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Facts
The assessee, D. M. Jewellers, filed an ITR for AY 2014-15. Subsequent investigation linked the assessee to accommodation entries provided by Shri Puneet Kulthia, specifically for Rs. 50,33,000/-. The case was reopened, and the AO added this amount as bogus purchases under Section 68, which was later confirmed by the CIT(A) citing lack of documentary evidence.
Held
The Tribunal noted that the assessment was made ex-parte under Section 144. While the CIT(A) confirmed the addition, the assessee claimed comprehensive documentary evidence (invoices, ledgers, bank statements, VAT returns) was submitted. Considering these claims and with no objection from the Departmental Representative, the Tribunal set aside the CIT(A)'s order and remanded the case to the AO for reconsideration and re-framing the assessment, granting the assessee an opportunity of being heard.
Key Issues
Whether the addition under Section 68 for bogus purchases was justified without considering the assessee's documentary evidence, and if the assessee was afforded adequate opportunity of being heard in the assessment proceedings.
Sections Cited
250, 68, 132, 133A, 148, 147, 144B, 144, 10(26)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, : GAUHATI BENCH : GUWAHATI
Before: SHRI MANOMOHAN DAS, HON’BLE & SHRI SANJAY AWASTHI, HON’BLE
ORDER
PER MANOMOHAN DAS, JM
The assessee filed this appeal against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the (“CIT(A)” dated 03.02.2025 passed under Section 250 of the Income Tax Act, 1961 Page 1 of 4 / GTY / 2025 D.M. Jewellers -Vs- The ITO, Ward-2 (1), Guwahati AY: 2014-15 (hereinafter referred to as the ‘Act’) and pertains to the Assessment Year 2014-15. The grounds of the assessee are as under:- (i) That the learned Commissioner of Income Tax (Appeals) erred both in law and on facts in confirming the addition of Rs. 50,33,000 under section 68 of the Income Tax Act, 1961, by treating the purchases made by the appellant as bogus purchase, especially where purchases are duly recorded in the books of account and payments have been made through banking channels. (ii) That the addition under section 68 is untenable in the absence of any direct evidence to prove that the appellant introduced unaccounted money in the form of bogus purchases. No unexplained cash credit or fictitious entry has been identified in the appellant’s books of account, and therefore, invoking section 68 in respect of trade purchases is erroneous. Merely, because the supplier was alleged to be involved in accommodation entries, it was incorrectly presumed that the appellant’s transactions were also of the same nature. The authorities have relied on surmises and conjecture rather than facts, thus rendering the addition unsustainable in law.
The brief facts of the case are that, the assessee filed return of income for the year under consideration on 19.11.2014 declaring total income of Rs. 3,16,810/-. As per information available with the department, a search and survey action u/s 132 and 133A of I.T. Act, 1961 was conducted in the case of Shri Puneet Kulthia and during the investigation it was found that Shri Puneet Kulthia was involved in providing accommodation entry to various persons / entities, helping them to channelize their unaccounted money back into their businesss to raise the capital through bogus sale or income. During the investigation, it was found that the assessee was the beneficiary of the receipt of accommodation entry amounting to Rs. 50,33,000/- . Based on this specific information available with the Department, the case of the assessee was reopened u/s 148 of the Act. The AO completed the assessment proceedings vide order u/s 147 r.w.s. 144B of the Act dated 28.03.2022 determining income at Rs. 53,49,810/- by making addition of Rs. 50,33,000/- on account of bogus purchase as per provisions of section 68 of the Act.
Page 2 of 4 / GTY / 2025 D.M. Jewellers -Vs- The ITO, Ward-2 (1), Guwahati AY: 2014-15 Being aggrieved, the assessee filed 1st appeal before the ld.
CIT(A). The ld. CIT(A) vide order dated 03.02.2025 dismissed the appeal of the assessee.
Being aggrieved, the assessee filed the present appeal before the Tribunal.
5. The ld. CIT(A) dismissed the appeal of the assessee by citing the reason that, the assessee has failed to furnish any documentary evidence which could substantiate the purchases such as stock register, documents related to delivery of goods / items weighing slip of items purchased, quantity of item, details of items / goods purchased etc.
We observe that, the assessment of the assessee was under section 144 of the Act. The assessee failed to participate in the assessment proceedings. Secondly, the ld. CIT(A) confirmed the addition of the cash deposit subject to the verification of the ld. AO whether the cash deposited amount was Rs. 1,98,10,490/-. The claim for exemption u/s 10(26) of the Act was not entertained by the ld. AO by observing that, the assessee has to prove it.
The Ld. AR submitted that, comprehensive documentary evidence was submitted during the course of assessment and appellate proceedings. It is submitted that, copies of purchase invoice, ledger account of the supplier, corresponding ledger in the books of the assessee, bank statements, Vat returns, Auditted financial statements, purchase ledger were submitted during the aforesaid proceedings.
We have carefully considered the submissions made by the Ld. AR and also gone through the orders of the lower authorities. From the claims of the assessee that comprehensive documentary evidences were submitted before the lower authorities, it is our considered opinion that, the case of the assessee should be remanded to the file of the ld. AO for reconsideration. Accordingly, we set aside Page 3 of 4 / GTY / 2025 D.M. Jewellers -Vs- The ITO, Ward-2 (1), Guwahati AY: 2014-15 the order of the ld. CIT(A) dated 03.02.2025 and remand the case to ld. AO for reframing of the assessment. We direct the ld. AO to reframe the assessment after giving the assessee an opportunity of being heard. The Ld. DR also has no objection in remanding the case to ld. AO for reconsideration. Thus, we allow the appeal of the assessee for statistical purposes only.
In the result, the appeal of the assessee is allowed for statistical purposes only.