GOODONE TRADERS PRIVATE LIMITED,DELHI V. CIT(A), DELHI

ITA 5591/DEL/2024

AI Insights

The case involves Goodone Traders Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) and the assessment order of the Ld. AO for the assessment year 2014-15. The primary contention was regarding the addition made under Section 68 of the Income Tax Act, 1961, which the assessee argued was based on a non-speaking and erroneous order. The assessee challenged the validity of the proceedings under Section 148 of the Act, claiming that the re-opening of the assessment was based on borrowed satisfaction without independent verification. The Tribunal found that the entries were deemed bogus by the Investigation Wing of the ED, but the books of account and sales submitted by the appellant were not rejected or doubted by the Ld. AO. Consequently, the Tribunal decided to set aside the orders and restore the matter for re-assessment applying three years gross profit of the sales.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785452 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 03-12-2024
• Other Referred Cases: Union of India vs. Ashish Agarwal, Divya Capital One(P.) Ltd v. ACIT, Laxmipat Singhania Vs. CIT, Suwalka and Suwalka Properties and Builders Pvt. Ltd. Vs ACIT, K.P. Varghese Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KAUSHAL
• Assessee Lawyers: MEENAL GOYAL; VIDHI
• Keywords: Set aside; Business income; Difference of opinion; Change of opinion; Unexplained cash credit; Onus to prove; Tax effect; Commercial expediency; Principle of natural justice; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 271(1)(c); 68

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 5591/Del/2024 Assessment Year: 2014-15 Goodone Traders Private Limited, 886A/47 Ward No. 6, Mehrauli Delhi- 1100 30 PAN: AAACY2998Q Vs. Commissioner of Income Tax (Appeals), Delhi (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal of assessee is against order dated 24.10.2024 of Learned Commissioner of Income-Tax (Appeals)/National Faceless Assessment Centre (NFAC), Delhi (hereinafter referred as “the Ld. C) under Section 250 of the Income Tax Act, 1961 (hereinafter referred as “the Act”) arising out of assessment order dated 29.05.2023 of the Learned Assessing Officer/Assessment Unit, Income Tax Department, Delhi (hereinafter referred Assessee by: Ms. Meenal Goyal, CA, Ms. Vidhi Nangla, Adv. And Ms. Tanya, Adv. Department by: Shri Sanjeev Kaushal, CIT (DR) Date of Hearing: 19.08.2025 Date of pronouncement: 27.10.2025 Printed from counselvise.com ITA No.5591/Del/2024 2 as “Ld. AO\") under Section 147 read with section r.w.s. 144B of the Act for assessment year 2014-15. 2. Brief facts of case are that assessee filed return of income declaring income of Rs.4,46,51,650/- on 19.11.2014. The return was processed under Section 143(1) of the Act. The case was selected for scrutiny assessment for assessment year 2014-15 and order under Section 143(3) dated 07.12.2016 was passed for the year under consideration. As per information available on Insight Portal and flagged by the Directorate of Income-Tax (System) as per risk profiling, the information relating to evasion of tax by the assessee has been disseminated. The ICICI Bank, on receipt of confirmation of bogus import informed the Enforcement Department. The Enforcement Directorate conducted the investigation and filed a charge-sheet against some persons on 18.-07.2014. On receiving the aforesaid information, the Jurisdictional Assessing Office (i.e. JAO) had independently examined the said information available with the department which was flagged by the Directorate of Income Tax (System) as per risk profiling. Learned JAO formed strong belief that the assessee M/s. Goodone Traders Pvt. Ltd. had taken accommodation entry amounting to Rs.563,71,92,774/- during financial year 2013-14 relevant to assessment year 2014-15 and the income of Rs.563,71,92,774/- has escaped assessment within the meaning of section 147 of the Act and the notice under Section 148 of the Act was issued on 30.06.2021. Against notice under Section 148 of the Act, the Printed from counselvise.com ITA No.5591/Del/2024 3 assessee filed writ petition, challenging validity of notice under Section 148 of the Act which were issued within the extended time. Hon'ble Supreme Court disposed of writ petition in Civil Appeal No.3005/2022 dated 04.05.2022 in the case of Union of India vs. Ashish Agarwal and many others. Notice under Section 148 of the Act was issued on 25.07.2022. Notice under Section 143(2) of the Act dated 25.04.2023, 20.01.2023, 17.04.2023, 26.04.2023, 04.05.2023, 09.05.2023 and show-cause-notices dated 15.05.2023 and 16.05.2023 were issued. On completion of assessment proceedings, Ld. AO made addition of Rs.6,05,07,00,151/- under Section 68 of the Act vide order dated 29.05.2023. 3. Against order dated 29.05.2023 of Ld. AO, the appellant/assessee preferred appeal before the Ld. CIT(A) which was dismissed vide order dated 24.10.2024. 4. Being aggrieved, the appellant/assessee preferred appeal with following grounds: “1. Under the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (A) (\"Ld. CIT(A)\") vide a non-speaking and erroneous order dated 24.10.2024 u/s. 250 of the Income-tax Act, 1961 (\"Act\") (hereinafter referred to as \"1st impugned order\") has erred in upholding the untenable additions u/s. 68 of the Act made by the Ld. Assessing Officer (\"Ld. AO\") vide assessment order dated 29.05.2023 passed u/s. 147 r.w.s. 144B of the of the Act (hereinafter referred to as \"2nd impugned order\") as the same is also bad and untenable in law. 2. For that on facts and law, the 1st impugned order passed by the Ld. CIT(A) dated 24.10.2024 is erroneous for not appreciating that the 2nd impugned order dated 29.05.2023 passed by the Ld. AO determining the Printed from counselvise.com ITA No.5591/Del/2024 4 assessed income at Rs. 609,65,89,191/- is arbitrary, bad in law and liable to be quashed. 3. That on the facts and circumstances of the case and in law, the Ld. AO untenably re-opened concluded assessment proceedings solely based upon a complaint lodged by the Directorate of Enforcement vide borrowed satisfaction sans any independent verification and in a clear exercise of change of opinion merely to take a divergent view sans cogent material thereby contradicting the provisions of Section 148 of the Act, rendering the impugned orders and proceedings arbitrary, bad in law and liable to be quashed. 4. That on the facts and circumstances of the case and in law, the Ld. AO failed to meet the jurisdictional threshold vide absence of any independent enquiry/verification, based on purported \"information\" which does not qualify as \"information\" and the same was also not supplied to the Appellant in entirety being contrary to statutory mandate under 1st proviso to Section 148 of the Act rendering the impugned proceedings void-ab-initio vide Divya Capital One(P.) Ltd v. ACIT, [2022] 139 taxmann.com 461 5. That on the facts and circumstances of the case and in law, the AO has failed to consider that same income cannot be taxed \"twice\" contrary to settled law qua alleged foreign inward remittances of Rs. 605,07,00,151/- duly disclosed in the financial statements and accordingly offered to tax vide Laxmipat Singhania Vs. CIT (72 ITR 291) (SC). 6. That on the facts and circumstances of the case and in law, the Ld. Authorities have erred by failing to consider that the total sales of Rs.867.48 Crores includes sales to Al Khat Al Fizi Trading LLC and thereby reconciles with the amount disclosed as export sales in the audited financial statements which was duly offered to tax thereby rendering invocation of rigors of Section 147 r.w.s 148 of the Act untenable and non-est. 7. That on the facts and circumstances of the case and in law, the Ld. AO has erroneously classified the impugned sales as \"bogus\" failing to appreciate that if the impugned sales are considered as bogus then the same shall be reduced from assessable income to be brought to tax as an unexplained cash credit u/s 68 of the Act, resulting in Nil tax effect and would ultimately result in loss to the Appellant, and subsequently no tax would be payable to the Revenue, which would be an absurdity. Printed from counselvise.com ITA No.5591/Del/2024 5 8. That the impugned orders are passed while overlooking the fact that a letter of credit (L/C) is not a sine-qua-non for an export transaction and that the AO has erred in questioning the commercial expediency of the impugned transaction contrary to settled jurisprudence. 9. That on the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Ld. AO has failed to apply an independent mind by solely relying upon the arbitrary disputed amount of Rs.551,37,06,580/-purportedly discovered by an investigation report of Ernst & Young LLP and proposed as addition. That the Ld. AO in gross violation of principles of natural justice made the impugned additions which were duly disclosed by the Appellant and already offered to tax rendering the impugned addition arbitrary and legally unwarranted. 10. That on the facts and circumstances of the case and in law, the Ld. AO has failed to dislodge its burden of proof of any live link/nexus with Mohd. Afroze Hasan Fatta, as the Appellant is not required to prove the negative as per settled law vide K.P. Varghese Vs. ITO [1981] 7 Taxman 13 (SC). W 11. That on the facts and circumstances of the case and in law, the Ld. AO has failed to disprove the substantial evidence furnished by the Appellant to establish bona-fide export sales transactions and that the Ld. AO has also failed to present any substantial evidence to establish beyond reasonable doubt its claim of bogus sales. 12. That on the facts and circumstances of the case and in law, the Ld. AO has wrongly invoked the inapplicable provisions of Section 68, contrary to settled jurisprudence which prohibits the scope of Section 68 qua transactions carried out in normal course of business and already credited in Profit and Loss account vide Suwalka and Suwalka Properties and Builders Pvt. Ltd. Vs ACIT (ITAT Jaipur), ITA No. 302/JP/2024. 13. That on the facts and circumstances of the case and in law, the Ld. AO has failed to consider that transactions qua Seema Enterprises cannot be deemed as bogus sans any documentary evidences placed on record and on mere suspicions and guesswork. 14. That on the facts and circumstances of the case and in law, the AO has erred in initiating penalty proceedings u/s 271(1)(C) of the Act on the basis of the impugned assessment order. Printed from counselvise.com ITA No.5591/Del/2024 6 15. That the Appellant craves leave to add, delete or modify the aforementioned Grounds of Appeal at any time during the pendency of the Appeal. 16. All the aforesaid grounds of appeal are independent and without prejudice to one another.” 5. Learned Authorized Representative, further submitted that ground of appeal nos. 1 and 2 are general in nature. Ground of appeal nos. 3 and 4 regarding validity of proceedings under Section 148 of the Act. Ld. AO failed to consider that assessment under Section 143(3) of the Act was passed and copy of the same is at Volume-3 of the paper books. Para nos. 2.3 and 3 of approval mentions reasons for initiating proceedings under Section 147 of the Act. Notice under Section 148 dated 25.07.2022 was issued. In assessment order dated 25.05.2023, Ld. AO did not reject the book of accounts. The sales recorded in books of accounts was not doubted. Appellant/assessee prays that three years profit of the sales may be applied. 6. Learned Authorized Representative for the Department of Revenue submitted that the investigation by ED and Ld. AO found books of account and sales submitted by the appellant/assessed. 7. From examination of record in light of aforesaid rival contentions, it is crystal clear that entries were found to be bogus by the Investigation Wing of ED. Ld. Assessing Officer’s order dated 29.05.2023 had not rejected books of accounts. Ld. AO had not doubted the sales. The appellant/assessee has Printed from counselvise.com ITA No.5591/Del/2024 7 requested three years gross profit of the sale to be applied. In view of above material facts in interest of justice, orders of both the authorities below are set aside and the matter is restored to the file of Ld. AO for applying three years gross profit of the sale of the assessee after affording fair opportunity of hearing to the assessee. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 27th October, 2025. Sd/- Sd/- ( S RIFAUR RAMAN ) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27th /10/2025 Mohan Lal Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "