Anshu Pahwa vs Income Tax Officer

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 4545/Del/2025 for Assessment Year: 2019-20 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in short “Act”) dated 23.05.2025 in DIN & Order No: ITBA/NFAC/S/250/ 2025-26/1076408254(1), which in turn has arisen from the assessment order dated 13.12.2024 passed by the AO u/s 147 r.w.s. 144B of the Act.(DIN : ITBA/AST/S/147/2024-25/1071198961(1)).

The brief facts of the case are that the assessee is an individual and proprietor of M/s Lakshya Enterprises. The assessee filed return of income u/s 139 on 31.10.2019, declaring income of Rs. 9,15,010/- . Thereafter specific information was received as per Risk Management Strategy formulated by CBDT through ITBA software under the ‘High Risk CRIU/VRU cases. As per information received , the assessee has carried out following transactions with the following parties, during the year under consideration:

Further, as per information received by the AO, the above mentioned entities were controlled by Shri Rajesh Mittal along with some other persons to provide accommodation entries. Shri Rajesh Mittal and his associates used to prepare computerized bills in the name of the entities mentioned above and e-way bill were obtained from GSTIN portal. These bills were issued without actual delivery / movement of any goods. Shri Rajesh Mittal and his associates used to provide the bills in the name of the above entities after charging commission @2% of GST amount. The whole amount were received in the bank account of the above entities through banking channel , and Shri Rajesh Mittal and his associates used to give back amounts in cash to various beneficiaries after deducting their commission. As per information available, the assessee has taken accommodation entries amounting to Rs. 42,29,745/-. The case of the assessee was reopened by the Revenue. Order u/s 148A(d) of the 1961 Act was passed by the AO on 06.04.2023 , and notice u/s 148 of the 1961 Act was issued by the AO on 06.04.2023. In response thereof , the assessee filed return of income on 25.04.2023, declaring income of Rs. 9,15,010/-. Statutory Notices u/s 142(1) and SCN were issued by the AO , from time to time, during reassessment proceedings . The details are recorded in reassessment order passed by the AO at page 2.The assessee did not filed its reply/response to aforesaid notices , except on one occasion. The assessee submitted details of purchases made from M/s R K International and M/s Shree Bala Sundri Wooltex, and furnished copy of ledger account. The assessee claimed that as per its books of accounts, it had made genuine purchases of goods from the said parties.The AO held that the parties from whom the assessee made purchases were merely paper concerns , and are not genuine entities, managed and controlled by Shri Rajesh Mittal and his associates for providing accommodation entries to various parties. The AO observed that statement recorded of Mr. Rajesh Mittal supported the stand that the aforestated concerns were being used for providing accommodation entries by issuing fake bills without actual movement of goods. The assessee having not submitted documentary evidences to substantiate the genuineness such as details of vehicles for transporting the items , the ledger account submitted were not confirmed by the parties to establish genuineness, and merely submitted invoices and unconfirmed ledger accounts is not sufficient. The assessee having failed to discharge the onus that lie on it. Even notice u/s 133(6) of the 1961 Act were issued to the parties, but no replies were received. Thus, the AO made additions to the income of the assessee to the tune of Rs. 42,29,745/- by treating the said expenditure incurred for purchase of goods as unexplained expenditure u/s 69C r.w.s. 115BBE. Further additions to the tune of Rs.84,595/- was made as unexplained expenditure by the AO u/s 69C r.w.s. 115BBE of the 1961 Act, being 2% of Rs. 42,29,745/- being allegedly commission paid for arranging bogus accommodation bills by Shri Rajesh Mittal & Associates. Thus, the AO assessed income of the assessee at Rs.52,29,350/- as against returned income of Rs. 9,15,010/- vide assessment order dated 13.12.2024 passed by the AO u/s 147 r.w.s. 144B of the 1961 Act.

Aggrieved , the assessee filed first appeal with ld. CIT(A). The assessee filed submissions before the ld. CIT(A). The assessee submitted that the AO asked for certain additional documents such as toll receipts, purchase orders, and weight slips, but the notice was not served in a timely manner, and hence assessee could not reply. The assessee claimed that the payments to these parties were made through banking channel. The assesse claimed that no toll existed between the assessee’s premises and supplier premises. The assessee acquired goods through agents, which is standard practice. The bundles of yarn are counted manually , a method widely accepted in the trade , each bundle have 50-60Kg. The assessee had no dealing with the proprietors of the concerns or even Mr. Rajesh Mittal. The sales were made from these purchases, which were not questioned. The assessee also claimed before ld. CIT(A) parties have active GST number. The assessee submitted ledger accounts of the parties, invoices, e-way bills, GST Report , audited financial statements , bank statements evidencing payments to these parties through banking channel, before ld. CIT(A). The assessee submitted that no additions be sustained based on unsupported third party statements. The ld. CIT(A) rejected the request of the assessee for cross examination. The ld. CIT(A) observed that the assesse rejected the contentions of the assessee on the grounds that mere submission of invoices, ledger account and making payments through banking channel is not sufficient. The assessee has not submitted purchase orders, weight slips . The notices u/s 133(6) issued to parties were not complied with.The assessee failed to prove movement of goods , details of vehicles, payment of freight, acknowledgment of delivery of goods , and the person holding these entities have confirmed in their statement that these concerns were used for providing accommodation entries by issuing fake bills without movement of goods. Thus, the appeal of the assessee stood dismissed by ld. CIT(A).

Aggrieved, the assessee filed second appeal with ITAT. The ld. Counsel for the assessee submitted that the assessee is now filing additional evidences which include stock statements. It was submitted that statements of Mr. Rajesh Mittal was not provided to the assessee. It was submitted that Cross Examination was not allowed. It was submitted that the assessee made genuine purchases for which payments were made through banking channel. The ld. Sr. DR objected to the admission of additional evidences. The ld. Sr. DR has filed written submissions. The ld. Sr. DR relied upon the orders of authorities below

We have considered rival contentions and perused the material on record. Brief facts are narrated by us in the preceding para’s of this order and are not repeated. The assessee has filed paper book containing invoices, e-way bills, stock register , bank statements etc.. The assessee has filed additional evidences in the form of stock records. The copy of such additional evidences as well paper book were also handed over by assessee to ld. Sr. DR. . We are of the considered view that in the interest of justice, additional evidences are required to be admitted , and thereafter adjudicated on merits in accordance with law. It is also incumbent that fair hearing be granted to the assessee, and assessee should not be condemned un-heard. Proper Inquiry is also required to be conducted in this matter by ld. CIT(A), before arriving at the decision. In the interest of justice and fairness to both the parties , we are remitting the matter back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee, on merits in accordance with law. We clarify that we have not commented on the merits of the issue in the appeal. The assessee is directed to co-operate in appellate proceedings conducted by ld. CIT(A).We order accordingly.

In the result,the appeal of the assessee is allowed for statistical purposes