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Facts
The A.O. made an addition of Rs. 5,52,334/- under Section 69C for alleged bogus purchases from M/s. Laxmi Trading Company, Raipur, based on information from the Commercial Tax Department identifying the vendor as a bogus dealer. The CIT(A) partially allowed the appeal, restricting the addition to 12.5% of the purchases after the assessee conceded to this percentage. The Revenue appealed this partial relief.
Held
The tribunal noted that the A.O. failed to prove malafide intent or direct benefit to the assessee from the alleged bogus transactions, or provide evidence to justify the 100% addition under Section 69C. It upheld the CIT(A)'s finding that a 12.5% addition, as conceded by the assessee, was appropriate.
Key Issues
Whether the CIT(A) was justified in restricting the addition for bogus purchases to 12.5% of the purchase value under Section 69C, when the A.O. had made a 100% addition based on information from the Commercial Tax Department regarding bogus dealers.
Sections Cited
Section 69C, Section 147, Section 148, Section 142(1), Section 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the Revenue emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 29.08.2025 for the assessment year 2010-11 as per the following grounds of appeal:
1. Whether on the facts and in the circumstances of the case and in law, the Id. Addl./JCIT(A) was justified in allowing 04 addition to the extent 12.5% out of total addition of Rs.5,52,334/- made by the AO u/s 69C of the Act, when the Commercial Tax Department has detected the bogus dealer namely M/s Laxmi Trading Co., Raipur who provided only the bills to the assessee without any actual delivery of goods ?
2. Whether on the facts and in the circumstances of the case and in law, the Id. Addl./JCIT(A) was justified in granting relief of Rs.4,83,292/- on account of submissions made by the assessee though the AO after thorough verification from the Commercial Tax Department has made the addition of Rs.5,52,334/-.
3. Whether on the facts and in the circumstances of the case and in law, the Id. Addl./JCIT(A) was justified in ignoring the findings of the Assessing Officer regarding The assessee’s involvement in a racket of tax evasion through bogus purchases, which falls under the exception provided in Para 3.1.(h) of CBDT Circular No.05/2024 dated 15.03.2024, thereby making this case fit for appeal notwithstanding the monetary limit prescribed in Circular No.09/2024, dated 17.09.2024.
4. The order of the ld. ADDL/JCIT(A) is erroneous both in law and on facts.
5. Any other ground that may adduced at the time of hearing.”
2. At the time of hearing, none appeared on behalf of the assessee and no adjournment application has been filed. That as evident from the order sheet entries, the matter was posted for hearing on 03.11.2025, 11.11.2025, 14.11.2025 and then on today i.e. 21.11.2025 and in all these while there was no compliance by the assessee. In such scenario, it cannot be said that reasonable opportunities were not provided to the assessee. In other words, prolonged process of litigation and providing adjournment unnecessary delays the process of justice which hampers the trust of the litigants in the judicial process. The Hon'ble Supreme Court in the case of Ishwarlal Mali Rathod Vs. Gopal and Ors., passed in Special Leave Petition (Civil) Nos. 14117-14118 of 2021, order dated 20.09.2021, held and observed that as on today the judiciary and the justice delivery system is facing acute problem of delay which ultimately affects the rights of the litigant to access to justice and speedy trial. Arrears are mounting because of such delay and dilatory tactics and asking of repeated adjournments by the advocates and mechanically and in routine manner being granted by the courts. It cannot be disputed that due to delay in access to justice and not getting the timely justice it may shake the trust and confidence of the litigants in the justice delivery system. Therefore, the Hon'ble Apex Court has directed specifically that adjournments should not be granted in a routine manner and mechanically and such grant of adjournment by the Courts should not be a cause for delay in dispensing justice. I am of the considered view that sufficient opportunities in the present matter has been already provided to the assessee and the department in this prolonged litigation. Considering the aforesaid, I proceed to hear the present appeal on merits after careful consideration of the documents on record and the submissions of the Ld. Sr. DR.
3. In this case, the addition has been made by the A.O for Rs.5,52,334/- u/s. 69C of the Income Tax Act, 1961 ( for short ‘the Act’) as unexplained expenditure in view of the alleged bogus purchases by the assessee from M/s. Laxmi Trading Company, Raipur. The A.O in the assessment order has held and observed as follows: “In this case return of income was filed on 09/10/2010 showing total income at Rs.601110/-. The office of the undersigned has received certain information from the Investigation Wing of the Department that during the meeting of Regional Economic Intelligence Bureau (REIC) information from the Commercial Tax Department, Raipur regarding bogus bills were shared. The Commercial Department has detected certain bogus concerns which were involved only in issuing bills without any actual delivery of goods. Subsequently, on the basis of such information available, the case of the assessee was reopened u/s. 147 of the Act after recording necessary reasons and after obtaining approval from the Raipur. Notice u/s.148 dated 31/03/2017 issued and served upon the assessee.
2. In response to the above notice, assessee file return on 07/12/2017. Assessee's accountant appeared and filed reply on 11/12/2017. Notice 142(1) of the Act was issued to the assessee to explain his case after going through the reasons.
The assessee earns income from business and interest income. The business of the assessee is that of wire drawing, galvanizing and trading. As per the information available with the department, the assessee had obtained bogus purchase bins amounting to Rs.5,52,331/- during F.Y.2009- 10 from M/s. Laxmi Trading Co., Raipur having TIN 22791506200. The assessee has been asked to furnish complete details of purchases made from the above party. During the course of proceedings the assessee furnished the copy of ledger a/c. in respect of M/s. Laxmi Trading Co., Raipur as appearing in his books. The bills have been called for and examined and placed on record.
In the meantime a letter has been issued to M/s. Laxmi Trading Co., Raipur on 04/12/2017 by RPAD requiring the party to furnish certain information and to examine the payments received from the assessee. The letter is returned back unserved with remark from postal department 'not known'. As per the TIN jurisdiction of M/s. Laxmi Trading Co., Raipur (TIN 22791506200), the Asstt. Commercial Tax Officer Cir 5, Raipur was also requested to the provide the details of the concern as appearing in the Commercial Tax return to verify the genuineness of the so called sales by the concern. The Asstt. Commercial Tax Officer Cir.5, Raipur vide his letter dated 11/12/17 has informed that the commercial tax department has cancelled the registration of the concern on, 10/01/2011 and the department has no information regarding its sales and purchases.
4. All these facts prove that the assessee has procured bogus purchase bills which could not be substantiated during the course of proceedings. The modus operandi has become to light when the Commercial Tax Department has detected and identified the concerns in whose name bogus sale bills have been issued through specialized software. Such bogus dealers were also examined by the investigation wing and found that such dealers were issuing only bills without delivering any goods. M/s. Laxmi Trading Co., Raipur was identified as a bogus dealer and the beneficiary is identified as Ganapati Wires, Prop Shri Ashish Gupta, the assessee.”
Accordingly, the A.O made the following additions: “6. For the reason discussed above, for inflating the above purchases, the said amount of Rs.5,52,334/- is added to the total income u/s.69C of the Act being unexplained expenditure. Penalty proceedings u/s. 271(1)(c) of the Act are initiated separately for furnishing inaccurate particulars of income. Subject to above total income is computed as under: Income as shown in the return Rs.23,01,210/- Add: Addition as discussed above : Rs.5,52,334/- Total Income : : Rs.28,53,544/- Or say : Rs.28,53,550/-”
I have carefully considered the documents on record and analyzed the facts and circumstances in this case. That as observed from the assessment order, the A.O has nailed the entity M/s. Laxmi Trading Company to be an entity for furnishing bogus purchase bills and in that regard, the A.O had relied on the report of the Commercial Tax Officer as well as Regional Economic Intelligence Bureau information which detected certain bogus concerns which were involved in issuing bills without actual delivery of goods. The A.O writes that one such concern was M/s. Laxmi Trading Company Raipur, in which, the assessee had transacted with. However, the A.O has failed to bring out malafideness in the transaction between the assessee and the said entity i.e. M/s. Laxmi Trading Company, Raipur. Meaning thereby, the A.O has not brought out whether the assessee was benefited through the transaction with M/s. Laxmi Trading Company, Raipur. There is no evidence on record as per the assessment order that the assessee weather was a direct beneficiary of M/s. Laxmi Trading Company, Raipur. In fact, the A.O while discussing the entity i.e. M/s. Laxmi Trading Company, Raipur vis.-a-vis information received from Commercial Tax Department suddenly jumped to the conclusion that the assessee is identified as one of the beneficiaries of such bogus dealer. However, the A.O has not brought on record any facts or evidence to justify his stand. Meaning thereby, mere accusations cannot entail the Revenue to fasten tax liability on the assesse until and unless, a malafide conduct is brought out in terms with Section 69C of the Act.
Be that as it may, before the Ld. CIT(Appeals)/NFAC the assessee had submitted that since the A.O has admitted the sales, therefore, 100% of the purchases cannot be added and accordingly, the assessee had submitted that 12.5% addition of the purchases made be added which was accepted by the Ld. CIT(Appeals)/NFAC.
Considering the entire spectrum of the matter and facts and circumstances of the case, I do not find any infirmity in the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld.
As per the above terms grounds of appeal raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in open court on 21st day of November, 2025.