepted. Business loss as shown in return is accepted and books of account are not rejected. Considering facts and evidence on record purchases are satisfactorily explained to be genuine purchase.

It is noted that purchases made by assessee are recorded in regular books of account. Payment made by assessee in respect to purchases is through proper banking channel. Books of account of assessee are accepted and have not invited any adverse observation for rejection of books of account. Transactions in bank account of assessee for the previous year under consideration remain undisputed. Payment made by assessee for purchases also stands accepted and not disputed. AO has made the addition by invoking provisions of section 69C of the Act. provisions of section 69C of the Act are reproduced hereunder the ready reference: “Section 69C of the Act – Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year: Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.”

It is noted from the observation of CIT(A) that the case set-up by DGGI against M/s Dadhichi Iron & Steel Pvt. Ltd. was that it is making bogus purchases and therefore input credit claimed by M/s Dadhichi Iron & Steel Pvt. Ltd. was being disputed by GST authorities. The dispute of input credit can be made by GST authorities only when GST collection made is not disputed. The aforesaid circumstance is not an adverse circumstance to hold that sale made by M/s Dadhichi Iron & Steel Pvt. Ltd. is not genuine at the hands of assessee company. In fact conclusion of GST (Sunrise Structural & Engineering P. Ltd.) authorities to hold GST collection by M/s Dadhichi Iron & Steel Pvt. Ltd. required to be paid to GST Authorities itself substantiated the purchase of assessee. It is not an adverse circumstance for which addition could be made. Thus observation of lower authorities to take it as adverse circumstance to make addition at the hands of assessee is unjustified and arbitrary.

It is seen that condition precedent for invoking provisions of section 69C of the Act are clearly absent and addition made is prima facie arbitrary and unjustified. The learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.6,77,58,435/- made by the Assessing Officer under section 69C of the Act. The conclusion arrived at is arbitrary, unjustified, and unsustainable in the eyes of law. The CIT(A) & AO has incorrectly treated the reversal of input tax credit amounting to Rs.1,21,96,518/- under the GST regime as an admission of bogus purchases. This inference is fundamentally flawed. Proceedings under GST law are independent and distinct from those under the Income-tax Act and reversal of ITC cannot by itself be construed as conclusive evidence of non-genuineness of purchases. Such reversals are often undertaken to avoid protracted (Sunrise Structural & Engineering P. Ltd.) litigation or due to issues attributable to suppliers and therefore cannot be equated with an admission of fictitious transactions. The CIT(A) has placed undue reliance on investigation reports, newspaper extracts and proceedings conducted against the supplier M/s Dadhichi Iron & Steel Pvt. Ltd. without appreciating that such materials were neither independently corroborated nor confronted to the assessee in a meaningful manner. It is settled principle of law that any adverse material collected behind the back of assessee cannot be relied upon without affording an effective opportunity of cross-examination. It is an undisputed fact that the sales declared by assessee have been accepted by the Department and have not been disputed at any stage. Sales made by assessee has been accepted as genuine purchase at the hands of buyer M/s Sunvijay Rolling & Engineering Ltd. in assessment framed u/s 147 r.w.s. 144B by Department. In such circumstances, it is inconceivable and commercially implausible that sales could have been effected without corresponding purchases. The action of department in disputing the purchases made by appellant from M/s Dadhichi Iron & Steel Pvt. Ltd. is wholly untenable in law. Department on one hand accepted sales of goods purchased from M/s Dadhichi Iron & Steel Pvt. Ltd. to 22 (Sunrise Structural & Engineering P. Ltd.) M/s Sunvijay Rolling & Engineering Ltd. by appellant as genuine, it is not open for department to simultaneously disallow corresponding purchases at the hands of appellant. It is settled principle of law that party cannot be permitted to approbate and reprobate in respect to same set of transaction. The allegation that the assessee received “fake invoices without actual delivery of goods” is wholly unsupported by any cogent or direct evidence. Further, no discrepancies have been pointed out in the quantitative records, stock registers or books of account maintained by assessee in the regular course of business. The assessee has duly discharged the onus cast upon it by furnishing complete documentary evidences, including Purchase invoices, Ledger accounts of suppliers, transport delivery receipts, proof of payments made through banking channels and Books of account maintained in the ordinary course of business These evidences clearly substantiate the genuineness of the transactions. The CIT(A), however has erred in disregarding these evidences and instead relied on generalized allegations pertaining to the suppliers without establishing any direct nexus with the assessee. The CIT(A) has further erred in holding that the assessee failed to discharge its burden of proof completely ignoring the substantial evidences placed 23 (Sunrise Structural & Engineering P. Ltd.) on record. In view of above facts and settled legal position the findings of the learned CIT(A) are based on surmises, conjectures and extraneous considerations and therefore deserve to be set aside. The confirmation of the addition under section 69C is thus wholly erroneous, unjustified, and liable to be deleted.

Considering the submissions made and totality of facts and circumstances in the case of assessee addition made by AO at Rs.6,77,58,435/- is unjustified and unsustainable. The addition made by AO and upheld by CIT(A) is held to be not in accordance with law and contrary to documentary legal evidence on record to substantiate the genuineness of purchases. Addition made by AO and upheld by CIT(A) is directed to be deleted and grounds of appeal of assessee are allowed. Ground No.2 to 7 allowed. (Relief granted Rs.6,77,58,435/-)

In the case of assessee notice u/s 148A(a) of the Act is issued on 02/03/2023. In compliance to same detailed submission is made on 09/03/2023 along with documentary evidence. The aforesaid submission is submitted before us and is at pages 3 to 7 of Volume- IV. AO has issued notice u/s 148A(b) of the Act on 10/03/2023, along with notice no information received or details of enquiry conducted are provided to assessee. Response to notice u/s 148A(b) of the Act has been made on 21/03/2023 along with documentary evidence placed in Paper Book page 11 to 228 (Volume-IV). Apart from documentary evidence as regard to transaction of purchases assessment order passed in the case of M/s Sanvijay Rolling & Engineering Ltd. an associate company for A.Y. 2018-19 dated 19/03/2023 was submitted and is at pages 148 to 154 of Volume- 26 (Sunrise Structural & Engineering P. Ltd.) IV. Perusal of assessment order passed in the case of associate company indicate that the reassessment notice was issued in the case of said company is on the basis of information of purchases made from M/s Dadhichi Iron & Steel Pvt. Ltd. through fake invoices which lack genuineness. In the aforesaid case also there was reversal of GST input credit. Ld. AO considering the documentary evidence placed on record had concluded that transaction made by associate company with M/s Dadhichi Iron & Steel Pvt. Ltd. is genuine and hence no adverse inference is drawn. The facts in the said case are similar/identical to that in the case of assessee company. The aforesaid documentary evidence and assessment order were available before Ld. AO in the course of proceedings initiated u/s 148A(b) of the Act. In the case of assessee order u/s 148A(d) of the Act has been passed on 31/03/2023 and in the aforesaid order at para 6 the facts of the case found during enquiry and investigation are observed. The aforesaid facts are reproduced hereunder for ready reference: 1) The goods purchased form M/s Dadhichi Iron & Steel Pvt. Ltd. were directly sold to M/s Sanvijay Rolling & Engineering Ltd. and the assessee submitted purchase invoice and tax invoice of the goods. 2) The assessee submitted Tax invoice indicates details of transportation namely Lorry Receipts. Vehicle No. and E-Way Bill which indicates that the goods were delivered directly to the customer M/s Sanvijay Rolling & Engineering Ltd. 27 3) The transaction of the purchases and sales of the assessee are corroborated from GST return of Assessee Company as well as the customer M/s Sanvijay Rolling & Engineering Ltd. 4) The assessee submitted quantitative wise statement of goods purchased and sold in respect of transaction from M/s Dadhichi Iron & Steel Pvt. Ltd. 5) All the payments made for purchase are through banking channel and the assessee submitted copy of bank statement as well as ledger account of M/s Dadhichi Iron & Steel Pvt. Ltd. which substantiate the transaction of the purchase of goods by the assessee company. 6) In this case enquiry u/s 133(6) was conducted with DGGI Zonal Unit, Nagpur and a copy of statement of the Director of M/s Sunrise Structural and Engineering Pvt. Ltd. was obtained o 23.03.2023. In reply to question no.5 regarding purchases made from M/s Dadhichi Iron & Steel Pvt. Ltd. the assessee specifically answered that the goods i.e. MS Channels, MS Joist and MS Angels have ben received from M/s Dadhichi Iron & Steel Pvt. Ltd., Raipur. The reply is quoted as under. “I state that the goods i.e. MS Channels, MS Joist and MS Angels have been received by us from M/s Dadhichi Iron & Steel Pvt. Ltd., Raipur.”

It is evident from the facts and evidence on record that during the course of enquiry genuineness of purchase transaction was reasonably established by adducing legal evidence. In order passed u/s 148A(d) of the Act notice has been issued u/s 148 of the Act merely because of report received from DGGI Zonal Unit and reversal of ITC on the strength of invoices issued by M/s Dadhichi Iron & Steel Pvt. Ltd. On similar facts in the reassessment framed of associate 28 (Sunrise Structural & Engineering P. Ltd.) company purchases from very same party have been accepted. On above factual position no valid satisfaction of escapement of income could have been derived by AO as to escapement of income and to conclude that it is a fit case for issue of notice u/s 148 of the Act.

The Hon’ble Delhi High Court in the case of M/s Devat and Ram Company Pvt. Ltd. reported at 175 taxmann.com 72(Del) had considered the provisions of section 148 and 148A of the Act. Relevant extract of judgement is reproduced hereunder for ready reference: “11. It is apparent from the above that the AO has completely disregarded the explanation and the evidence furnished by the petitioner by simply accepting the information to the effect that MSIPL was a dummy entity involved in bogus billing, as correct. In our view, this approach defeats the very purpose of enabling an assessee to respond to the information, which according to the AO, may suggest that its income for the relevant assessment year has escaped assessment. The purpose of issuing a notice under Section 148A(b) of the Act is to evaluate whether the information available was adequately explained. 12. We are also hard-pressed to imagine as to what further material or evidence could be furnished by the petitioner to establish that its transactions were genuine, and in any event no income had escaped assessment. It is necessary for the AO, at the bare minimum, to examine the material placed by the petitioner and verify whether the same could be faulted. However, the AO did not undertake any such exercise but rejected the overwhelming evidence furnished by the petitioner merely on assuming that information available on the portal was correct. xx xx xx 29

………. Additionally, the petitioner submitted that GFPL had also entered into transactions with MSIPL. On the basis of the information that MSIPL was a bogus company, the AO having jurisdiction in case of GFPL had initiated proceedings. However, on further enquiries, it dropped the said proceedings. The aforesaid contentions were noted by this Court in the order dated 26.11.2024, which reads as under: xx xx xx 16. Clearly, if in the case of GFPL, the proceedings - which had commenced on the allegation that its dealings with MSIPL were not genuine because MSIPL was a bogus entity - were dropped, a contrary view on facts, without any further material would not be warranted.” 21. Raito laid down by the judgement of Hon’ble Delhi High Court squarely applies to the facts in the case of assessee. In the aforesaid case also the purchase from disputed party were accepted by department in the case of an associate company and information pertained to GST Department. Facts in the case of assessee are similar. Respectfully following the same we hold that notice issued u/s 148 and order passed u/s 148A(d) of the Act in the case of assessee is not in accordance with law laid down by the Hon’ble Delhi High Court and thus same is not in accordance with law. Consequent assessment framed thereupon is liable to be cancelled. 22. The Hon’ble Co-ordinate Bench of Delhi in in the case of B. C. Enterprises while considering the provisions of section 148 of the Act has held as under: 30 (Sunrise Structural & Engineering P. Ltd.) “10. We have heard the rival submissions and perused the material available on record. In the instant case, the assessee since inception of the proceedings asked the AO for supply of the material relied upon for initiating proceedings u/s 148A of the Act. The Hon’ble Supreme Court in the case of Ashish Agarwal reported in [2022] (5) TME- 240(SC) has held that material relied upon for initiating the proceedings u/s 148A should be supplied to the assessee so as to enable him to file the necessary reply. xx xx xx 12. ………….. In the instant case, from the perusal of the notice issued u/s 148A(b) it appears that though the said notice was issued with the prior approval of the PCIT, Delhi-20, however, no material whatsoever was supplied nor the results of the enquiries, if any, conducted were confronted to the assessee and it is merely stated that based on the information received through insight portal it was found that assessee was having accommodation entry in the shape of bogus purchases. It is also seen that assessee in reply to the said notice had filed a detailed reply on 24th March, 2020 which was sent through email to the AO, however, such reply was not considered and the order was passed u/s 148A(d) recording the satisfaction that it is a fit case for issue of notice u/s 148 of the Act. 13. ……………………. It appears that the AO simply proceeded to reopen the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary as he failed to appreciate the intent of the legislation behind introduction of provisions of section148A before issue of notice u/s 148 of the Act. xx xx xx 16. After considering the above discussion, we are of the view that the Assessing Officer has failed to comply with the direction given by the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) and also the assessee Ashish Agarwal (supra) wherein it is held that AO should provide all the information and relied upon material available with him to the assessee alongwith notice u/s 148A(b) of the Act. Nor the reply 31 (Sunrise Structural & Engineering P. Ltd.) of the assessee was considered before passing order u/s 148A(a) of the Act. Accordingly, in our considered view notice u/s 148 is bad in law and thus, the entire reassessment proceedings is held as invalid and is hereby quashed. The cross objections of the assessee taken in ground of appeal no.1 to 5 of the assessee C.O. are allowed.”

In the case of assessee information and material has not been supplied along with the notice issued u/s 148A(b) of the Act. The aforesaid fact is evident from the reply submitted on 21/03/2023 and is available at page 13 Volume-IV. Despite requests no information is provided and voluminous documentary evidence placed on record has been not accepted for no valid justification. Ratio laid down by the judgement of Hon’ble Delhi Bench squarely applies to the facts in the case of assessee. Respectfully following the same we hold that notice issued u/s 148 and order passed u/s 148A(d) of the Act is not in accordance with law.

The Hon’ble Jurisdictional High Court in the case of Gandhibagh Sahakari Bank Ltd. reported at 156 taxmann.com 221 (Bom) while considering the provisions of section 148 has held as under: “…………… Except for stating that such information was available on the Insight Portal it has not been indicated in the said reasons as to how there was formation of belief by the Assessing Officer that income had escaped assessment. The reasons supplied do not indicate that 32 (Sunrise Structural & Engineering P. Ltd.) any exercise of independent verification thereafter was undertaken resulting in consideration of the same with due application of mind by the Assessing Officer so as to re-open the completed assessment. Only by stating that information was available on the Insight Portal, belief has been formed by the Assessing Officer that the stated amount had escaped assessment at the hands of the petitioner. In Shodiman Investments (P) Limited (supra) it has been held that the words “reason to believe” would mean cause or justification. It can only be the basis of forming such belief. However, the belief must be independently formed in the context of the material obtained that there was escapement of income. The facts in the said decision indicate that the reasons made available to the assessee indicate that the information was received from the Director of Income Tax (Investigation) about a particular entity entering into suspicious transactions. The said material however was not further linked by any reason to come to the conclusion that the assessee had indulged in any activity that could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax had escaped assessment. Further there was absence of application of mind to the information received and the re-opening notice was issued merely on the basis of such information received. It was held that such action was in breach of the settled position of law that the re-opening notice was required to be issued by the Assessing Officer on his own satisfaction and not on borrowed satisfaction. We find that in the present case except for referring to the information available on the Insight Portal, the Assessing Officer has proceeded to re-open the assessment without indicating any independent application of mind to the said information that was available on the Insight Portal for satisfaction to be recorded. It would thus be a case of issuing the re- opening notice on borrowed satisfaction.” SLP filed by Revenue in respect to judgement of Hon’ble Bombay High Court has been dismissed vide judgement dated 03/09/2025 and is reported at 178 taxmann.com 259 (SC). Ratio laid down by the Hon’ble Jurisdictional High Court squarely applies to the facts in the case of assessee. Respectfully following the same we hold that notice issued u/s 148 of the Act is not in accordance with law. 33 (Sunrise Structural & Engineering P. Ltd.) 25. Considering the facts and evidence on record and respectfully following the judicial precedents discussed hereinabove we hold that notice issued u/s 148 and order passed u/s 148A(d) of the Act is not in accordance with law. Consequent assessment framed thereupon is directed to be cancelled. Ground No.1 raised by the assessee is allowed.

Ground No.8 is consequential and ground No.1 is general in nature, therefore, no separate adjudication is required.

In the result, appeal filed by the assessee stands allowed.