ACIT, CENTRAL CIRCLE-1, LUCKNOW, LUCKNOW vs. BLA UDYOG PVT. LTD., KOLKATA, WEST BENGAL

Revenue for assessment year 2011-12 against impugned appellate order dated 25/06/2024 (DIN & Order No.ITBA/APL/S/250/2024-25/1066012814(1) of Commissioner of Income Tax (Appeals) [“CIT(A)”] for short].

(B) In this case assessment order dated 24/12/2018 was passed u/s 147/143(3) of the Income Tax Act, 1961 (“the Act” for short) whereby the assessee’s total income was assessed at Rs.2,31,77,863/- (rounded off to Rs.2,31,77,860/-) as against returned income of Rs.33,15,037/-. In the aforesaid assessment order, an addition of Rs.1,98,62,826/- was made on account of alleged bogus purchase. The assessee’s appeal filed in the office of the learned CIT(A) was partly allowed. The learned CIT(A) sustained an addition of Rs.19,86,283/- whereas remaining addition of Rs.1,78,76,543/- was deleted. The relevant portion of the order of learned CIT(A) is reproduced as under:

(C) The present appeal has been filed by Revenue against the aforesaid impugned appellate order of the learned CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal, a paper book and a compilation of case laws written submissions filed from the assessee’s side, as per following details:

6. Submission made before CIT(A) dated 16/12/2020 and dated 24/05/2024

7. Order of CIT(A) dated 25/06/2024

8. Copy of order in the case of CIT vs. Nangalia Fabrics P Ltd. [2023] 40 taxmann.com 206 (Guj.)

9. Copy of order in the case of Kamal Kumar Saharia vs. CIT [1994] 73 TAXMAN 299 (Guj)

10. Copy of order in the case of Smt. Sudha Loyalka vs. Income Tax Officer [2018] 97 taxmann.com 303 (Del-Trib.)

(D) At the time of hearing before us, the learned D.R. submitted that the Assessing Officer has passed a detailed order in the facts and circumstances of the case. Drawing our attention to the relevant parts of the assessment order, the learned D.R. contended that the assessee had failed to substantiate the claim of purchase of the aforesaid amount of Rs.1,98,62,826/- from the party from whom the assessee has claimed to have made the purchases. He submitted that as the assessee failed in this regard, the addition made by the Assessing Officer should be confirmed in totality and that the relief of Rs.1,78,76,543/- allowed by the learned CIT(A) was incorrect in the facts and circumstances of the case. The learned Counsel for the assessee relied on the order of the learned CIT(A) (relevant portion of which has been reproduced in paragraph no. (B) of this order) and the case laws compilation (reproduced in paragraph No. (C) of this order).

(E) We have heard both sides. We have perused materials on record. We find that neither the Assessing Officer nor the learned CIT(A) has examined the quantitative details of opening stock, purchase, sale and closing stock. The Assessing Officer has made the addition; and the learned CIT(A) has allowed partial relief, without this inquiry. In the facts and circumstances of the present case, it was relevant to make inquiry whether the total quantity consisting of opening stock and purchase have been reflected in the books of account as quantities of sales and closing stock. The Assessing Officer as well as the learned CIT(A) have failed to make this inquiry. Therefore, in the specific facts and circumstances of the case before us, and in the fitness of things, we set aside the impugned order of the learned CIT(A) and restore the entire dispute regarding addition of Rs.1,98,62,826/- to the file of the Assessing Officer with the direction to pass de novo order in accordance with law after making aforesaid inquiry after providing reasonable opportunity to the assessee.

(F) In the result, the appeal of the assessee is partly allowed for statistical purposes.

(Order was pronounced in the open court on 30/06/2025)