INCOME TAX OFFICER, C R BUILDING DELHI V. SPECTRA TELEVENTURES PRIVATE LIMITED, SOUTH DELHI

ITA 225/DEL/2024

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the Ld.CIT(A) which had allowed the appeal of Spectra Televentures Pvt. Ltd., a private limited company engaged in telecom services and trading. The Revenue challenged the deletion of an addition of INR 12,88,63,261 made by the AO, which was initially disallowed as non-genuine purchases. The Tribunal examined the evidence and arguments presented by both parties, including the verification of suppliers and the nature of the transactions. The Tribunal concluded that the assessee had sufficiently demonstrated the genuineness of the transactions, leading to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716809 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2021-2022
• Appeal Filed On: 23-01-2024
• Other Referred Cases: Pr.CIT-5, Mumbai vs Kanak Impex (India) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR; CITING FOLLOWING
• Assessee Lawyers: RANO JAIN; MANSI JAIN
• Keywords: Business income; Bogus purchase; Onus to prove; Bogus
• Section: 143(3); 142(1)

Judgement Text

"ITA No.225/Del/2024 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.225/Del/2024 [Assessment Year : 2021-22] ITO, Ward-24(1), C.R.Building, I.P.Estate, Delhi-110002. vs Spectra Televentures Pvt.Ltd., B-170B, GF, Khasra No.82, 83, 84, 86, 91-94, Maidan Gari Extension, South Delhi, Delhi-110068. PAN-AANCS0303C APPELLANT RESPONDENT Revenue by Shri Mahesh Kumar, CIT DR Assessee by Ms. Rano Jain, Adv., Mansi Jain, CA, Pranshu Singhal, CA, Sakshi Rustagi, Adv. & Mudit Dewan, Adv. Date of Hearing 27.05.2025 Date of Pronouncement 20.08.2025 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the Revenue against the order dated 30.11.2023 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld.CIT(A)”] in Appeal No.NFAC/2020-21/10201795 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 30.12.2022 passed u/s 143(3) r.w.s. 144B of the Act pertaining to assessment year 2021-22. 2. Brief facts of the case are that the assessee is a Private Limited Company and as explained before the AO, its activities are described as under:- Printed from counselvise.com ITA No.225/Del/2024 Page | 2 “Spectra Televentures Pvt Ltd was formed in 2009 in which Lalit Gupta and Bindu Gupta are as Director's. Lalit Gupta, passed out from Regional Engineering College in 1988. Lalit Gupta joined Indian Air Force as Short Service Commission Officer. Lalit Gupta joined various Telecom companies such as Escotel Mobile Communications, Nortel Networks, Tekelec systems till 2008. Till date, he has vital experience of 34 years. Spectra Televentures Pvt. Ltd is primarily a Telecom Services company working as service provider with different Telecom Operators, Infrastructure providers and Telecom OEM vendors. Spectra is doing civil laying of optical fiber, Man holes, repair of RCC , road etc. Spectra is also doing civil and electrical work for tower foundations, network checking and resources supply and other associated civil Maintenance works as well. Spectra has prime telecom customers like Reliance Jio, Indus Telecom Infra, Airtel, Bharti Infra, American Tower Company, Samsung, Nokia etc. Spectra is also doing trading business in Drawing and colouring books and mobile accessories. Spectra has also worked in Solar civil work and installation work for KEC, Enerpac, Tata projects and Amplus. Spectra is also providing, telecom Transport services for their telecom customers.” 3. The return of income for the year under appeal was filed on 27.01.2022, declaring total income of INR 48,13,760/-. The case of the assessee was selected for complete scrutiny for the reason “verification of genuineness of business purchases”. Thereafter, notice u/s 143(2) of the Act was issued on 08.07.2022 followed notice u/s 142(1) alongwith questionnaire from time to time which were replied by the assessee. The AO made verification of the purchase made by the assessee of INR 12,88,63,261/- and after considering the report of the verification unit with respect to four suppliers as discussed in the assessment order, the total purchases made was disallowed as non-genuine purchases and the addition for the same was made in the assessment order passed u/s 143(3) of the Act dated 30.12.2022. Printed from counselvise.com ITA No.225/Del/2024 Page | 3 [4. Against this order, assessee preferred appeal before Ld.CIT(A) who vide impugned order dated 30.11.2023 allowed the appeal of the assessee. 5. Aggrieved by the order of Ld.CIT(A), the Revenue is in appeal before the Tribunal wherein the solitary ground of appeal taken by the Revenue is with respect to the deletion of the addition made by the AO of INR 12,88,63,261/- by holding that genuineness of purchase transactions were not proved before the AO. 6. Before us, Ld.CIT DR for the Revenue vehemently supported the order of the AO and submits that AO has made verification of four suppliers which revealed that either the parties are non-existent or not registered with the GST authorities or the registration with the GST authorities does not contain the goods which were supplied/stated to have been purchased by the assessee. Ld. CIT DR further submits that the AO had made necessary enquiries and provide sufficient opportunity to the assessee by providing the outcome of the verification done however, the assessee has failed to rebut the same with cogent material and filed vague replies. He thus, requested for the confirmation of the order of the AO. Ld. DR also placed reliance on the recent decision of Hon’ble Bombay High Court in the case of Pr.CIT-5, Mumbai vs Kanak Impex (India) Ltd. in ITA No.791 of 2021 dated 03.03.2025 wherein Hon’ble High Court has confirmed the addition made on account of purchase by holding the same as bogus. He prayed accordingly. Printed from counselvise.com ITA No.225/Del/2024 Page | 4 7. On the other hand, Ld.AR of the assessee submits that the purchases were made from 17 suppliers out of which enquiries were made in respect of only four suppliers and the entire purchases were held as bogus based on outcome from such four suppliers which also were duly rebuttal by the assessee. Ld.AR further submits that during the course of assessment proceedings, the assessee has provided new addresses of the suppliers and it was stated by the assessee that all the suppliers are assessed to Income tax and filed their Income Tax returns. With respect to the mis-match in items traded as per GST certificate, it was submitted that in GST Certificate, only five commodities could be mentioned and there is a possibility that the goods purchased by the assessee are other than those however, the same must be part of the total approved items. Since the assessee had purchased the goods after payment of GST and it is not alleged by the GST authorities that such purchases were not in terms of GST certificate issued to the supplier party, no adverse inference could be called for in this regard. Ld.AR further submits that the judgement relied upon by Ld. DR is distinguishable on facts as in that case, assessee was failed to file any details therefore, the Hon’ble Court was of the view that entire purchases were bogus whereas in the instant case, not only every precise details were provided but also the assessee has rebuttal the allegations made with all plausible evidences and explanations. Therefore, the judgement relied upon by the Revenue is not applicable to the facts of the present case. In the last, Ld.AR requested for the confirmation of the order of Ld.CIT(A) who after verification of the facts and submissions made, has deleted the additions. Printed from counselvise.com ITA No.225/Del/2024 Page | 5 8. Heard the contentions of both the parties and perused the material available on record. From the perusal of the assessment order, it is seen that AO had made enquiries with respect to the four parties of which the result of the enquiries were discussed party- wise in the assessment order. The main allegation of the AO was that either the suppliers are not non-existence or their GST Nos. was got cancelled or the description of goods mentioned as per GST certification do not match with the description of the goods purchases by the assessee. Further, it is seen that total purchases made from these four parties was only INR 2,88,73,590/- however, the entire purchases of INR 12,88,63,261/- was disallowed as bogus. The purchases from the four parties who were alleged as bogus was of 22.8% of the total purchases. It is further seen that the assessee has explained each and every discrepancy/short- comings noted by the Verification Unit and by AO based on which the entire purchases was doubted. The details submitted by the assessee are reproduced at pages 20-22 of the appellate order wherein the party-wise details submitted by the assessee are tabulated by Ld.CIT(A). A perusal of the same reveals that the assessee had filed confirmations, purchase invoices, copy of the acknowledgement through which the responses were filed by the respective parties before AO/Verification Unit and in some cases, the copy of the Balance Sheet and ITRs of the parties were also filed. Ld.CIT(A) after considering these facts, deleted the additions made by the assessee by observing in para 7.2 to 7.2.3 of the order as under:- Printed from counselvise.com ITA No.225/Del/2024 Page | 6 7.2. ”Ground of Appeal No. 5 of the appellant pertains to addition of Rs.12,88,63,261/- by the A.O. for disallowing the purchases. The Ld. A.O. passed his order u/s 143(3) of the Act, on 30.12.2022. The Ld. A.O. discussed the Issue of non-genuine purchases in his order. The order of the A.O. is not para-wise, the relevant portions related to such bogus purchases are re-produced as under: - “The assessee had incurred purchases amounting to Rs. 12,88,63,261/-for the year under consideration. The assessee was asked to establish the genuineness of such transactions and also establish the credibility of the suppliers. The assessee had submitted invoice copies and ITs of few persons with whom the assessee had entered into such transactions. All the submissions were verified and it is noticed that the total income offered in ITR by the suppliers is very less when compared to the amount of purchase transactions made with the assessee. On perusal of the ITR of Kiran Bala (Prop Jai Durga trading co), the total income offered to tax amounts to Rs, 3,66,660/- whereas the purchase transaction amounts to Rs. 47,94,989/-. Further, independent enquiry was conducted and it was found that in case of two suppliers i.e. M/s. M.J. international and Srinath traders, the persons are not traceable to the address provided by the assessee. On further verification it is found that one of them does not exist at that particular address. Such evidences depict that the said purchase transaction are not genuine and are bogus.\" 7.2.1 The Ld. A.O., in his order mentioned that verifications were made in the case of assessee through Verification Unit of the Department. The findings of the Verification Unit of the Department sent to the appellant for his comments. The appellant has raised his objections before the A.O. and submitted ledger copies, ITR copies and invoices of the Transactions. The Ld. A.O, did not accept the documents of the appellant by citing following reasons: - * The /TR copies of any of the supplier is not been provided by the assessee for the year under consideration i.e for AY- 2021-22. *The assessee's claim that certain purchases are exempted from GST is not correct as printed books such commercial catalogues are to be taxed at the rate of 12%. * Apart from the income of the creditor, other material evidence clearly demonstrates that such purchase transaction is a colorable transaction. 7.2.2 It is notice from the order of the A.O, that the appellant has also given further documents to the A.O. and also sought personal hearing. It appears that the personal hearing did not happen during the assessment proceedings. The Ld. A.O. finally gave the following findings: - \"The assessee's claim is not acceptable on the following grounds: Printed from counselvise.com ITA No.225/Del/2024 Page | 7 The assessee's contention of wrong addresses mentioned in the report is not acceptable as the assessee himself have provided the address as per his submission dated 31.08.2022. * The parties with whom such transactions took place responded to notice u/s 133(6). Their submissions were perused but their claim does not match with the description of goods registered with the GST department as argued in para 4.1.5 & 4.1.7. * Also, with respect to MJ international and Goushiya enterprises, the assesses had not produced the IR for the year under consideration nor have these two replied for notice u/s 133(6). Therefore, the transactions with MJ INTERNATIONAL and GOUSHIYA ENTERPRISES are non-genuine in nature as the assessee failed to provide any relevant evidence and the VU report provides that such persons could not be found at the addresses provided by the assessee. * Based on the above evidences and arguments the purchases made by the assessee during the year under consideration are completely non genuine and are added back to the total income.* 7.2.3.During the appellate proceedings, the appellant submitted his reply on 19.10.2023. The appellant raised many issues including the issue of personal hearing which was claimed but not granted to him. Whereas, the Ld. A.O.'s order suggest that the opportunity was availed by the appellant. Even if, the opportunity was not granted by the A.O., the submission and other document are examined at the appellate level, hence, this ground of the appellant is not allowed here. In his reply, the appellant submitted the purchases made by him (but this allowed by A.O.), in the table on the issue raised by the AO that the suppliers are showing low income as compared to the sale. The appellant contended that income is not directly related to the sales of the parties which was made basis by the A.O. for treating the purchases (sales of parties) of the appellant as non-genuine. The appellant further submitted that the new addresses of the parties were made available to the A.O. but the Ld.A.O. did not try to serve the notices at these new addressed. The appellant has also mentioned that the stock register of sale and purchase was produced before the A.O. but the A.O. failed to consider this register. The appellant also submitted that total sales (trading) are at Rs. 14,01,04,272/- and profit is shown at Rs. 1.12,41,011/-which is 8% of the sales. The appellant argued that his entire purchases are disallowed which is against the accounting principles and not justifiable. I have gone through the submissions of the appellant and other documents produced by him in the appellate proceedings. I have also gone through the P & L account furnished by the appellant. I have noticed that total trading sales is at Rs. 14,01,04,272/- and the Ld. A.O. disallowed the entire purchases amounting to Rs. 12,88,63,261/- of the traded goods. Interestingly, the Ld. A.O. did not appreciate the facts that how the appellant has made sales without the purchases. The Ld. A.O. even did not reject the books of the appellant and failed to re-caste the trading account. I have also gone through the documents submitted by the appellant related Printed from counselvise.com ITA No.225/Del/2024 Page | 8 to the so-called parties/suppliers. I have noticed that in most of the cases e- way bills are also enclosed and all the bills are in order. All the said parties are filing ITRs and maintaining books of accounts. It is further notice that all these documents were produced by the appellant before the Ld. A.O. The action of the A.O. by disallowing all the purchase and without disturbing the sales are not justifiable. It is further noticed by me that the appellant is maintaining stock register invoice by invoice and this stock register was also not rejected by the A.O. Even if it is presumed that all such parties are bogus, in that case, either sales should also be treated bogus, otherwise gross profit would shoot up ta 100%, which is unrealistic. Another presumption is that the appellant has made purchases in cash and obtained only bills from these parties, in this scenario the source of cash is explained i.e. taken from these parties to whom cheques were given. But, in any case the AO had to reject the books. It is also further seen that there is no drop in GP / NP ration in this year. Keeping in view of above observation, the addition made by A.O. Is deleted and the ground of the appellant is allowed.” 9. After considering the facts of the case and discussions made herein above wherein we observed that the assessee has filed all the plausible evidences in support of the purchases made and further successfully rebutted the allegations of the AO with respect to four parties from whom the enquiries were made. It is also seen that the facts of the judgement of Hon’ble Bombay High Court in the case of Kanak Impex (India) Ltd. (supra) as relied upon by Revenue, are totally distinguishable to the facts of the present case, as in the said case, the Hon’ble High Court observed that the assessee has not appeared in the re-assessment proceedings and failed to discharge its onus of proving the purchases. Before Ld.CIT(A), certain details were filed by the assessee therefore, the Hon’ble High Court was of the opinion that the purchases remained unexplained. In the instant case as observed above and could be seen from the table at pages 20 to 22 of the order of Ld.CIT(A), it is clear that the assessee has not only filed the confirmation, purchase invoices, ITRs but also filed the details of the acknowledgement etc. through which these Printed from counselvise.com ITA No.225/Del/2024 Page | 9 parties have responded to the AO/Verification Unit. Thus, in the instant case, the assessee has participated in the assessment proceedings and filed all the necessary evidences in respect to the purchases made and discharged its burden to prove the same as genuine. Therefore, the ratio laid down by the Hon’ble Bombay High Court in the case of Kanak Impex (India) Ltd. (supra) is not applicable to the facts of the present case. 10. As observed above, Ld.CIT(A) had duly considered the submissions made and the evidences filed by the assessee for rebuttal of the allegations made by AO and Revenue has failed to controvert those findings of Ld.CIT(A). Accordingly, we do not find any reason to interfere in the findings given by Ld.CIT(A) and thus, the same are hereby upheld. Grounds of appeal raised by the Revenue are dismissed. 11. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 20.08.2025. Sd/- Sd/- (YOGESH KUMAR U.S) JUDICIAL MEMBER Date:-20.08.2025 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File Assistant Registrar, ITAT, NEW DELHI Printed from counselvise.com "