MERCHANDISERS (P) LTD,MATTANCHERRY vs. DCIT.CORPORATE CIRCLE-2(1), KOCHI
Facts
The assessee, engaged in trading raw-rubber, filed a return disclosing a loss. The AO initiated reassessment proceedings under section 147 based on information about bogus accommodation entries, leading to an addition of Rs. 1,45,91,304/-. The CIT(A) confirmed the AO's action.
Held
The Tribunal noted that the assessee denied any transaction with the company providing the alleged bogus entries and asserted its total purchases were only Rs. 23,13,615/-. The Tribunal also noted the appellant's submission that it does not deal in garments.
Key Issues
Whether the addition made on account of alleged bogus purchases is justified without proper verification, especially when the assessee denies transactions and the business profile does not match.
Sections Cited
143(1), 148, 147, 144B, 153BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI ANIKESH BANERJEE, JM ITA No. 601/Coch/2025 Assessment Year: 2016-17 Merchandisers (P) Ltd. .......... Appellant 7/594, Jew Town, Mattancheery, Kochi [PAN: AABCM6455D] vs. DCIT, Corporate Circle-2(1), Kochi ......... Respondent Assessee by: Shri Thomson Thomas, CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 27.10.2025 Date of Pronouncement: 29.10.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC) dated 06.08.2025 for Assessment Year (AY) 2016-17.
Brief facts of the case are that the appellant is a private limited company engaged in the business of trading in raw-rubber. The return of income for AY 2016-17 was filed on 17.10.2016 disclosing loss of Rs. 3,79,128/-. The said return of income was processed u/s. 143(1) of the Income Tax Act, 1961 (the Act) accepting the returned
2 ITA No. 601/Coch/2025 Merchandisers (P) Ltd. loss. Subsequently, the AO issued notice u/s. 148 of the Act based on the statement recorded from one Shri Joginder Pal Gupta during the course of search and seizure operation in his case on 23.12.2019 that he provides bogus accommodation entries and the appellant is one of the beneficiaries. Against the said notice assessment was completed by the AO vide order dated 03.05.2023 passed u/s. 147 r.w.s. 144B of the Act after making addition of Rs. 1,45,91,304/- as unexplained expenditure of the appellant and applied the tax rate as prescribed u/s. 153BBE of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee contends that the appellant company never dealt with the company owned by Shri Joginder Pal Gupta. The appellant company is engaged in the business of raw-rubber and not engaged in garment business. The total turnover of the company is only Rs. 23,13,615/-. Therefore, the question of purchasing to the tune of Rs. 1,45,91,304/- does not arise.
On the other hand, the learned Sr. DR opposed the above statement.
3 ITA No. 601/Coch/2025 Merchandisers (P) Ltd. 7. We have heard the rival contentions and perused the material available on record. On mere perusal of the assessment order it would reveal that the AO made addition of Rs. 1,45,91,304/- based on the statement recorded from one Shri Joginder Pal Gupta. The appellant company had denied having any transaction with the said company and moreover it is asserted that the total purchase made by the assessee company and debited to the Profit & Loss A/c. comes only Rs. 23,13,615/-. Therefore, the question of making addition on account of alleged bogus purchase to the tune of Rs. 1,45,91,304/- does not arise. Further, the submission of the appellant that it does not deal in garments, requires verification by the AO. Therefore, in the interest of justice, we remand the matter back to the file of AO for due verification of the contentions of the appellant. Accordingly, the matter is set aside to the file of AO for de novo adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant.
In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
Order pronounced in the open court on 29th October, 2025.
Sd/- Sd/- (ANIKESH BANERJEE) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 29th October, 2025 n.p.
4 ITA No. 601/Coch/2025 Merchandisers (P) Ltd. Copy to:
The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order
Assistant Registrar ITAT, Cochin
