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Facts
The assessee is aggrieved by an assessment order which made an addition of Rs. 55,00,032/- on account of bogus purchases. The CIT(A) partly allowed the appeal, restricting the addition to the profit element on such purchases.
Held
The Tribunal noted that the CIT(A) had already granted substantial relief by restricting the addition to the profit element of the bogus purchases, following a High Court judgment. The assessee's AR stated they had no further major grievances.
Key Issues
Whether the addition on account of bogus purchases was correctly restricted to the profit element, and if the assessee had any further grounds to press the appeal after the relief granted by CIT(A).
Sections Cited
253, 147, 144B, 69C, 115BBE, 271AAC, 246A, 148, 148A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for sake of brevity) before this Tribunal. The assessee is aggrieved by order bearing Number ITBA/NFAC/S/ 250/2024- 25/1067635847(1) dated 14.08.2024 passed by Ld. CIT(A), u/s 250 of the Act which is hereinafter referred to as the “impugned order”. The relevant Assessment Year is 2018-19
Page 1 of 7 A.Y. 2018-19 and the corresponding previous year period is from 01.04.2017 to 31.03.2018.
2. FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 147 r.w.s. 144B of the Act the total income of the assessee was computed & assessed at Rs.5,45,37,062/-. Income as per return of income was of Rs.4,90,37,030/-. Addition of Rs.55,00,032/- was made. [Rs.4,90,37,030+Rs.55,00,030/-] That the aforesaid assessment order bears No:- ITBA/AST/S/147/2022- 23/1050178006(1) & that same is dated 31.10.2022 which is hereinafter referred to as the “Impugned Assessment Order”.
The Ld. AO in para 3.6 has concluded & held has as under:-
“3.6. Conclusion drawn. In the absence of requisite details, supporting documents and plausible explanations as discussed above, the amount of Rs.55,00,032/- is treated as unexplained expenditure and brought to tax within the meaning of section 69C rws 115BBE of the I.T. Act, 1961 As the addition is made by applying the provisions of section 69C, penalty proceedings u/s 271AAC are separately initiated. 2.2 That the assessee being aggrieved by the “Impugned Assessment Order” prefers first appeal u/s 246A of the Act,
Page 2 of 7 A.Y. 2018-19 before the Ld. CIT(A) who by the “Impugned order” has partly allowed, the first appeal of the assessee on the grounds & reasons stated therein. The core ground & reason for partly allowing the first appeal was as under in the Impugned Order:-
“8. The submission of the appellant and the Assessment order made by the AO were perused during appellate proceedings and observed that the AO had made an addition on account of bogus purchases made by the appellant to the tune of Rs 55,00,032/- The appellant has made number of contentions regarding the addition made by the AO such as vehicle numbers being valid and payment made to the alleged bogus seller i.e M/s Radha Rani Traders by cheques. The appellant has also contended the sales in this case have not been disturbed for which the appellant has also referred to number of judgements to elaborate this point. Keeping in view the Assessment Order and the submissions made by the appellant it is observed that even though by going through A.O.'s logic, if purchases made by the appellant are not termed as genuine, yet there have been sales declared by the appellant in the ITR which have not been disturbed by the AO and this fact cannot be ignored. Further the judgement in the case of passed by the Hon'ble Mumbai High Court is also relevant in this case of Pr.Cit v/s Mohd. Haji Adam and Co.ITA No. 1004 of 2016 can also be considered as relevant here which is as under: "even if the purchases are bogus, the entire purchase amount cannot be added. As the department had not disputed the assessee's sales & there was no discrepancy between the purchases and sales, the purchases cannot be rejected without disturbing the sales in case of a trader. The addition has to be restricted to the extent of the G.P. rate on purchases at the same rate of other genuine purchases." In view of the above judgement of the Hon'ble Mumbai HC, the addition made by the AO is restricted to the amount as determined keeping in view the Hon'ble Mumbai HC judgement. The AO is directed to determine the disallowance as per the above said judgement.
Page 3 of 7 A.Y. 2018-19 8.1 Ground No: 1 partly allowed.” 2.3. That the assessee being aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in form no.36 against the “Impugned Order” which are as under:-
“1. That on the facts and circumstances of the case and in law the assessment order passed in illegal, bad-in-law and without jurisdiction and therefore deserves to be quashed.
That on the facts and circumstances of the case and in law the notice u/s 148 is time barred and the consequent proceedings including the re-assessment order passed u/s 147 are bad in law and deserve to be quashed.
That on the facts and circumstances of the case and in law no information as contemplated u/s 148A r.w.s 148 of the Income Tax Act, 1961 was issued to the assessee thus assessment order is without jurisdiction and void-ab-initio.
4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition to the extent of profit element in the alleged bogus purchases, without properly appreciating the facts of the case and the submissions made before him.
5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not holding that the entire addition made by the Ld. AO u/s 69C is erroneous as the source of said payments were clearly explained as the same were recorded in the books of accounts of the assessee.
That on the facts and in the circumstances of the case and in law, the Ld. CIT-(A) erred in summarily rejecting the additional legal grounds raised
by the Appellant during the course of appellate proceedings without properly appreciating the submissions made by the assessee in regard to the same.
7. The appellant seeks to leave, add, alter, amend, abandon or substitute any of the above grounds during the hearing of the appeal.”
Page 4 of 7 A.Y. 2018-19 3. Record of Hearing 3.1 That the hearing in the matter took place before this Tribunal on 04.08.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “Impugned Order” is illegal, bad in law, and not proper. It therefore, deserves to be set aside by this Tribunal in exercise of it’s Appellate Power. The Ld. AR stated that he is not pressing the ground nos.1,2,3 & 6 raised in form no.36 (supra). The Ld.
AR then stated that the only ground which he is now challenging before this Tribunal is the ground of NON genuine purchases and the addition made thereon. It was then stated by the Ld. AR that in specific he is challenging profit element only on account of non genuine purchases. It was submitted by the Ld. AR that the sales made by the assessee are not doubted & Ld. CIT(A) in the Impugned order has already given major relief which is substantial. Purchases which were made from “Radha Rani Trader” were doubted. The Bench then queried and pointed out to the Ld. AR that he should tell and inform this Tribunal expressing in clear terms as to what is the point of challenge in the “Impugned order” to which the Ld. AR replied that he now
Page 5 of 7 A.Y. 2018-19 cannot argue more on the “Impugned order” as major relief of substantial nature on the allegation of bogus purchases from Radha Rani Trader has already been granted by Ld. CIT(A) in the impugned order(supra). The Ld. DR for revenue contended that the assessee has demonstrated today that he has no major grievance against the Impugned Order and under the circumstances assessee’s instant appeal has no cause of action left and that the same should be dismissed.
Observations & findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case and the conentions canvassed before us.
4.2 We have carefully perused the records of the case.
4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered opinion that in view of finding of Ld. CIT(A) in the “Impugned Order” at para 2.2 (supra) the issue of bogus purchase from the Radha Rani Trader has been decided in favour of the assessee and the matter is Page 6 of 7 A.Y. 2018-19 directed back to Ld. AO to determine the disallowance as per the judgment of the Hon’ble Bombay High Court in case of Pr. CIT vs. Mohd. Hagi Adam & Co. In ITANo.1004 of 2016. Further the Ld. AR has made a statement during the hearing that he has no major grievances left against the “Impugned Order”. In view, thereof, we dismiss the appeal of the assessee as not pressed.
Order 5.1 In view of the aforesaid the appeal of the assessee is dismissed.
Order pronounced in open court on 06.08.2025.