INCOME TAX OFFICER, WARD-1, FARIDKOT, BSNL BUILDING vs. M/S VOHRA SOLVEX PVT. LTD, SADIQ ROAD

Per Udayan Dasgupta, J.M.:

This appeal is filed by the Revenue against the order of ld. CIT(A) National

Faceless Appeal Centre (NFAC), Delhi dated 03/09/2024 passed u/s 250(6) of the

Income Tax Act, 1961 which has emanated from the order of the Assessing Officer

dated 26.03.2022 passed by the AO, NFAC, Delhi.

“1. The Ld. CIT(A) has erred in limiting the addition only to the extent of 1.2% of bogus purchases as against 100% made by the AO u/s 69C of the Act by not appreciating the judgment of the Hon'ble Hon'ble Supreme Court in the case of N.K. Proteins Ltd. v. DCIT [2017] 84 taxmann.com 195 (SC) in which the Hon'ble Apex Court has dismissed the SLP of the assessee against the decision of the Gujarat High Court [N.K. Industries Ltd. v. DCIT (2016) 72 taxmann.com 289 (Gujarat)] wherein 100% of bogus purchases were added to the total income of the assessee.

3 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors Kumar, Prop. M/s Universal Foods Corporation had admitted before the ITO, Ward-2(4) in their statements recorded on 12.12.2016 and 13.12.2016 respectively, that they had not supplied any goods to the assessee company and only invoice bills have been issued.

carrying on the business of running a ‘Solvex Plant’ and extracts edible and semi-

edible oil etc., from Rice Bran, which is the primary raw material consumed by the

assessee in the extraction process. Regular return has been filed along with the copies

of audited accounts which were produced and examined in course of assessment

proceedings and assessment completed u/s 143(3) on 19.12.2016. Subsequently, the

case has been reopened u/s 148 on the basis of information gathered by the

department that the purchase of goods made from M/s Evergreen Sales Corporation

(in short, (ESC), Fazilka amounting to Rs.3,98,40,548/- and M/s Universal Foods

Corporation (in short, (UFC), Fazilka amounting to Rs.2,45,14,364/- (totaling Rs.

6,43,54,912/-) are bogus purchase entries. As per the information received by the

AO, it was noted that Sh. Naresh Kumar, Proprietor of M/s Universal Food

Corporation and Sh. Vijay Kumar, Proprietor of M/s Evergreen Sales Corporation

4 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors has admitted on oath before ITO-Ward-2(4), Abohar, that no physical delivery of

goods, consisting of rice, phak and nakku were actually delivered and they were only

entry providers. It was further admitted that bank accounts were opened with

different banks for financial transactions to be recorded without actual delivery of

goods.

documents and evidences to prove genuineness of the purchase from M/s ESC and

UFC consisting of certified copies of yield chart of goods extracted by the assessee

for the assessment years 2013-14 and 2014-15, month-wise summary statements of

sales and purchase made by the assessee during the year under appeal, confirmation

of copies of accounts of ESC and UFC, copy of bank statements of the assessee with

Punjab & Sindh Bank, through which payments has been made by the assessee in

respect of such purchases, copies of sample purchase invoices issued by M/s ESC and

UFC which contains the details of transportation along with the vehicle numbers,

confirmation of copies of both sellers in the books of the assessee, complete purchase

book for the year under appeal, complete stock register, containing full details of

inward and outward movement of rice bran, copy of VAT return of the assessee,

wherein the details of purchases made from the two parties of ESC and UFC are

reflected, and copy of respective VAT return of UFC and ESC where the respective

5 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors sales to the assessee company are found recorded, copy of month-wise summary

details of consumption of purchase of raw material and copy of yield chart certified

by the chartered accountant for the year under appeal has been produced and filed

before the AO in course of re-assessment proceedings. However, the AO has refused

to give any cognizance to such documentary evidences produced and filed in course

of reassessment proceeding due to the absence of any purchase agreements and

details of transportation in respect of the said purchases and as such the same has

remained unexplained and addition has been made of the entire amount of purchase

totaling Rs.6,43,54,912/-, u/s 69C of the Act to the total income of the assessee as

bogus purchase.

submissions were filed by the assessee and the ld. CIT(A) arrived at a conclusion that

the bogus purchase or wrong addition has been made by the AO in respect of the

above two parties ESC and UFC, and after examining the ledger accounts, the ld.

first appellate authority concluded that the total purchase from ESC will have to be

considered at Rs. 2,43,78,214/- (instead of 3,98,40,548/-) because the AO has

inadvertently missed out the confirmed ledger A/c. Thereafter, the ld. CIT(A) arrived

at a conclusion, that there is no material on record to prove that the cash paid by the

assessee through bank channel has been received back by the assessee. He also

6 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

opined that when the purchase under question is found to be in the books of account

of the assessee, and books are not rejected and sales are accepted then the purchase

under question cannot be disallowed in full, only profit element embedded in such

purchase is to be added to the total income. Thereby, he restricted the addition to

1.2% (one point two percent) of the total purchases of Rs.4,88,92,578/-, resulting in

an addition of Rs.5,86,710/-. The relevant portion of the findings of the ld. CIT(A) is

reproduced as under:

“6.9 The entire payments being made by banking channels and there is no material on record to prove that cash has been received back by the appellant. Further, it also cannot be denied that when the purchase under question here is being found to be genuine, then profit element embedded in such purchases should be added to income of assessee. From the balance sheets of the appellant of last years, it is observed that the Net profit of the company was 0.61% & 0.57% for the years 2021-22 & 2022-23. Considering the above net profit ratio of the company, the Net Profit ratio for the impugned purchases is taken at 1.20% Thus, under the facts & circumstances of the case and after considering the submissions of the appellant, the profit percentage of 1.2% is hereby applied on the purchases amount of Rs. 4,88,92,578 (1.e. Rs. 2,45,14,364/- from M/s Universal Foods Corporation, Fazilka and Rs 2,43,78,214/- from M/s Evergreen Sales Corporation, Fazilka)

6.10 Accordingly, addition of Rs. 5,86,710/- (i.e. 1.2% of Rs. 4,88,92,578) is upheld out of the total addition of Rs.6,43,54,912/-.”

been challenged by the assesee before the ld. first appellate authority, the ld. CIT(A)

has dismissed the said grounds by observing as under:

7 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors “5.9 As highlighted in the various judgments of higher courts quoted above, the AO has power to reopen a case, provided there is tangible material to come to the conclusion that there is escapement of income of the assessee. The contentions of the appellant that all maternal facts were disclosed before the AO during the original assessment proceedings is not acceptable because mere production of copies of accounts and bank accounts relevant to the concerned transactions does not make the same as genuine. It is not necessary that every transaction routed through banking channel is a genuine transaction. In fact, it is a case where the assessee has not fully & truly disclosed the facts related to these transactions. The case has been reopened on the basis of reasons which were not available before the AO during the original assessment proceedings.

5.10 Therefore, in my considered view, there is not enough grounds to accept the contention of the appellants, and accordingly, theses grounds of appeal are dismissed.”

in Form No. 36.

limiting or restricting the addition to only Rs.5,86,710/- i.e., (1.2% only) instead of

100% addition which should have been made and confirmed u/s 69C of the Act. In

support of his argument, he relied on the judgment of Hon’ble Apex Court in the case

of N.K Proteins Ltd. v. DCIT [2017] 84 taxmann.com 195 (SC) in which the Hon’ble

Apex Court has dismissed the SLP of the assessee against the decision of the Hon’ble

Gujarat High Court where it has been held 100% of bogus purchase should be added

to the total income of the assessee. He further submitted that it has been admitted by

8 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors the proprietors of the respective sellers Mr. Vijay Kumar (proprietor of ESC and Mr.

Naresh Kumar, proprietor of UFC) where they have stated in their recorded

statement that they have not supplied any goods to the assessee and only invoices and

bills has been raised. As such, the ld. DR prays for restoration of the assessments

order.

confirmed ledger accounts of both these sellers ESC and UFC as appearing in the

books of account of the assessee, along with the photocopies of serial number of

purchase invoices issued by the sellers which contains vehicle number through which

goods has been transported with full details of wages and quantity of bags date-wise,

he has also furnished copies of entire stock register, which gives full date wise details

of inward and outward movements of stock and the quantitative balance that remains

at the end of duly as reflected in the stock register, copies of ledger account of entire

purchase made from the above two parties, which also reflects date-wise bills and

quantity of goods purchase and also the payments made through through bank

channel duly reflected in bank statement. He also filed copies of entire bank

statements as supporting evidences to prove the fact that entire payments has been

transferred from the bank accounts to the respective sellers.

9 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

and purchase made by the assessee, documentary evidences has been filed, supported

by the regular books of account which has been accepted and no defect has been

pointed out by the Assessing Officer and the said books account has not been rejected

and there are absolutely no materials on record to prove that the transactions are not

genuine. Since, in the instant case the purchases made by the assessee are supported

with invoices and all payments are made through bank channel and the sales were

also accepted by the AO then the purchase cannot be doubted, and in support of his

contention, he relied on the following judgments:

“(i) Judgment in the case of CIT v. Odeon Builders (P.) Ltd. as reported in [2019] 110 taxmann.com 64 (SC).

INCOME TAX: Where assessee had submitted purchase bills, transportation bills, confirmed copy of accounts and VAT Registration of sellers as also their Income-tax Return and payment was made through cheques, impugned purchases could not be disallowed.

(ii) Judgment in the case of PCIT vs. Tejua Rohit Kumar Kapadia reported in [2018] 94 taxmann.com 325 (SC)

Where purchases made by assessee-trader were duly supported by bills and payments were made by account payee cheque, seller also confirmed transaction and there was no evidence to show that amount was recycled back to assessee, Assessing Officer was not justified in treating said purchases as bogus under section 69C: SLP dismissed.

10 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

(iii) Judgement iin the case of PCIT vs. Nitin Ramdeoji Lohia as reported in ( [2022] 145 taxmann.com 546 (Bombay)

INCOME TAX: Where Assessing Officer made addition by disallowing expenses on purchases on ground that an information was received from sales tax department that assessee was beneficiary of accommodation entries on account of bogus purchases, since Assessing Officer had not disputed corresponding sales transactions, purchases also could not be bogus and, thus, impugned addition made on account of bogus purchases to be deleted.

(iv) Also, it is submitted that assessee has filed quantitative stock tally in form stock inventory, yield chart showing consumptions, purchases, goods returned, sales made by the assessee and no defect has been pointed out by the AO as well as CIT(A) during the course of assessment proceedings and appellate proceedings and reliance is being placed on judgment in the case of Piyush Developers Pvt. Ltd V/s ACIT in ITA No.5599/DEL/2010, ITAT, Delhi Bench (on the issue, if no defect have been pointed out, no addition is called for)

"No defects have been found in the stock register nor any defects have been pointed out by the A.O. in the audited books of accounts maintained by the assessee. Despite search and seizure no adverse material was found to substantiate the disallowance made by the A.O. Coming to the identity of the parties we find that all the parties are registered with sales tax department and have charged VAT in each of the bills. All these parties have bank accounts and payments were made through account payee cheques. Evidence of material having been received by the assessee, has been filed."

From perusal of above referred case laws, it is submitted that the assessee has proved the genuineness of the purchases by way of various documentary evidences mentioned above and same cannot be disallowed and treated bogus merely on the basis of statement recorded and the CIT(A) has accepted the fact at para 6.8 page 37 of the appellate order, wherein, it is mentioned that, it sales are accepted and no defect has been pointed out in the stock

11 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

inventory and there is no material on record to prove that the transactions were not genuine and even when the books of the assessee are also not rejected then the entire purchases cannot be disallowed only the portion of profit embedded to be added back to the income of the assessee.”

AO solely on the basis of some statements given Mr. Vijay Kumar and Mr. Naresh

Kumar, which were recorded behind the assessee without considering any material

evidences or submissions made by the assessee and without offering any

opportunities of cross examination of witnesses for rebuttal of the same. In support of

his arguments the assessee relied on the following judgments:

“Principal Commissioner of Income-tax, Central-2, Mumbai vs. Nitin Cylinders Ltd. [2024] 159 taxmann.com 649 (Bombay)/[2024] 298 Taxman 33 (Bombay) [31-01-2024]

INCOME TAX: Where Assessing Officer made an addition on account of bogus purchases solely on a statement made by only one party recorded under section 131 without adducing evidence of other necessary parties. Tribunal was justified in deleting impugned addition Section 69C of the Income-tax Act, 1961 Unexplained expenditure (Bogus purchases) Assessee-company was engaged in manufacture of high-pressure seamless cylinders Pursuant to search and seizure operations of group concerns of assessee, Assessing Officer on basis of statement made by a director of assessee opined that assessee-company siphoned off cash by issuing cheques against bagus capital expenses debited in accounts of assessee-company Accordingly, he made an addition on account of bogus purchases which was confirmed by Commissioner (Appeals) However, Tribunal had held that capitalization could not be denied to assessee merely on a statement given by director of assessee, without

12 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

adducing evidence of other necessary parties It was found that assessee had produced certain documents including ledger extracts of parties, confirmation from parties, bank statements and certificate from registered valuer showing construction of a building indicating procurement of steel for which said payments were made by cheque - Capitalization was denied solely based on statement made by only party recorded under section 131- No enquiry in this regard was made and no evidence generally was made available by Assessing Officer-Whether since entire order of Assessing Officer was based merely on statement of Director of assessee without summoning or adducing additional/supplementary evidence of any other person corroborating allegation regarding bogus poyments made by assessee, Tribunal was justified in deleting impugned addition - Held, yes [Paras 6 to 9] [In favour of assessee]

Deputy Commissioner of Income-tax vs VVD & Sons (P.) Ltd. [2024] 158 taxmann.com 395 (Chennai-Trib.)[13-09-20231

INCOME TAX : Where Assessing Officer, based on sworn statement recorded from one directors of assessee-company. disallowed claim of expenditure made by assessee towards special salary etc. and brought same to tax, since impugned addition was made merely on basis of statement and without any credible evidence. same was to be deleted

Thus, the reopening merely on basis of statement and without any credible evidence same was to be deleted following above case laws.

13 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

held that the statements taken at the back of the Assessee cannot be used for making additions unless a chance to cross examine has been given to the Assessee. It has also been held that the Assessing Officer cannot make such additions only on the basis of surmises and conjectures:

[2024] 162 taxmann.com 5 (SC) Principal Commissioner of Income-tax v. Kishore Kumar Mohapatra". (Judgment Set-1, pages 139 140)

"INCOME TAX: SLP dismissed against order of High Court that where Assessing Officer denied exemption claimed by assessee under section 10(38) on long-term capital gain on sale of shares an basis of statement of entry operators recorded on various dates in some other proceedings not connected with assessee and no opportunity to cross-examine so- called entry providers was given to assessee thereby violating principles of natural Justice, Tribunal was Justified in deleting addition made by Assessing Officer"

[2023] 157 taxmann.com 193 (SC) SUPREME COURT OF INDIA Principal commissioner of Income-tax v. Hadoti Punj Vikas Ltd

INCOME TAX: SLP dismissed against impugned High Court's order that where AO made addition under section 68 solely on basis of information received from Investigation Wing that lenders from whom assessee-company acquired loans were indulged in bogus accommodation entries, since assessee was not granted an opportunity to cross-examine persons whose statements were recorded during Investigation, Impugned addition made on basis of such investigation which was not privy to assessee were to be deleted

[2015] 281 CTR 0241 (SC) Andaman Timber Industries Vs. Commissioner of Central Excise.

[2024] 161 taxmann.com 586 (Punjab & Haryana) Principal Commissioner of Income-tax (Central) v. DSG Papers (P.) Ltd."

14 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

INCOME TAX: Where pursuant to a search conducted at business premises of assessee, department made additions on account of suppressed turnover through under-invoicing based on third-party statements, since said statements were recorded at back of assessee and without giving proper opportunity for cross-examination, Tribunal rightly deleted said addition From perusal of above referred case laws, it is submitted that, wherein the opportunity of cross examination has not been provided to assessee then the assessment framed will be considered as invalid assessment, thereby violating the principal of natural justice, therefore, needs to be quashed.

Judgment of Hon'ble Punjab & Haryana High Court in the case of Rajeev Aggarwal in ITA No. 35/2020 (O&M)wherein, it has been held as under:

"Against the same, the Revenue as such was in appeal. The Tribunal, vide its order dated 22.05.2019 (Annexure-A-III), has also examined the record and it was noticed that the assessee had produced stock statement where no negative stock had been shown and, therefore, it was concluded that how the AO had noted that the negative stock was not clear. The record produced showed that evidence was part of the account books furnished in support of the assessee's contention and the evidence had also been filed before the first Appellate Authority. Accordingly, it was held that is was not justified for rejecting the accounts simply because the names of the buyers were not mentioned in the bills of cash sales and it would not go to disbelieve the books of accounts since the assessee was trading in gold bullion. The day to day rates would have also been ascertainable from the rates declared by National market, Sarrafa Bazzars etc. Resultantly, a finding was recorded that the AO was not justified in rejecting the book version of the assessee and to apply the profit rate of 0.54% without any good reason and no comparable instance had been given and

15 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors there was no valid reason to doubt the record of the assessee and the assessee had maintained quantitative tally of the stock. The Revenue had not been, thus, able to make out a case that the assessee had not adopted consistent method of accounts and the profit and gains earned by the assessee could easily be detected from the books of accounts. The appeal as such was dismissed."

discharged his onus placed upon him and no specific defects has been pointed out in

respect of the voluminous information and documentary evidences and the books of

account filed before the Assessing Officer, more so, in this case where the books of

account has not been rejected and as such the entries in the regular books of account

has to be accepted. Before concluding, the ld. A/R, has also distinguished the facts of

this case vis-à-vis the decision of the Hon’ble Apex Court in N.K. Proteins Ltd. v.

DCIT (2017) 84 taxmann.com 195 (S.C.). He submitted that the reliance placed by

the department on the case of N.K. Industries is clearly misplaced and distinguishable

on facts. In N.K. Industries, bogus purchases were inferred based on seized signed

blank cheques and vouchers found during a search. In contrast, no such incriminating

material was found in the present case, and no search action was undertaken. The

assessee has maintained proper books of account, along with a quantitative tally and

day-to-day stock register, which were duly furnished during assessment and are

available in the paper book. Month-wise purchase details were also submitted during

16 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors the hearing, and no discrepancy has been pointed out by the AO. As such, he prays

for deletion of the entire addition.

record and the contents of the paper books and the various judgments relied upon by

the assessee and we are of the opinion that the assessee has produced the stock

statements, complete stock book where no negative stock has been shown and has

produced the entire purchase invoices supported by payments through bank channel.

It is also seen that the purchase invoices issued by the respective sellers contained

date-wise details of transportation of goods along with the vehicle numbers and in

course of assessment proceedings, the AO has not formed out any defects in such

purchase invoices. In the instant case, we also find that the AO has not made out a

case for rejection of books and as such the regular books of account has not been

rejected in absence of any rejection of books of account, the entries in such regular

books of account cannot be discarded as bogus. Moreover, we also find that the

inward and outward movement of the stock register as examined by A.O. has not

been doubted and as such the gross sales of the assessee which are also recorded in

the stock register has been accepted as correct and when sales are accepted as correct,

there is no reason to treat the purchase as bogus because there cannot be any

extraction of finished products without input of raw materials. We also find that the

17 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors entire addition of disallowances has been made on the basis of third party statement

which has been recorded behind the back of the assessee without affording any

opportunity to the assessee of cross examination of witnesses. As such, we are of the

opinion that the statements recorded behind the back of the assessee cannot be used

for making addition unless and an opportunity to cross examine the witness is

allowed.

arrived at a conclusion that the entire purchase cannot be considered to be bogus

especially when the books of account of the assessee are not rejected then the book

figures are to be accepted as correct. As such, we uphold the order of the ld. CIT(A)

and the Revenue appeal on this ground is dismissed being devoid of merits.

C. O. No. 3/Asr/2025 for Asstt. Year: 2014-15 15.

The assessee has filed Cross Objection against the order of ld. CIT(A) National

Faceless Appeal Centre (NFAC), Delhi dated 03/09/2024 passed u/s 250(6) of the

Income Tax Act, 1961 which has emanated from the order of the Assessing Officer

dated 26.03.2022 passed by the AO, NFAC, Delhi.

18 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

“1. That the Ld. CIT(A), has erred in upholding the action of the Assessing Officer in reopening of the case u/s 148 on account of alleged bogus purchases of Rice Phuck and Nakku..

147/148 of the Act on the ground of alleged bogus purchase, where the assessee has

relied on the judgments of the Hon’ble Punjab & Haryana High Court in the case of

M/s Supertech Forgings (India) Pvt. Ltd. Vs PCIT reported in [2021] 62 CCH 0632

Asr, which according to the assessee is an identical case.

are commenced by issue of notice u/s 148, beyond four years the same should be

based on some tangible materials available with the AO, but in the instant case, the

19 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors said reopening has been done simply on the basis of statement of third parties

recorded behind back of the assessee. He further submitted that complete invoices

were available with the assessee and day to day stock registers were maintained

evidencing the purchase of rice bran (raw material) the payment of which has been

made through bank channel. He further submitted that purchase of raw materials has

been accepted by the Assessing Officer in original assessment proceedings and as

such, the reopening of this assessment u/s 148 was bad in law and he strongly relied

upon the judgment of the jurisdictional High Court in the case of M/s Supertech

Forgings (India) Pvt. Ltd. Vs PCIT (supra) where under similar facts and

circumstances on the basis of statement of the buyers that they had not made any

sales to the assessee concern, the assessment was reopened u/s 148 and the Hon’ble

Tribunal held that the said information was required to be corroborated and verified

by the AO before taking any action u/s 148, because the original assessment has been

framed u/s 143(3) after necessary verifications and as such the Hon’ble Tribunal has

quashed the reopening u/s 148.

Court where the Hon’ble Court has confirmed the order of the Tribunal which has

quashed the reopening of the case u/s 148 of the Act. Number of other judgment has

also been cited and relied upon by the assessee which laid down the law that where

original assessment has been famed u/s 143(3) then it has to be proved that the fresh

20 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors

information that has been received has to be corroborated and until and unless the

same is proved, the reopening of the assessment is bad in law. On this issue, the ld.

AR of the assessee has cited number of judicial precedents which are as follows:

“i). Judgement in the case of CIT and another Vs Canara Bank, reported in 460 ITR 6 (SC).

ii). Judgement in the cae of ACIT Vs Meder Gems 154 taxmann.com 647. dated 25.08.2023(SC).

iii). Judgement in the case of Basic Clothing P. Ltd. Vs ITO 155 taxmann.com 507 Del HC order, dated 19.09.2023.

iv). Judgement of Hon'ble Bench in the case of GMADA for A.Y. 2008-09 and AY 2009- 10 in ITA No. 410/Chd/2013 order, dated 20.12.2017

v). Judgement in the case of CIT Vs ICICI Bank Ltd., reported in 31 taxmann.com 53 (Bom. HC)

vi). Judgement in the cae of Hon'ble Bombay HC in the case of CIT Vs Jet Speed Audio Pvt. Ltd., reported in 55 taxmann.com 531.

vii). Shiva Exports Vs ITO in [2009] 28 SOT 512 (Chd).”

has been recorded by the Assessing Officer in the sense that the purchase from ESC

has been recorded at Rs.3.98 crores instead of actual purchase of Rs.2.43 crores

which proves that the reopening is on the basis of wrong reasons to believe. On this

issue he has relied upon some judicial precedents which are as follows:

21 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors “i). [2024] 165 taxmann.com 197 (Amritsar- Trib.) ITAT, Amritsar Bench in the case of Sukhvir Singh Vs ITO.

ii). Smt. Monika Rani in ITA No. 582/Chd/2019, dated 28.02.2020.

iii). Gaurav Joshi Vs ITO, reported in (2019) 55 CCH 0083 (Jalndhar Camp)

iv). Sagar Enterprises Vs ACIT (2002) 257 ITR 335 (Gujarat High Court)

v). Harjeet Singh Vs ITO (ITAT) Delhi), order dated 12.11.2018, in ITA No. 2013/Del.2015.

vi). KMV Collegiate Sr. Sec. School Vs ITO (2017) 163 ITD 653 (Asr.) (Trib.)

vii). Fortune Metaliks Limited. Vs DCI, ITA No. 1090/Chd/2019, dated 12.01.2021-Chd. Trib”

the order of the ld. CIT(A) and argued that the tangible materials where there before

the AO for reopening of the assessment proceedings and refer to the observations of

the ld. CIT(A) in para nos. 5.1 to 5.10 of the appellate order.

the materials on record and also the contents of the paper book filed by the assessee

along with the copy of the judgment set of various decisions of various courts relied

upon by the assessee in support of his argument. We find that in the instant case, the original assessment was framed u/s 143(3) on 19th December, 2016 and the reopening notice u/s 148 was issued on 19th March, 2021 which has been issued beyond four

22 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors years, on the basis of statement of two parties recorded behind the back of the

assessee by the ITO, Ward 2(4), Abohar and on the basis of information supplied by

the ITO, Ward-2(4), Abohar to the AO of the assessee, proceedings has been initiated

u/s 148 without verifying the particulars and the contents of such information. The

AO has not made any enquiry before issue of such notice u/s 148. We find that the

Assessing Officer has not recorded his independent satisfaction. He has simply relied

upon the information passed on to him by the AO, Abohar and relying on the report

of the investigation wing, he has proceeded to reopen the assessment without any

independent satisfaction or findings that there has been any escapement of income.

Respectfully, following the law laid down by the jurisdictional High Court in the case

of M/s Supertech Forgings (India) Pvt. Ltd. Vs PCIT (supra) where the AO has

disallowed the entire purchase as bogus purchase on the basis of statement of third

parties recorded on the back of the assessee where they have denied making any sales

to the assessee company and this information received by the AO was neither

corroborated nor verified by the AO, the Hon’ble jurisdictional High Court quashed

the reopening of the assessment.

and as such we have no hesitation in holding that the reassessment proceedings in the

instant case by issue of notice u/s 148 dated 29.03.2021 is bad in law. We further find

that in the recorded reasons the purchase from Evergreen Sales Corporation (ESC)

23 I.T.A. No. 588/Asr/2024 & Ors Vohra Solvex Pvt Ltd. v. ITO & Ors has been (incorrectly mentioned at Rs.3,98,4048/-) against the correct amount

2,43,78,214/- which proves that the wrong reasons to believe has been formed by the

Assessing Officer and relying on the judgments cited by the assessee before us, the

reassessment proceedings are held to be void ab-initio and accordingly the cross

objection of the assessee is allowed on this legal ground and reassessment

proceedings as initiated by the Assessing Officer by notice u/s 148 dated 29.03.2021

are liable to be quashed.

the CO No. 3/Asr/2025 filed by the assessee is allowed.

Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate

Tribunal) Rules, 1963 as on 29.04.2025.

Sd/- Sd/- (Krinwant Sahay) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order