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Facts
The Revenue made an addition of Rs. 3,52,44,796/- to the assessee's income under Section 69, alleging it to be undisclosed freight income received from M/s. Electrotherm India Limited, a company implicated in bogus transportation billings with TDS deductions. The assessee, a transporter operating as "Ashapura Roadlines," was identified as a beneficiary of these alleged bogus charges. The Ld. CIT(A) subsequently deleted this addition, leading to the Revenue's appeal before the Tribunal.
Held
The Tribunal found no evidence from the Revenue to prove actual receipts by the assessee from M/s. Electrotherm India Limited and noted the Revenue had not claimed tax from the TDS deducted. Consequently, the Tribunal declined to interfere with the CIT(A)'s order deleting the addition. However, the Tribunal directed the Revenue to further examine the movement of funds and the claim of TDS under the assessee's old PAN in the interest of the exchequer.
Key Issues
Whether the CIT(A) correctly deleted the addition of undisclosed freight income under Section 69, given the alleged bogus nature of transactions by the payer and the Revenue's inability to prove actual receipts by the assessee.
Sections Cited
Section 250, Section 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
PER DR. B.R.R. KUMAR, VICE-PRESIDENT :
This appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 10.01.2025, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2016-17.
The Revenue has raised following grounds:-
“The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.3,52,44,796/- made by AO on account of undisclosed freight income received from M/s. Electrotherm India Limited u/s 69 of the IT Act, despite the fact that the credible information was received from Investigation Wing ITO Vs. Manilal Bhamjibhai Shah Asst. Year : 2016-17 - 2– that the entity M/s. Electrotherm India Limited was indulging in unscrupulous activities and assessee was one of the beneficiaries of bogus transportation charges from the said entity on which TDS has been deducted.”
The pertinent facts required for adjudication of the case are that the assessee is engaged in transport business through his proprietorship firm “Ashapura Roadlines”. The assessee has applied for a new PAN instead of requesting a duplicate copy of PAN, and the assessee has been allotted a new PAN on 05.08.2002. The assessee started filing returns under the new PAN for AY 2003-04 to AY 2016-17. The assessee has also submitted that he has surrendered the old PAN vide letter dated 03.03.2009.
The inquiries conducted by the Revenue in the case of M/s. Electrotherm India Limited revealed that the said company had resorted to bogus booking of transportation bills and had also shown TDS deductions to various transporters, of which assessee is one such transporter. As per the documents filed before us, the Revenue could not prove any receipts from the said company namely M/s. Electrotherm India Limited and also has not claimed any tax out of the said tax deducted at source by M/s. Electrotherm India Limited. Keeping in view these facts, the Ld. CIT(A) has deleted the addition which we find acceptable.
At the same time, we have no records before us to prove that whether the Revenue has rightly examined the claim of TDS in the old PAN of the assessee, i.e. AFSPS5896M and also the fact that if the payments made from M/s. Electrotherm India Limited have gone to any of the assessee’s concerns by examining the movement of funds from M/s. Electrotherm India Limited’s company bank
As far as the appeal before us is concerned, we decline to interfere with the order of the Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open Court on 07.01.2026