DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE, PUNE, SWARGATE, PUNE V. SHREE CHANAKYA EDUCATION SOCIETY, AUNDH, PUNE

ITA 2170/PUN/2024

AI Insights

The case involves the DCIT (Exemption) Circle, Pune as the appellant and Shree Chanakya Education Society as the respondent. The core issue was the alleged bogus purchases amounting to Rs.1,84,99,795 made by the assessee from a shell company, M/s Dev Shreem Solutions, which were purportedly used to inflate the application of income for tax benefits. The Assessing Officer reopened the assessment under section 147 of the Income Tax Act, 1961, based on information from the Investigation Wing. However, the Ld. CIT(A) / NFAC found that the assessee had not engaged in any wrongdoing, noting that the assessee's application of income exceeded its receipts, thus negating any tax evasion. The Tribunal dismissed the Revenue's appeal, supporting the Ld. CIT(A)'s decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717700 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2024
• Other Referred Cases: CIT vs. Maharashtra Academy of Engineering and Educational Research, CIT vs. Audyogik Shikshan Mandal, CIT vs. Apeejay Education Society
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P MURKUNDE
• Assessee Lawyers: S NEELESH KHANDELWAL; VINOD GUPTA
• Keywords: Unexplained cash credit; Bogus purchase; Reopening of assessment; Accommodation entries; Reason to believe; Charitable institution; Bogus
• Section: 147; 148; 143(3); 142(1); 271(1)(c); 11; 12AA; 153A; 68; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2155/PUN/2024 Assessment Year : 2014-15 DCIT (Exemption) Circle, Pune Vs. Shree Chanakya Education Society Flat No.1 and 2, Runwal Sarita, Balaji Park, Aundh, Pune – 411007 PAN: AAETS6660C (Appellant) (Respondent) CO No.12/PUN/2025 Assessment Year : 2014-15 Shree Chanakya Education Society Flat No.1 and 2, Runwal Sarita, Balaji Park, Aundh, Pune – 411007 Vs. DCIT (Exemption) Circle, Pune PAN: AAETS6660C (Cross Objector) (Respondent) ITA No.2170/PUN/2024 Assessment Year : 2014-15 DCIT (Exemption) Circle, Pune Vs. Shree Chanakya Education Society Flat No.1 and 2, Runwal Sarita, Balaji Park, Aundh, Pune – 411007 PAN: AAETS6660C (Appellant) (Respondent) Assessee by : S/Shri Neelesh Khandelwal & Vinod Gupta Department by : Shri Ramnath P Murkunde Date of hearing : 17-07-2025 Date of pronouncement : 11-08-2025 Printed from counselvise.com 2 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 O R D E R PER R.K. PANDA, VP : ITA No.2155/PUN/2024 filed by the Revenue is directed against the order dated 21.08.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2014-15. The assessee has filed the Cross Objections vide CO No.12/PUN/2025 against the appeal filed by the Revenue. ITA No.2170/PUN/2024 filed by the Revenue is directed against the order dated 21.08.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2014-15 cancelling the penalty levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). For the sake of convenience, both the appeals filed by the Revenue and the Cross Objections filed by the assessee were heard together and are being disposed off by this common order. ITA No.2155/PUN/2024 2. Facts of the case, in brief, are that the assessee is a trust registered u/s 12A of the Act. It filed its return of income on 29.09.2014 declaring Nil income. Subsequently information was received from the DDIT, Investigation U-2(4), New Delhi that the assessee had received accommodation entries through bogus purchase bills amounting to Rs.1,84,99,795/-. The Assessing Officer, therefore, reopened the assessment as per the provisions of section 147 of the Act by recording the following reasons: Printed from counselvise.com 3 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 “1. Assessee is Charitable trust registered u/s 12A of IT Act. The activities of trust mainly involves educational activities like running of Schools & Colleges. The ITR for AY 2014-15 was filed on 29-09-2014 and subsequently processed u/s 143(1) on 28-08-2015 generating refund of Rs.8,68,200/-. 2. From the material available on record, it is found that Assessee trust has made fictitious purchases to extent of Rs.1,84,99,795/- from one of the shell entities namely M/s Dev Shreem Solutions. These purchases were made on various dates from Jan. 2014 to March 2014. The Shell entities were operated by one Mr. Joginder Pal Gupta, who is accommodation entry operator/provider. During the search on Joginder Pal Gupta on 23.12 2019 at his office located at Netaji Subhash Place, Pitampura, Delhi, an excel sheet of various entities operated or used by J.P. Gupta by name of \"JP Sirs firms & Co All details\" was found on personal desktop used by Miss Kajal, an office employee of Joginder Pal Gupta. The excel sheet includes the entities with name M/s Dev Shreem Solutions. Further, on perusal of books of accounts of shell entities of Joginder Pal Gupta, maintained on tally records of Bipin Kumar Jha, CA who maintains books of shell entities of J. P. Gupta, it is found that Shree Chanakya Educational Society has made fictitious purchases of Rs.1,84,99,795/- on various dates from January to March 2014. 3. The ledger of Shree Chanakya Education Society in books of M/s Dev Shreem Solutons is reproduced as under for ready reference.- ……………….. 3. The modus operandi of arranging fake purchase bills by Joginder Pal Gupta is as under- Any client desirous of fake/bogus/fictitious bills provides JP Gupta with details of item, quantity & rate. The bill & E way bill is arranged from third party/shell entity. The client sends money by RTGS to bank account mentioned in bill. Once RTGS is received, JP Gupta collects Cash from third party/ shell entity who has provided bill. The Cash is then passed on to client to whom bill had been provided. There is no movement of goods. 4. Thus, it is clear that purchases to extent of Rs.1,84,99,795/- are fictitious/bogus and claimed as expenditure in I&E account of Assessee trust. Considering the above facts, it is clear that assessee trust has claimed bogus expenditure resulting in incorrect claim of application of income leading to underassessment of total income of Assessee trust to extent of Rs.1,84,99,795/-. Therefore, I have reason to believe that income to extent of Rs.1,84,99,795/- has escaped assessment for AY 2014-15 within the meaning of provisions of section 147 of the IT. Act, 1961 and case of Assessee trust needs to reopened to bring escaped income to tax 5. In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the Printed from counselvise.com 4 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded in above paragraph 2 to 4. 6. It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. 7. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Commissioner of Income Tax as per the provisions of section 151 of the Act.” 3. Accordingly, notice u/s 148 of the Act was issued to the assessee on 30.03.2021. Since the assessee has not filed the return of income in response to the notice u/s 148 of the Act, the Assessing Officer issued notice u/s 142(1) to the assessee to submit certain details as per the questionnaire. 4. The assessee on 24.02.2022 furnishing the following details called for in response to the notice u/s 142(1): (a) Invoice copy of Dev Shreem solution (b) Ledger account copy of Bank of Maharashtra (c) Payment details for purchases 5. The Assessing Officer during the course of assessment proceedings noted that the assessee is engaged in imparting secular education and various discipline of education. The total receipts from income from other sources was disclosed to the tune of Rs.1,02,37,86,354/-. He observed that as per report received from the Printed from counselvise.com 5 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 investigation wing of the department, M/s. Dev Shreem Solutions was a shell company and was providing accommodation entry / bogus bills without actual purchases. He referred to the information received from the Investigation Wing, the statement of Mr. Joginder Pal Gupta, the details found from the computer of Ms Kajal, one of the office employee of Mr. Gupta, books of account of shell entities maintained by Mr. Bipin Kumar Jha, C.A. and noted that Shree Chanakya Educational Society has made fictitious purchases of Rs.1,84,99,795/- on various dates from January to March 2014. From the details furnished by the assessee on 24.02.2022, the Assessing Officer noticed that the assessee has claimed purchases of Rs.1,85,00,000/- from M/s. Dev Shreem Solutions, New Delhi which according to him are matching with the amount reported by the Investigation Unit. In absence of any satisfactory explanation given by the assessee, the Assessing Officer made addition of Rs.1,85,00,000/- u/s 68 of the Act by treating the bogus purchases of Rs.1,85,00,000/- as unexplained credit. 6. Before the Ld. CIT(A) / NFAC it was submitted that the assessee is a public charitable trust registered u/s 12A of the Act and the return was filed by claiming exemption u/s 11 of the Act. It was argued that as per provisions of section 11, the entire income of the trust is exempt if more than 85% of the income is applied for the purpose of trust. It was submitted that the application of income made by the assessee was far in excess of the receipts of the trust by making capital and other additions required for creating excellent and world class educational facilities. Printed from counselvise.com 6 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 Under these circumstances, there can be no question of requiring any fake bills just to inflate the application of money. It was further submitted that the total application of money during the year was Rs.108,17,64,353/- towards purpose of the trust as against the income for the year at Rs.102,37,86,355/-. Thus, there was excess application of Rs.5,79,77,998/-. The assessee has also not claimed statutory accumulation u/s 11(1) of the Act. Presuming, but without admitting that the said payment was on account of fake bills, the Assessing Officer could have reduced the application of funds of the assessee by that amount and even by doing so also the entire income had been applied for the purposes of the trust and there was no income chargeable to tax for that year. Relying on various decisions, it was argued that the Assessing Officer was not justified in making addition of Rs.1,85,00,000/-. 7. Based on the arguments advanced by the assessee the Ld. CIT(A) / NFAC deleted the addition. While doing so, he noted that neither the assessee nor his employees know any Shri Joginder Pal Gupta. Further during the course of assessment proceedings the assessee was never given a chance to cross-examine Jogindar Pal Gupta. He observed that no third party enquiry has been conducted by the Assessing Officer during the course of assessment proceedings and he has not brought any material on record to show that the bills or invoices were fake. He has also not been able to show that the said computers, which have been purchased and which are being termed fake, have not been received by the institution in question. Printed from counselvise.com 7 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 8. Referring to the decision of Hon’ble Bombay High Court in the case of CIT vs. Maharashtra Academy of Engineering and Educational Research (2024) 161 taxmann.com 290 (Bom), he noted that denial of benefit u/s 11 will be restricted only to that income of trust which was used / applied directly or indirectly for benefit of prohibited persons. He noted that the Hon’ble Bombay High Court in the case of CIT vs. Audyogik Shikshan Mandal (2019) 101 taxmann.com 247 (Bom) has held that where funds of the assessee trust were utilized for purchase of car in name of its trustee, there was violation of section 13(2)(b) r.w.s. 13(3). However, denial of exemption u/s 11 should be limited only to amount which was diverted in violation of section 13(2)(b). He referred to the decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs. Apeejay Education Society (2015) 59 taxmann.com 102 (P&H) where the Hon’ble High Court has held that registration granted to the assessee society u/s 12AA could not be cancelled on mere ground that the assessee made bogus purchases of software in view of the fact that the assessee had brought plenty of evidence regarding truthfulness of transaction. In view of the above discussion and relying on various decisions, the Ld. CIT(A) / NFAC directed the Assessing Officer to delete the addition of Rs.1,85,00,000/-. 9. Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in appreciating the fact that the bogus nature of the transactions entered into Printed from counselvise.com 8 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 by the assessee with M/s. Dev Shreem Solutions has been established through credible information received from the Investigation Wing. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in appreciating that the lack of opportunity for cross-examination does not invalidates the findings of fictitious purchase transactions. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the statement of Shri Jogindar Pal Gupta, recorded under Section 132(4) of the Income Tax Act, 1961, holds significant evidentiary value and should not have been dismissed merely due to the absence of cross-examination. 4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the case laws relied upon by the Ld. CIT(A) are not applicable to the facts of the present case. The cited judgments address issues related to the genuineness of the application of income, rather than focusing on the matter of bogus transactions. 5. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 10. The assessee has raised the following grounds in its Cross Objection: 1. On facts and circumstances prevailing in the case and as per provisions of law; it be held that the appeal filed by Dy. Commissioner of Income Tax (Exemptions) contending that the Respondent was involved in booking of bogus expenses is improper, invalid and unjustified. Just and proper relief be granted to the respondent in this respect. 2. On facts and circumstances prevailing in the case it be held that even if expenses of Rs.1,85,00,000/- was to be disallowed, the Respondent had an excess application of Rs.5,79,77,998/- for the relevant Assessment Year. Therefore, even by doing so, there will be no income chargeable to tax for AY 2014-15. Just and proper relief be granted to the respondent in this respect. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete and raise any grounds of appeal at the time of hearing. 11. The Ld. DR strongly challenged the order of the Ld. CIT(A) / NFAC in deleting the addition made by the Assessing Officer. He submitted that when it was established through credible information that the transaction entered into by Printed from counselvise.com 9 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 the assessee with M/s. Dev Shreem Solutions was bogus, the Ld. CIT(A) / NFAC was not justified in deleting addition. Further lack of opportunity for cross- examination does not invalidate the findings of fictitious purchase transactions. He submitted that the statement of Shri Joginder Pal Gupta recorded u/s 132(4) has a significant evidentiary value and the same should not have been dismissed merely due to absence of cross-examination. He submitted that the various decisions relied on by the Ld. CIT(A) / NFAC are not applicable to the facts of the present case and are distinguishable. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be reversed and that of the Assessing Officer be restored. 12. The Ld. Counsel for the assessee referring to the reasons recorded for reopening of assessment drew the attention of the Bench to para 2 of the same and submitted that it is not known who is Miss Kajal since her full name is not given. Referring to page 19 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the statement recorded u/s 132(4) of the Act of Shri Jogindar Pal Gupta on 24.12.2019 and drew the attention of the Bench to the question Nos.6 to 12 and particularly question Nos.11 and 12 which read as under: “Q11. In response to no. 15 & 16 of your statement dated 23.12.19 u/s 132(4) of Income Tax Act, 1961 at 7003, Ansal Sunshine County, Kundli, Sonepat, you have stated Modus operandi in relation to the Bills/Invoices for various clients, wherein you have mentioned that you act as intermediary & arrange such bills from third parties who are working to provide such bills. While providing detailed modus operandi you have also mentioned that whenever a client wants a bill, he provide you the requirements such as nature of items, quantity, rate to you which is then ultimately forwarded by you to the party providing the bill. The party providing the Invoices/Bill sends you a copy of bill either through whatsapp or in hard copy. In case the bill sent is in soft copy or on whatsapp, you take print out of the same & put stamp and signature and then send it to client/parties requiring hills. You Printed from counselvise.com 10 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 have also stated that once the bills are sent, the party requiring Bills sends RTGS to the bank account mentioned in the bill and you collect cash from the party which has provided the bills. From the cash received, you pass on the cash back to the client/party requiring bill after deducting your commission. Please confirm and acknowledge that you had stated the same and also provide the list of the beneficiaries (Purchaser/Seller as per bill) of the bill entries provided through you for the last 6 years. Ans. Sir, I acknowledge and accept that such modus operandi as explained by me in my statement on Oath is correct and is stated by me. I have asked my staff to prepare a list of such beneficiaries of bill entries to whom bills have been issued through me. Sir, I also would like to add that I had started such entries for bill since January 2018 only and some details in relation to bill entries has already been submitted during my statement at 7003, Ansal Sunshine County, Kundli, Sonepat. Q12. I am showing you a loose sheets (Pages 2, 4 und 5) of Annexure A-1 (Pages 1-5) which has been found at the premise 604, 6th Floor, Best Business Park, Plot No. 2, Netaji Subhash Place, New Delhi in a Cobra spring file no. S-1650 green file wherein the name Tyagiji is written wherein on Page 2, 4 & 5 certain names alongwith amounts is figure are written. Please explain in detail the content of Page 2, 4 &5. Ans 12. Sir, I acknowledge that page 2, 4 & 5 in Cobra spring file no. S- 1650 green file wherein the name Tyagiji is written has been shown to me. The content on page 5 are related to the cash received in crores except where specifically mentioned in lakhs by me through Tyagiji for the purpose of providing loan accommodation entries to Cardinal Energy and Infrastructure Private Limited and its group companies including Amitech (India) Pvt. Ltd., Storm Sofi Technologies Pvt. Ltd. Pegasus Venture Pvt. Ltd. The amount written in front of name of companies/entities ie. Nicky Marmo Ltd., Bell Indus Fibrecom Pvt. Ltd., Otwin Garments Pvt. Ltd., Salonil Buildtech Pvt. Ltd. and Anuj Buildcon Pvt. Ltd. is the total cash in crores except where specifically mentioned in lakhs received by me through Tyagiji till 31 March 2019 for providing loan accommodation entries since 2012. Sir, this amount is also reflected in books of the account of my related companies/entities as loans and advances to Cardinal Group of companies. The same is also reflected in unsecured loans (Liabilities) in their books of accounts. The contents written on the right hand side on page number 5 with a boundary of pencil is against the name of Nicky Marino Ltd. and Saloni Buildtech Pvt. Ltd. amounting to 20 lakhs and 75 lakhs respectively are also amount of cash received for providing accommodation entries after 31st March 2019. These entries are also given by me through Tyagiiji for Cardinal Group of Companies. On page number 4 the amounts written against the companies/individuals are in lakhs and mentions the cash received through Tyagiji from various Printed from counselvise.com 11 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 companies/individuals/entities for providing loan accommodation entries in relation to Mumbai based parties. On page number 2 there exist date wise entries for cash received by me through Tyagiji for Good Earth Commodities India Pvt. Ltd. to provide loan accommodation entries for the month of February and March 2019 through Olwin Garments Pvt. Ltd., Nicky Marmo Ltd., Saloni Buildtech Pvt. Ltd. and Bell Indus Fibrecom Pvt. Ltd. (All companies/entities are related to me). The total cash in crores is received by me through Tyagiji till 31 March 2019 for providing loan accommodation entries. Sir, this amount is also reflected in books of the account of my related companies/entities as loans and advances to Good Earth Commodities India Pvt. Limited. The same is also reflected in unsecured loans (Liabilities) in their books of accounts. Page no. 3 is blank.” 13. He submitted that Shri Joginder Pal Gupta has categorically stated that he has started giving such fake entry bills since January, 2018 only, whereas the assessment year involved in the instant case is assessment year 2014-15. However, the same has been completely ignored by the Assessing Officer. Referring to page 33 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the answer to question No.29 by Shri Joginder Pal Gupta recorded u/s 132(4) of the Act on 25.12.2019 and the subsequent inference of the search party which reads as under: Ans 29 Sir, I acknowledge that I have been shown the page no 2 & 3 of the Exhibit -2. Here the first total amounting to Rs. 37.5 lakh received from Ramesh Kanti and Vicky and entries thereafter represents cash paid to the parties mentioned therein. It is also clear in the next entry wherein balance of 5.29 lakhs is shown. The entries mentioned on page 2 represents tentative amount which was to be paid from amount received from Ramesh and Vicky. However, entries mentioned on page 1 represents actual receipts and payments given effect by me. During the course of statement u/s 132(4) of the I.T. Act, 1961, Sh. Joginder Pal Gupta provided the details of loan accommodation entries provided to M/s DAG Pvt Ltd during the period F.Y. 2010-11 to F.Y. 2018-19 (Exhibit 3-page 22). Sh. Joginder Pal Gupta also provided summary of list of beneficiary of loan accommodation entries from 13 companies related to him amounting to Rs.179.63 Crores and certified the information to be true (Exhibit 3-pages 1a to 21). Printed from counselvise.com 12 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 Sh. Joginder Pal Gupta has also provided the contact numbers of key persons related to these beneficiary entities. Sh. Joginder Pal Gupta has also provided summary of GST Bills (pages 1-12 of the Exhibit - 4) which have been facilitated by him since Jan 2018 to various parties requiring bills. He has also assured to provide yearwise details of the GST bills provided through him in a span of few days to the department. (emphasis supplied by AR) These submissions were made by Sh. Joginder Pal Gupta in response to Q No.6, 20 & 24 above. 14. Referring to pages 35 to 37 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed by the DDIT (nv), New Delhi to the DCIT (Exemption), Pune regarding certain clarification with respect to PAN and name of the shell entity not mentioned in Enqury Report in the case of Joginder Pal Gupta. He submitted that the reasons were recorded on the basis of statement of Mr. Gupta where the name of two persons namely Miss Kajal, office employee and Bipin Kumar Jha, CA does not appear. His statement has not been considered in its entirety but considered selectively. Therefore, there is absolutely non-application of mind by the Assessing Officer. He has not verified the bank entries along with the bills when the books of account were produced. The Assessing Officer relied on something which has not happened during the year, therefore, the addition could not have been made. Further, on account of bogus purchases how can the Assessing Officer made addition u/s 68 is also not known. Printed from counselvise.com 13 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 15. The Ld. Counsel for the assessee in his alternate plank of argument submitted that search has taken place on Shri Joginder Pal Gupta during which certain incriminating material were found. Therefore, the only course of action that could have been taken by the Assessing Officer is under the provisions of section 153C and not u/s 147 of the Act and therefore the notices issued u/s 148 instead of under section 153C renders the assessment invalid. For the above proposition, he relied on the following decisions: 1. Sejal Jewellary Vs. Union of India [2025] 171 taxmann.com 846 (Bombay High Court) 2 Tirupati Construction Company v. ITO [2024] 165 taxmann.com 176 (Rajasthan High Court) 3 Shri Karshni Metals Pvt. Ltd Vs. ITO [ITA No. 5079/DEL/2019] (Delhi Tribunal) Date of pronouncement: 27th August, 2024. 4. Vijaykumar Mangilalji Chordiya Vs. NFAC (ITA No.1075/PUN/2024) (Pune Tribunal) Date of pronouncement: 19th September, 2024. 5 Sri Moti Panjabi, HUF Vs. ACIT (ITA No. 1474/PN/2011) (Pune Tribunal) Date of pronouncement: 21 November, 2012. 6. ITO, Ward-1, Ahmednagar Vs. Narendra Sampatlal Bafna (ITA No. 688/PUN/2024) (Pune Tribunal) Date of Pronouncement: 19th August, 2024. 16. Referring to the following decisions, he submitted that no addition can be made on account of bogus purchases in absence of independent enquiry by Assessing Officer: i) PCIT Vs. Shapoorji Pallonji and Co. Ltd. [2022] 141 taxmann.com 509 (SC) ii) PCIT Vs. Shapoorji Pallonji & Co. Ltd [2020] 117 taxmann.com 625 (Bombay High Court) Printed from counselvise.com 14 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 iii) Ashok Kumar Rungta Vs. ITO [2024] 167 taxmann.com 429 (Bombay High Court) iv) PCIT-1 Vs. SVD Resins & Plastics Pvt. Ltd. [ITA No. 1662 of 2018] (Bombay High Court) v) PCIT-13, Mumbai Vs. Vaman International Pvt. Ltd. [1940 OF 2017] (Bombay High Court) 17. Referring to the following decisions, he submitted that addition cannot be made based on statement recorded if Cross examination has not been granted: i) H.R. Mehta Vs. ACIT [2016] 72 taxman.com 110 (Bombay High Court) ii) CIT Vs. Rajesh Kumar [2008] 172 Taxman 74 (Delhi High Court) iii) Shri Deepak Valji Karia Vs. ITO [ITA No.259/MUM/2021] (Mumbai Tribunal) Date of pronouncement: 10th March, 2022 iv) Obulapuram Mining Company (P.) Ltd Vs. DCIT [2016] 72 taxman.com 73 (Bangalore Tribunal) v) ITO Vs. Pawan Kumar Gupta [2011] 43 SOT 32 (Delhi Tribunal) (URO) 18. He accordingly submitted that both legally and factually the addition could not have been made by the Assessing Officer. Therefore, the grounds raised by the Revenue should be dismissed. 19. The Ld. DR in his rejoinder referring to the decision of Hon’ble Delhi High Court in the case of PCIT vs. Naveen Kumar Gupta (2024) 168 taxmann.com 574 (Del) submitted that the Assessing Officer can initiate re-assessment proceedings u/s 147 of the Act even if the proceedings u/s 153C could have been initiated. Printed from counselvise.com 15 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 20. Referring to the decision of Hon’ble Gujarat High Court in the case of Amar Jewellers Ltd. vs. ACIT (2022) 137 taxmann.com 249 (Guj), he submitted that the Hon’ble High Court in the said decision has held that there was no condition u/s 153A that the additions should be strictly made on the basis of evidence found in the course of search or other post-search material or information available with the Assessing Officer which could be related to evidence found to show that the assessment undertaken u/s 153A and never be reopened u/s 147 would be incorrect statement of law. Relying on various other decisions, he submitted that the proceedings initiated u/s 147 of the Act are valid and cannot be held to be invalid. 21. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the Assessing Officer, on the basis of information obtained from the Investigation Wing that the assessee has indulged in making bogus purchases from M/s. Dev Shreem Solutions which came to light during the course of search on Shri Joginder Pal Gupta on 23.12.2019, reopened the assessment by recording reasons, the details of which have already been reproduced in the preceding paragraphs. Since according to the Assessing Officer Shri Joginder Pal Gupta was providing bogus entries to various parties including M/s. Dev Shreem Solutions and since the assessee has purchased various items from M/s. Dev Shreem Solutions to the extent of Rs.1,85,00,000/-, therefore, the Assessing Officer treated Printed from counselvise.com 16 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 such purchases of Rs.1,85,00,000/- as bogus and made addition of the same u/s 68 by treating the same as unexplained credit of the assessee and made the addition u/s 68 of the Act. We find the Ld. CIT(A) / NFAC deleted the addition made by the Assessing Officer on the ground that neither the assessee nor his employees know Shri Joginder Pal Gupta. Further neither the Assessing Officer has given any opportunity to the assessee to cross-examine Shri Joginder Pal Gupta nor any third party enquiry was conducted by the Assessing Officer. The Assessing Officer has not brought any material to show that the bills as produced are false. Further the assessee is a charitable trust registered u/s 12A and is claiming exemption u/s 11 of the Act. The total application of funds of the assessee for charitable purpose during the year is Rs.108,17,64,353/- as against the income of Rs.102,37,86,355/- and thus, there is excess application of Rs.5,79,77,998/-. According to the Ld. CIT(A) / NFAC, the assessee has not claimed statutory accumulation u/s 11(1) of the Act and therefore, even if such purchases are treated as bogus, then the Assessing Officer could have reduced the application of income of the assessee by that amount and even by doing so also since the entire income had been applied for the purposes of trust, there was no income chargeable to tax for that year. He, therefore, held that it was never the intention of the assessee to avoid any amount of tax and it has never done so. 22. It is the submission of the Ld. DR that the bogus nature of transaction entered into by the assessee with M/s. Dev Shreem Solutions was established through credible information received from the Investigation Wing. Further, the Printed from counselvise.com 17 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 statement recorded u/s 132(4) of the Act of Shri Joginder Pal Gupta holds significant evidentiary value and should not have been dismissed merely due to absence of cross examination. 23. It is the submission of the Ld. Counsel for the assessee that when Shri Joginder Pal Gupta in his statement recorded u/s 132(4) of the Act has categorically stated that he was indulged in providing such bogus entries from 2018 onwards, therefore, in absence of any contrary material at the disposal of the Assessing Officer, he could not have made the addition in the assessment year 2014-15 merely based on information obtained from the Investigation Wing and without applying his independent mind or without conducting any independent investigation to show that the bills produced by the assessee are false. 24. We find some force in the above arguments of the Ld. Counsel for the assessee. We find certain incriminating material were found from the computer of one Miss Kajal an office employee of Mr. Joginder Pal Gupta during the course of search at the premises of Shri Joginder Pal Gupta and his statement was also recorded u/s 132(4) of the Act. As mentioned earlier, Shri Joginder Pal Gupta in his statement recorded u/s 132(4) in reply to question No.11 has categorically stated that he has started giving such entries for bills since January, 2018 only. We reproduce his answer to Question No.11 at the cost of repetition which read as under: “Q11. In response to no. 15 & 16 of your statement dated 23.12.19 u/s 132(4) of Income Tax Act, 1961 at 7003, Ansal Sunshine County, Kundli, Sonepat, you have Printed from counselvise.com 18 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 stated Modus operandi in relation to the Bills/Invoices for various clients, wherein you have mentioned that you act as intermediary & arrange such bills from third parties who are working to provide such bills. While providing detailed modus operandi you have also mentioned that whenever a client wants a bill, he provide you the requirements such as nature of items, quantity, rate to you which is then ultimately forwarded by you to the party providing the bill. The party providing the Invoices/Bill sends you a copy of bill either through whatsapp or in hard copy. In case the bill sent is in soft copy or on whatsapp, you take print out of the same & put stamp and signature and then send it to client/parties requiring hills. You have also stated that once the bills are sent, the party requiring Bills sends RTGS to the bank account mentioned in the bill and you collect cash from the party which has provided the bills. From the cash received, you pass on the cash back to the client/party requiring bill after deducting your commission. Please confirm and acknowledge that you had stated the same and also provide the list of the beneficiaries (Purchaser/Seller as per bill) of the bill entries provided through you for the last 6 years. Ans. Sir, I acknowledge and accept that such modus operandi as explained by me in my statement on Oath is correct and is stated by me. I have asked my staff to prepare a list of such beneficiaries of bill entries to whom bills have been issued through me. Sir, I also would like to add that I had started such entries for bill since January 2018 only and some details in relation to bill entries has already been submitted during my statement at 7003, Ansal Sunshine County, Kundli, Sonepat. (emphasis supplied by us) 25. Even the search party after resuming the statement recorded u/s 132(4) on 25.12.2019 after answer to question No.9 had also mentioned that Shri Joginder Pal Gupta had provided summary of GST bills which have been facilitated by him since January, 2018 to various parties requiring the bills. Thus, a perusal of the statement recorded u/s 132(4) of the Act of Shri Joginder Pal Gupta which according to the Revenue has great evidentiary value shows that Shri Gupta has clearly and categorically stated that he was indulging in providing such fictitious bills to various parties who are interested only from January, 2018. It has been held in various decisions that the statement which is the basis for any addition should be read as a whole and cannot be read selectively. The Revenue cannot rely Printed from counselvise.com 19 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 on a part of the statement that suits it and ignore the other part that is unfavourable to it. As mentioned earlier, in the instant case the purchases were made during the financial year 2013-14. Therefore, when the books of account were produced before the Assessing Officer along with bills and vouchers and bank statements, the Assessing Officer should have conducted some further enquiries to establish that such bills are false or not true. However, he has failed to do so in the instant case. Since Shri Joginder Pal Gupta in his statement recorded u/s 132(4) of the Act has stated that he was indulging into providing such type of bills from January, 2018, therefore in absence of any other material before the Assessing Officer that Shri Joginder Pal Gupta has also provided such type of bogus bills even in financial year 2013-14, he could not have made any addition in the hands of the assessee treating the purchases as bogus and that too u/s 68 of the Act. 26. We further find merit in the arguments of the Ld. Counsel for the assessee that when the assessee is registered u/s 12A and its application of income during the year is Rs.1,08,17,64,353/- as against income of Rs.102,37,86,355/-, there was no need on the part of the assessee to indulge into such fictitious transactions since there is excess application of Rs.5,79,77,998/- and even after reducing the amount of Rs.1,85,00,000/-, still there is excess application of income and therefore, no income is chargeable to tax. We, therefore, concur with the findings of the Ld. CIT(A) / NFAC that the assessee has not indulged into any such bogus transactions during the year. We, therefore, uphold the order of the Ld. CIT(A) / NFAC on this issue and the grounds raised by the Revenue are dismissed. Since we have Printed from counselvise.com 20 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 dismissed the grounds raised by the Revenue, therefore, the Cross Objection filed by the assessee becomes infructuous. Accordingly the same is dismissed. ITA No.2170/PUN/2024 27. After hearing both sides, we find the Assessing Officer in the instant case levied penalty of Rs.1,23,83,690/- u/s 271(1)(c) of the Act on account of addition of Rs.1,85,00,000/- made by him u/s 68 r.w.s. 115BBE of the Act. We find the Ld. CIT(A) / NFAC deleted the penalty on the ground that he has already deleted the addition in quantum appeal. Since the order of the Ld. CIT(A) / NFAC deleting the quantum addition has been upheld by us in the preceding paragraphs, therefore, the order of the Ld. CIT(A) / NFAC deleting the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act does not call for any interference. The grounds raised by the Revenue on this issue are accordingly dismissed. 28. In the result, both the appeals filed by the Revenue and the Cross Objection filed by the assessee are dismissed. Order pronounced in the open Court on 11th August, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 11th August, 2025 GCVSR Printed from counselvise.com 21 ITA No.2155/PUN/2024 CO No.12/PUN/2025 ITA No.2170/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 04.08.2025 Sr. PS/PS 2 Draft placed before author 07.08.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "