CENTURION LABORATORIES PVT. LTD.,VADODARA vs. THE ACIT, CIRCLE-1(1)(1), VADODARA

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ITA 2292/AHD/2025Status: DisposedITAT Ahmedabad11 February 2026AY 2019-2010 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid on jurisdictional grounds. The Tribunal noted that the Assessing Officer himself had restricted the addition to the gross profit element embedded in the purchases, applying a GP rate of 13.85%. The Tribunal found that the actual value of purchases debited to the purchase account was Rs. 3,47,25,650/-, with the balance amount of Rs. 62,50,617/- representing IGST, which was accounted for separately and not claimed as expenditure. Applying the 13.85% GP rate to the actual purchase value of Rs. 3,47,25,650/- resulted in an alleged escaped income of Rs. 48,09,503/-. This amount was found to be below the monetary threshold of Rs. 50,00,000/- prescribed under section 149(1)(b) of the Act for initiating reassessment proceedings where the income escaped assessment is more than Rs. 50 lakhs. The Tribunal clarified that the expression 'income chargeable to tax which has escaped assessment' refers to the real income sought to be brought to tax, not the gross value of transactions. Therefore, the assumption of jurisdiction under section 148 was held to be invalid, and the consequential reassessment proceedings were quashed. On merits, the Tribunal observed that the assessee had provided primary evidence like purchase orders, invoices, e-way bills, and RTGS payments, and the AO had not conducted independent enquiries to disprove the genuineness of these transactions. Furthermore, the assessee's books of account were not rejected under section 145(3). The Tribunal concluded that adding the gross profit, which was already reflected in the returned income, would lead to double taxation, which is impermissible. Consequently, the reassessment order and the addition were not sustained.

What were the facts?

The assessee, Centurion Laboratories Pvt. Ltd., filed an appeal against the reassessment order for AY 2019-20. The assessment was reopened on the grounds of alleged bogus purchases of Rs. 4,09,76,267/- from M/s. Gensis Health Care, which was claimed to be a provider of accommodation entries. The Assessing Officer (AO) proposed to disallow the gross profit of 13.85% on these purchases, amounting to Rs. 56,75,210/-. The assessee contended that the actual purchase debit to its books was Rs. 3,47,25,650/-, excluding IGST of Rs. 62,50,617/-, and therefore, the proposed addition should be calculated on this reduced amount. The AO made an addition of Rs. 48,09,503/- (13.85% of Rs. 3,47,25,650/-). The CIT(A) dismissed the assessee's appeal, upholding the AO's order on both jurisdiction and merits.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147 r.w.s. 148 are valid, considering the alleged escaped income is below the monetary threshold prescribed under section 149(1)(b) of the Income Tax Act, 1961. Assessee's contention: The assessee argued that the actual purchase value, after excluding IGST, was Rs. 3,47,25,650/-. Applying the AO's adopted GP rate of 13.85% to this amount resulted in an alleged escaped income of Rs. 48,09,503/-, which is below the Rs. 50,00,000/- threshold for reopening under section 149(1)(b). Therefore, the reassessment proceedings are bad in law. Revenue's contention: The revenue supported the orders of the lower authorities, implying that the reassessment was valid and the transaction was bogus. The cancellation of the supplier's GST registration from 01-06-2019 was highlighted to support the claim of bogus transactions. 2. Whether the addition of Rs. 48,09,503/- on account of alleged bogus purchases is sustainable on merits, especially when the assessee has provided supporting documentary evidence and its books of account have not been rejected under section 145(3). Assessee's contention: The assessee provided purchase orders, invoices, e-way bills, and bank statements (RTGS/NEFT) to demonstrate genuine business transactions. It was argued that the AO made the addition solely based on the Investigation Wing report without independent verification and without rejecting the assessee's books of account. The addition of the gross profit already reflected in the returned income amounts to double taxation. Revenue's contention: The revenue supported the lower authorities' orders, implying that the transactions were bogus and the addition was justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(2),Section 142(1),Section 148A(d),Section 149(1)(b),Section 145(3),Section 131(1A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha

ORDER PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER This appeal is filed by the Assessee as against appellate order dated 10-06-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2019-20.

A.Y. 2019-20 2 Centurion Laboratories Pvt. Ltd. Vs. ACIT

2.

The registry has noted that there is a delay of 88 days in filing the above appeal. The assessee explained way of Notarized Affidavit that email communication address of Shri Ambalal Patel was mentioned in Form No. 35. However, he resigned from the appellant company with effect from 01-04-2025 due to his old age (72 years) and his resignation was intimated to

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