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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)/NFAC Delhi [‘CIT(A)’ in short] dated 26.03.2025 arising from the assessment order dated 28.04.2021 under Section 143(3) r.w.s 144B of the Income Tax Act, 1961 (‘the Act’) by the Assessing Officer for Assessment Year (A.Y.) 2018-19.
None appeared on behalf of the assessee. We heard the ld. DR at length who assisted us with the facts of the case and relied on the orders of the Assessing Officer. Case records carefully perused and considered.
Brief facts of the case are that the case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 on the issue of 'Business Purchase'. Accordingly, statutory notices u/s 143(2) & 142(1) were issued to the assessee by the AO. In response, the assessee filed reply from time to time and submitted the details called for in ITBA module.
The assessee is proprietor of M/s Ispat India and M/s Trimurti Roadways. The firm M/s Ispat India is in the business of trading of Iron and steel and the firm M/s Trimurti Roadways is in the business of transportation and running trucks. During the course of assessment proceedings, on the basis of verification of the details, the AO concluded that the assessee was actually not running any genuine business and in the given circumstances in totality the assessee was just a paper entity involved in providing accommodation entry of bogus billing against a fixed percentage of commission to defraud the revenue. The AO noted that during the year under consideration, the assessee had given accommodation entry of sales of Rs.17,49,83,402/-to two sales parties against fixed percentage of commission which was the income earned by the assessee during the relevant period. The AO further noted that in several instances of search and seizure operation by the department, it was found from the statements given on oath by the parties involved in giving accommodation entries of bogus billing, that the range of prevailing rate of commission varies between 4% to 8% of the value of bill issued. The AO has taken the mean value of commission @6% and decided the commission earned by the assessee on total sale of Rs.17,49,83,402/- amounting to Rs. 1,04,99,004/- and added to the total income of the assessee and the AO stated that since the business of assessee, trading of iron and steel was not recognized, addition on the points of unaccounted purchase u/s 69C of the Act, amounting to Rs.9,28,490/- and cessation of liability u/s 41(1)(a) of the Act amounting to Rs.64,63,941/- were not made in the assessment order. Aggrieved, assessee was in appeal before the CIT(A)/NFAC against the assessment order u/s 143(3) r.w.s. 144B issued by the AO dated 22.04.2021. Learned CIT(A)/NFAC dismissed the appeal of the assessee.
Aggrieved by the order of CIT(A)/NFAC, assessee is now in appeal before us with the following grounds:
1.“That the Ex-party Appellate order so passed by the Ld. CIT (A) NAFC thereby dismissing the appeal of the appellant and upholding the entire illegal and impugned addition so made by the AO is perverse to the law and to the facts of the case as such no tenable, because non issuance and service of any hearing notice as contained in para 4 of the order, as communicated/informed in para 12 of the appeal filed on form no. 35.
2.That the assessment order passed on 28.4.2021 u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 as has been upheld by the Ld. CIT (A) is further against the principal of law and natural justice as the draft assessment order was only sent on 23.4.2021 and final order was passed on 28.4.2021, without affording proper and reasonable opportunity to file its rebuttal thereof as permissible under the law, even the request for adjournment was also turned down/not considered prior to pass the order.
3.That no notice if any, has ever been issued/uploaded on the portal of the appellant u/s 143(2) of the Income Tax Act, 1961, or ever served, prior to finalize the assessment proceedings u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961, as such the same becomes barred by limitation as having no existence/validity under the law.
4.That the total commission income presumably worked-out of Rs. 1,04,99,004/- on lump-sum basis @6% on the total sales of Rs. 17,49,83,402/- thereby alleging that the appellant HUF is engaged in providing bogus bills, being entry operator is further wrong as entirely based upon to the whimsical assumptions, presumptions and gauss work of the AO without the support of any cogent material/evidence in support thereto either collected, confronted or ever placed upon records as having any nexus to the charging/earning of lump-sum commission at any point of time @ 6% of the total turnover declared of Rs. 17,49,83,402/- as on the contra the AO has already accepted the genuineness, bonafide and credit worthiness of the entire purchases of Rs. 21.57,45,155/- as appears in the audited financials forming part of the ITR.
5.That the assessment order passed on 28.4.2021 further becomes non-est under the law and the facts of the case, as such not tenable because of the view opined and held at page no. 7 of the assessment order, that the appellant has given only accommodation entry of sales to the tune of Rs. 17,49,83,402/- to two parties against fixed percentage of commission, is not correct because in support of which the AO has not supplied any material either collected, confronted or ever placed upon record having any nexus to support his view/opinion so drawn.
6.That the order so passed as has been upheld by the Ld. CIT (A) is further not legal under law and to the facts of the case as the AO has already accepted the entire audited financials forming part of the appellant's ITR containing the details of sales/purchases and expenses thereupon, which have not so far been disturbed/differentiated, or ever disputed u/s 145(3) of the Income Tax Act, 1961 prior to pass the assessment order, therefore without rejection of books of account no further commission if any, could be worked-out on lump-sum basis which forming illegal and impugned additions in the income of the appellant HUF.
7.That the order passed further becomes annulity as the AO also failed to consider that the goods sold to two parties for Rs. 17,49,83,402/-as contained and discussed at page no. 8 of the assessment order, the respective purchases to the tune of similar amount of Rs. 17,49,83,402/- in their hands have already been accepted as correct in the hands of two parties who's name contained at page no. 8 of the assessment order by their concerned assessing officers in the same year.
8.That the order passed is further unlawful and un-constitutional under the law and to the facts of the case, because the AO failed to consider an adjudicate the supported information provided and all the documents uploaded on ITBA module including the copies of all the returns filed under VAT and CGST declaring therein the entire purchases and sales thereof for the year under assessment on prescribed format, which has already been accepted and assessed as such by the VAT/CGST department after examination, verification of its bonafide and genuineness thereof, which the AO has also never controverted or ever doubted prior to pass the order.
9.That the AO also failed to collect, confront or ever place upon records, that the commission so worked-out on lump-sum basis @6% on the total turnover declared and appearing the books of the appellant (HUF) of Rs. 17,49,83,402/- to the tune of Rs. 1,04,99,004/- was having any nexus to the determination of the working of lump-sum commission income thereupon a 6% on the total sales of Rs. 17,49,83,402/- which worked-out to Rs. 1,04,99,004/- for the purpose of additions made in the declared income of the appellant (HUF).
10.That the AO has failed to appreciate that he has already accepted the correctness, completeness, bonafide and genuineness of all purchases as reflected in the books of account being forming part of the audited financials, the particulars of which contained in the ITR so filed for the year under assessment.
11.That the order passed u/s 143(3) r.w.s. 144B of the Act was further wrong as illegal against the law and to the facts of the case, because of his exceeding powers contained under the Rules and Guidelines framed by CBDT under the law as the case was selected under limited scrutiny for the purpose of verification/examination of their purchases only, which have found and already have been accepted as correct, while finalizing the assessment proceedings, therefore, no additions if any can further be made or to have been deserved to be made on the other grounds, as has been done in the present case prior to the written permissions from the concerned CIT for conducting its full scrutiny thereof in the said case.
12.That the order passed further becomes perverse under the law and to the facts of the case because of not providing P/H u/s 144B (6)(viii) of the Income Tax Act, 1961.
13.That the appellant has only viewed the appellate order on the ITBA portal on 23.1.2026 on the receipt of SMS alert on his phone, as his ID password was having and used by his accountant, who has already left his service long time back, as such present appeal so filed is within the prescribed period of limitation.
14.That the assessment order so passed on 28.4.2021 was against the rule of consistency, which is required to be considered and followed by Assessing Officer and by the Ld. CIT (A), as has been considered and accepted in the preceding and subsequent assessment year, where in the entire purchases/sales declared in the audited financials forming part of the respective ITRs have been accepted as being purchases/sales only as conducted the by the appellant for the year under assessment.
15.That the interest charged and penalty initiated u/s 270A is also wrong being consequential to the additions so made, as have been challenged in the present appeal and relief claimed therefrom as per the grounds of appeal and prayer clause on the present appeal.
16.That the appellant HUF assails their right to amend, alter or change any grounds of appeal at any time even during the course of hearing of this instant appeal.
PRAYER:
It is, therefore prayed:
1.That the assessment order so passed, may pleased be quashed having its non existence and survival thereof or alternatively delete the ad-hoc illegal and impugned additions so restricted and to have been made of Rs. 1,04,99,004/- being 6% ad-hoc commission charged/determined on the total turnover of Rs. 17,49,83,402/-.
2.That interest charted and penalty initiated u/s 270A of the Income Tax Act, 1961 may also accordingly be deleted/quashed as prayed above in ground no. 14.
3.Any other relief which this Hon'ble Forum may please be deemed fit and proper on the facts and in the circumstances of the case.”
Learned Departmental Representative of the Revenue submitted that it is the case of bogus sales, wherein the AO has assessed the income @6% of the total sale and the CIT(A)/NFAC has affirmed the 6% calculated as commission income from the bogus sales.
We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the sales made to two parties as genuine. The assessee, even prima facie, could not dispel the Revenue’s allegation that the assessee was involved in providing accommodation entry of sales for a commission. The assessee’s contentions to prove the sales as not bogus, hardly deserves to be accepted especially when the AO found that there is no existence of real business. On the other hand, the Revenue’s endeavour to assess the commission income at 6% of the sales, cannot be fully justified. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of 3% of the sales made to two parties of Rs 17.49 crore only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 to 16 is partly allowed.
In the result, appeal filed by the assessee in ITA No. 1276/DEL/2026 is partly allowed.