Loading judgment…
Facts
A search and seizure operation revealed that Shri Mithilesh Kumar Tiwari provided accommodation entries for bogus purchases/sales. The assessee, Shri Nikhil Mittal, proprietor of M/s. Niros Industries, was identified as having made bogus purchases of Rs. 54,20,106/- from M/s. H.K Enterprises for AY 2018-19, failing to prove their genuineness. The AO initiated reassessment proceedings and made an addition of Rs. 6,77,513/- (12.5% of bogus purchases). The CIT(A) subsequently annulled the assessment order without going into the merits, citing procedural defects in the reassessment notice and proceedings.
Held
The ITAT observed that the CIT(A) failed to fulfill the mandate of Section 250(4) & (6) by not adjudicating the appeal on merits. The tribunal set aside the CIT(A)'s order and remanded the case back to the CIT(A) for a de novo adjudication on the merits of the bogus purchases, ensuring compliance with natural justice principles and the relevant sections of the Act.
Key Issues
The primary issues concerned the validity of reassessment proceedings initiated by the AO under Section 147/148, particularly procedural irregularities regarding Section 151A and denial of cross-examination. Another key issue was whether the CIT(A) was justified in annulling the assessment solely on procedural grounds without adjudicating the merits of the alleged bogus purchases, and consequently, whether the case should be remanded for a decision on merits.
Sections Cited
Section 132, Section 133(6), Section 147, Section 148, Section 148A, Section 151, Section 151A, Section 250(4), Section 250(6)
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 25.08.2025 for the assessment year 2018-19 as per the grounds of appeal on record.
At the assessment proceedings, as per information available on record with the department, a search and seizure action was conducted u/s. 132 of the Income Tax Act, 1961 (for short ‘the Act’) in the case of Hanumant Trading and H.K Group on 19.02.2020. In his statement recorded on oath, Shri Mithilesh Kumar Tiwari, proprietor of M/s. H.K Enterprises has provided accommodation entries of bogus purchases and sale bills. That on verification of the details, it was observed that during the year under consideration, the assessee viz. Shri Nikhil Mittal, proprietor of M/s. Niros Industries had made bogus purchases amounting to Rs.54,20,106/-. The A.O had issued notice u/s. 133(6) of the Act to Shri Mithilesh Kumar Tiwari but there has been no reply from him. Again, by Verification Unit another notice u/s. 133(6) of the Act was also issued to Shri Mithilesh Kumar Tiwari but again, no reply has been received from him.
That on careful consideration of the facts in the case of the assessee, it was observed by the A.O that the assessee had made total purchases of Rs.54,20,106/- from M/s.H.K Enterprises, proprietor Shri Mithilesh Kumar Tiwari and the said M/s.H.K Enterprises has been involved in Input Tax Fraud (ITC) by providing fake invoices. That finally, the A.O made addition of Rs.6,77,513/- (being 12.5% of Rs.54,20,106/-) as tainted purchases done from non-genuine parties since that the assessee also failed to discharge his burden to prove genuineness of such purchases made from M/s. H.K Enterprises.
That on careful perusal of the order of the Ld. CIT(Appeals)/NFAC, it is observed that the said authority has given relief to the assessee only on the issue of JAO/FAO relying on the decision of the Hon’ble High Court of Bombay in the case of Hexaware Technology Ltd. Vs. Assistant Commissioner of Income Tax (2024) 464 ITR 430 (Bom.) and Hon’ble High Court of Telengana and Hon’ble High Court of Gauhati in different matters with the same parity of reasoning akin to that held by the Hon’ble Bombay High Court (supra). However, the Ld. CIT(Appeals)/NFAC has not given any finding on merits of the matter nor on issues emanating from the assessment order.
At the time of hearing, the Ld. Counsel for the assessee had filed following written submissions:
Be that as it may, the Ld. Counsel for the assessee also conceded that since the Ld. CIT(Appeals)/NFAC has not followed the mandate of the Act i.e. Section 250(4) & (6) of the Act and has not given his findings on merits on issues which emanates from the assessment order, therefore, the matter may be restored to the file of the Ld. CIT(Appeals)/NFAC after recording his submissions.
The Ld. Sr. DR in her submission vehemently contended that the issue of JAO/FAO remains sub-judice before the Hon’ble Apex Court of India and that since the Ld. CIT(Appeals)/NFAC has failed to adjudicate on the issues emanating from the assessment order regarding bogus purchases, therefore, the matter needs to be remanded back to the file of the First Appellate Authority for adjudication on merits.
Having heard the submissions of the parties herein and on careful consideration of the facts and circumstances in this matter, the assessment order well establishes the fact that the assessee is a beneficiary of the bogus purchases made from M/s. H.K Enterprises, proprietor Shri Mithilesh Kumar Tiwari and the said entity i.e. M/s. H.K Enterprises is recorded to be involved in the Input Tax Fraud providing fake invoices. The assessee has failed to establish the genuineness of the purchases claimed to be have been made from the said entity. That as per the mandate of Section 250(4) & (6) of the Act, the Ld. CIT(Appeals)/NFAC should have conducted inquiry on this aspect and should have given his findings on the issue of bogus purchases as emanating from the assessment order and even after calling for a remand report from the A.O and at the same time, should have fulfilled the mandate of the Act. However, the Ld. CIT(Appeals)/NFAC chose to dispose off the appeal by resorting to an issue which itself is sub-judice before the Hon’ble Apex Court of India. Be that as it may, in the interest of substantial justice and on careful consideration of the submissions made by the parties herein, I am of the considered view that the matter needs to be remanded to the file of the Ld. CIT(Appeals)/NFAC for denovo adjudication on merits while complying with the principles of natural justice. The Ld. CIT(Appeals)/NFAC shall pass an order in conformity with Section 250(4) & (6) of the Act and the necessary inquiry conducted by it should be apparent in its findings itself so that the order comes out the character of a speaking order. The findings of the Ld. CIT(Appeals)/NFAC is set-aside. I order accordingly.
As per the above terms grounds of appeal raised by the Revenue stands allowed for statistical purposes.
In the result, appeal of the Revenue is allowed for statistical purposes.
Order pronounced in open court on 10th day of November, 2025.