DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, LUDHIANA, LUDHIANA V. SPORTKING INDIA LIMITED , VILLAGE KANECH GT ROAD

ITA 16/CHANDI/2024

AI Insights

The case involves M/s Sportking India Limited, a company engaged in the textile business, which was subjected to a search under section 132 of the Income Tax Act. Following the search, an assessment was made under section 153A, which was later reopened based on information from the investigation wing about alleged bogus purchases. The AO issued notices to the entities involved in these purchases, which went unanswered, leading to the addition of Rs.465.16 Lacs to the assessee's income. The CIT(A) later deleted this addition, finding the transactions to be genuine. The revenue appealed against this decision, leading to the current proceedings before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398230 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: M/s S.P.Singla Construction vs. DCIT, Tejua Rohit Kumar Kapadia
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BANSAL LD
• Assessee Lawyers: ASHWANI KUMAR; DEEPALI
• Keywords: Corroborative evidences; Bogus purchase; Reason to believe; Tangible material; Bogus
• Section: 148; 143(3); 132; 153A; 68; 133(6)

Judgement Text

"1 04-06-2025IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH CHANDIGARH. BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 16/CHANDI/2024 (िनधाŊरणवषŊ / Assessment Year: 2011-12) DCIT-Central Circle-2 SCO 1-6, 3rd Floor Kichlu Nagar, Ludhiana-141001 बनाम/ Vs. M/s Sportking India Limited Village Kanech, GT Road, Sahnewal Khurd, Punjab 141120 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACS-3037-Q (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) & आयकरअपीलसं./ CO No.30/CHANDI/2024 (In ITA No.16/CHANDI/2024) (िनधाŊरणवषŊ / Assessment Year: 2011-12) M/s Sportking India Limited Village Kanech, GT Road, Sahnewal Khurd, Punjab 141120 बनाम/ Vs. DCIT-Central Circle-2 SCO 1-6, 3rd Floor Kichlu Nagar, Ludhiana-141001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACS-3037-Q (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) Assessee by : Shri Ashwani Kumar (CA) & Ms. Deepali Aggarwal (CA) – Ld. ARs Revenue by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 09-04-2025 घोषणाकीतारीख /Date of Pronouncement : 04-06-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. The revenue is in further appeal before us for Assessment Year (AY) 2011-12 against the order of Ld. Commissioner of Income Tax 2 (Appeals)-5, Ludhiana [CIT(A)] dated 10-10-2023 in the matter of an assessment framed by Ld. AO u/s 143(3) r.w.s. 147 of the Act on 29- 12-2018. The sole grievance of the revenue is deletion of addition of Rs.465.16 Lacs. The assessee has filed cross-objection wherein the assessee questions the reassessment jurisdiction of Ld. AO. In this regard, Ld. AR relies on the decision of this Tribunal in M/s S.P.Singla Construction vs. DCIT (ITA No.514/Chd/2023 dated 02-01-2025). The copy of the same has been placed on record. The registry has noted delay of 187 days in assessee’s cross-appeal which stand condoned. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 2.1 The assessee being resident corporate assessee is stated to be engaged in business of textiles, handlooms, power looms etc. The assessee was subjected to search u/s 132 and accordingly, an assessment was framed u/s 153A on 31-03-2016 at Rs.33.82 Crores. 2.2 However, the case was reopened pursuant to receipt of certain information from ITO (Inv.), Gurgaon regarding bogus purchases as made by the assessee. After recording reasons, the case was reopened and notice u/s 148 was issued to the assessee on 31-03- 2018 which was duly been responded to by the assessee. The reasons of reopening were also supplied to the assessee. The assessee objected to the same which was rejected by Ld. AO vide separate order dated 22-11-2018. 2.3 To ascertain the genuineness of purchases, Ld. AO issued notices u/s 133(6) to three entities viz. M/s Aditya Traders, M/s SR 3 Sales Corporation and M/s Pratap Enterprises. The same remained un- responded. The assessee had made aggregate purchases of Rs.465.16 Lacs from these three entities. Going by investigation findings, Ld. AO rejected these purchases and added the same u/s 68 to the earlier assessed income. Appellate Proceedings 3.1 The assessee assailed reassessment jurisdiction on legal grounds and also contested impugned addition on merits. It was, inter- alia, stated that no incriminating material was found in that respect during search on the assessee. Further, the reassessment has been initiated merely on the basis of information received from investigation wing. The payments to the suppliers were through banking channels. The assessee also raised various other arguments to assail the quantum addition on legal ground as well as on merits. The assessee’s submissions were subjected to remand proceedings. 3.2 The adjudication of legal grounds is contained in para 6.2.3 of the impugned order. The Ld. CIT(A) held that information was a tangible material and Ld. AO was within his right to reopen the case on the basis of this information. At the time of issuance of notice u/s 148, it was not necessary for AO to establish beyond doubt that income had escaped assessment. At this stage, there should be prima facie reason to believe that certain income had escaped assessment. This condition was fulfilled. Accordingly, the legal ground was dismissed. 3.3 For merits, the assessee drew attention to the purchase documents of these three concerns and relied on the decision of Hon’ble Apex Court in the case of Tejua Rohit Kumar Kapadia (94 4 Taxmann.com 325) to buttress the contention that the impugned purchases were genuine purchase. The documents furnished by the assessee include purchase bills, ledger extracts, dharam kanta receipts and copy of VAT D3 receipts. It was also contended that the payments were through banking channels and sales were accepted by AO. The books were not rejected by Ld. AO. 3.4 The Ld. CIT(A) concurred that the transactions made with these three parties were regular business transactions and appeared to be genuine in nature. The mere statement by third persons was not sufficient material unless supported by corroborative evidences. There was no evidence of routing back of cash to the assessee. The assessee provided all the supporting documents to prove these transactions. There was movement of goods across different states which was duly supported by transportation documents and statutory VAT forms. Accordingly, the impugned additions were deleted against which the revenue is in further appeal before us. The assessee, in its cross-objections, seek our indulgence on legal grounds. Our findings and Adjudication 4. From the facts, it emerges that the assessee was subjected to search proceedings on the basis of which an assessment was framed u/s 153A on 31-03-2016 on the basis of search proceedings. This assessment has been reopened by Ld. AO pursuant to receipt of information from the investigation wing that the assessee allegedly made bogus purchases from three entities as admitted by those entities during the course of certain proceedings in their respective cases. Armed with this information, Ld. AO formed an opinion of escapement 5 of income and re-opened the case of the assessee. To verify the purchases, Ld. AO issued notices u/s 133(6) which remained un- responded to by these entities. However, the assessee, in support of impugned purchases, furnished various documentary evidences which include purchase invoices, ledger extracts, transport receipts and applicable forms under VAT showing movement of goods. Undisputedly, the payments have been made to all the parties through banking channels and these parties are regular supplier for the assessee. The assessee provided all the supporting documents to prove these transactions. The books of accounts were duly audited and the sales turnover has been accepted by Ld. AO. The assessee has maintained quantitative details of trading items and no defect has been pointed out in the same. On these facts, it could very well be said that the assessee had duly discharged the initial onus of establishing the genuineness of these purchases. Except for investigation findings, there is no concrete material before Ld. AO to held these purchases as bogus purchases. Nothing has been brought on record to establish that the assessee’s own money was routed back through these concerns. It is trite law that no addition could be made on the basis of mere suspicion, conjectures or surmises. The sole basis of addition is third- party statements. Pertinently, no evidence of bogus purchases was found from the possession of the assessee during search proceedings. On these facts, the onus was on Ld. AO to prove his allegation with conclusive findings. In the absence of such an exercise, the impugned addition could not be sustained in law. The cited cash law of Hon’ble High Court of Gujarat in Tejua Rohit Kumar Kapadia (94 6 Taxmann.com 324) duly support our conclusion. Therefore, the impugned order, on merits, does not require any interference on our part. The revenue’s appeal stands dismissed. Consequently, the assessee’s cross-objection has been rendered infructuous. 5. The revenue’s appeal stands dismissed. The assessee’s cross- objection stand dismissed as infructuous. Order pronounced on 04-06-2025. Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated:04-06-2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH "