KAUSHAL PRAVINKUMAR SHAH,AHMEDABAD V. THE ITO, WARD-3(3)(2), AHMEDABAD

ITA 995/AHD/2025

AI Insights

This case involves an appeal by Kaushal Pravinkumar Shah against the order of the National Faceless Appeal Centre (NFAC), which confirmed an assessment order adding Rs. 69,22,150 as unexplained expenditure under section 69 of the Income Tax Act. The addition was based on allegations of bogus purchases from M/s. S.K. Enterprises, which were found to be involved in providing bogus invoices. The Assessing Officer had initially disallowed the purchases and taxed them under section 115BBE. The CIT(A) dismissed the appeal ex-parte. The Tribunal found that further investigation was needed regarding the GST input credit and the actual movement of goods, leading to the remand of the case to the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717647 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 05-05-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Keywords: Unexplained expenditure; Bogus purchase; Principle of natural justice; Accommodation entries; Bogus
• Section: 147; 148; 142(1); 69; 133(6)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Kaushal Pravinkumar Shah, D-504, Indraprasth-5, Nr. Flovour Resturant, Prahladnagar, Ahmedabad PAN: FHGPS4580B (Appellant) Vs The ITO, Ward-3(3)(2) Ahmedabad (Respondent) Assessee by: None Revenue by: Shri Abhijit, Sr. D.R. Date of hearing : 07-07-2025 Date of pronouncement : 12-08-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 27-11- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2018-19. 2. The grounds of appeal are as under:- “1. That on facts, and in law, the learned CIT(A) NFAC has grievously erred in dismissing of appeal and confirming the assessment order with addition of Rs. 69,22,150/-. 2. Having regard to the facts and circumstances of the case of your appellant, the relief claimed in Ground No. 1 is allowed. ITA No. 995/Ahd/2025 Assessment Year 2018-19 Printed from counselvise.com I.T.A No. 995/Ahd/2025 Kaushal Pravinkumar Shah, A.Y. 2018-19 2 3. Your appellant craves leave to add/alter or amend any of the grounds till the appeal is finally heard and decided.” 3. The Assessing Officer observed that the assessee is one of the beneficiaries who had taken accommodation entries through bogus invoices from M/s. S.K. Enterprises related to GST aggregated to Rs. 17.59 crores from buyers without actual movement of goods. More precisely in assessee’s case, bogus invoice of Rs. 69,22,150/- issued by the entity, Shahrukh J. Pathan and thus tried to evade taxes. 3.1 The assessee’s case was reopened u/s. 147 after recording reasons after following a procedure. Notice u/s. 148 was issued on 05-04-2022 which was not responded by the assessee immediately, but was responded on 16-11-2022 thereby filing ITR for A.Y. 2018-19 declaring total income of Rs. 8,45,120/-. In response to notices u/s. 142(1) dated 15-01-2024, the assessee submitted that he is the proprietor of Apar Chemical and doing trading as well as processing the chemical during the year under consideration. Notice u/s. 133(6) dated 15-01-2024 was also issued to M/s. S. K. Enterprises, but the same was not responded. Hence, the question of cross-examination was not granted by the Assessing Officer which was asked by the assessee during the assessment proceedings. 3.2 After taking cognizance of various details filed by assessee, the Assessing Officer held that M/s. S.K. Enterprise is involved in providing bogus invoices and in absence of any documentary evidences in support of the purchases made by the assessee, it is proved that the assessee made bogus purchase from M/s. S.K. Enterprises Proprietor Shahrukhkhan Jamiyatkhan Pathan amounting to Rs. 69,22,150/-. The Assessing Officer held that Printed from counselvise.com I.T.A No. 995/Ahd/2025 Kaushal Pravinkumar Shah, A.Y. 2018-19 3 purchase of Rs. 69,22,150/- should be treated as bogus purchases and disallowed the same as unexplained expenditure u/s. 69 of the Act, thereby taxing the same u/s. 115BBE Act. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal ex- parte without discussing anything on merit. 5. At the time of hearing despite giving notices, none appeared on behalf of the assessee. The assessee on 3rd May, 2025 has filed affidavit stating thereby to condone the delay in filing the appeal, the delay is condoned. 6. The ld. D.R. submitted that the said legal entity M/s. S.K. Enterprise’s status is shown by the GST Portal as “GST registration is cancelled suo moto from 05-09-2017”. The Ld. DR submitted that this should be taken on record. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. We have heard ld. D.R. and perused the details filed by the ld. D.R. wherein the GST registration has been cancelled of M/s. S.K. Enterprises by the GST Department w.e.f. 05-09-2017 from whom the assessee made purchase. As per the records, it can be seen that the Assessing Officer has not called for the information from GST Department related to the cancellation of the registration of M/s S. K. Enterprises as well as whether the assessee took the input credit of GST component or not, and if taken the credit, whether the GST Department has recovered the same from the assessee or not. The Assessing Officer has also not taken into account the bank statement of the assessee relating to the said transactions of purchase from M/s S.K. Printed from counselvise.com I.T.A No. 995/Ahd/2025 Kaushal Pravinkumar Shah, A.Y. 2018-19 4 Enterprises. From the perusal of the records it appears that the GST has been collected by the purchaser party (i.e. M/s S. K. Enterprises) but the same was not deposited to the Government treasury. The second component of GST tax credit/GST input credit whether has been claimed by the assessee has also not been questioned by the Assessing Officer. Thus, though the purchases were rightly held bogus purchase, while disallowing the said purchases, these specific queries should have been asked by the Assessing Officer. Further, the Assessing Officer should have verified the cash trail before concluding that it is a bogus purchase and hence amount to accommodation entry. It is found from the records that the M/s. S.K. Enterprises is involved in the accommodation entry and thus, if the assessee being a prudent businessman purchased the goods whether the assessee will pay the GST component when the purchaser is not a regular registered GST holder and will incur the loss without claiming GST input credit. In that case, the GST input credit is also a loss to assessee and why the said loss should be taken into account by the assessee. The factual aspect prima facie sets out the case of the Revenue that there is an accommodation entry and it will be appropriate to remand back this matter to the file of Assessing Officer for verifying the details from the bank statements of the assessee as to how the purchase was made and also from the GST Department whether the assessee claimed input credit of GST component. The Assessing Officer is further directed to verify the cash trail in the said transaction in consonance with the assessee’s cash books before concluding that it is a bogus purchase and accommodation entry. The Assessing Officer after verifying these details, adjudicate the matter as per Income Tax Act. These directions to the Assessing Officer is only for the reason that there should not be any Printed from counselvise.com I.T.A No. 995/Ahd/2025 Kaushal Pravinkumar Shah, A.Y. 2018-19 5 revenue loss at the same time the assessee be given proper opportunity of hearing by following principles of natural justice. If the assessee fails to bring on record the details, the Assessing Officer after doing inquiries and verifying the details from the GST and the concerned banks and decide the case on merit. The appeal of the assessee is partly allowed for statistical purposes. 8. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 12-08-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 12/08/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "