LATE BABULALL MANMALL DUGAR THROUGH HIS LEGAL REPRESENTATIVE AMRAV B. DUGAR,AHMEDABAD V. THE ITO, WARD-1(2)(1), AHMEDABAD

ITA 381/AHD/2025

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The case involves Late Babulall Manmall Dugar, represented by his legal representative Amrav B. Dugar, appealing against the order of the CIT(A) which upheld the Assessing Officer's decision to estimate commission income based on alleged bogus transactions. The Assessing Officer had reopened the assessment under Section 148 of the Income-tax Act, 1961, following information from the Commercial Tax (Enforcement) Department and the ITO (Investigation), which suggested suppression of purchases and sales. The CIT(A) affirmed the Assessing Officer's decision, leading to the appeal before the Tribunal. The Tribunal found the reopening and subsequent estimation of income to be based on insufficient evidence and procedural lapses, leading to a partial allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712808 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.P. MAKWANA
• Assessee Lawyers: PREYASHI TATED
• Keywords: Revised return; Rejection of books of accounts; Principle of natural justice; Tangible material; Bogus
• Section: 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.381/Ahd/2025 (Assessment Year: 2011-12) Late Babulall Manmall Dugar through his legal representative Amrav B. Dugar, 1, Sanjay Society Part-II, Shahibaug Road, Ahmedabad-04 [PAN :AEAPD 5581 P] Vs. Income Tax Officer, Ward 1(2)(1), Ahmedabad (Appellant) .. (Respondent) Appellant by : Ms. Preyashi Tated, AR Respondent by: Shri B.P. Makwana, Sr DR Date of Hearing 15.07.2025 Date of Pronouncement 29.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed by the assessee against the order dated 24.12.2025 passed by the Ld. ADDL/JCIT(A)-9, Mumbai (hereinafter referred to as \"CIT(A)\" for short), passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as \"the Act\" for short) for the Assessment Year 2011-12. 2. The assessee has raised the following grounds of appeal: “1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice. 2. The Ld. CIT(A) has erred in law and on facts in upholding estimated commission income by Ld. AO of Rs. 4,07,580/- being 2% of purchase and sales of Rs. 2,06,68,791/-. 3. The Ld. CIT(A) has erred in law in not providing cross examination of commercial tax officer as well as Income Tax Officer inspite of specific request made by appellant. 4. The Ld. CIT(A) has erred in law and on facts in upholding rejections of books of accounts made by the Ld. A.O. without any defects.” 3. The assessee filed the original return of income electronically on 20.09.2021 declaring income of Rs.5,49,140/-. Subsequently, a revised return was Printed from counselvise.com ITA No. 381/Ahd/2025 Late Babulall M. Dugar thru Legal Rep. Amrav B. DugarVs. ITO Asst. Year : 2011-12 - 2– filed declaring income of Rs.5,03,910/-. The return was processed under Section 143(1) of the Act. Subsequently, based on information received from the Commercial Tax (Enforcement) Department, Ahmedabad, and the ITO (Investigation), Unit-1, Ahmedabad, it was noted that the assessee had allegedly suppressed purchases and sales in the books of accounts. The Assessing Officer, thereafter, reopened the assessment under Section 148 of the Act. Subsequently, the reasons for re-opening were supplied and also an order rejecting the objection was passed. After considering submissions and examining records, the Assessing Officer rejected the books of accounts under Section 145(3) and estimated income @ 2% of the alleged bogus transactions totaling Rs. 2,06,68,791/-, being sales (Rs.1,04,52,730/-) and purchases (Rs.1,02,16,061/-) of the goods of M/s. Shakti Agrochem, resulting in an addition of Rs.4,13,376/-. The Assessing Officer treated this as commission income. The Assessing Officer has given the credit of profit already declared of Rs.5,796/- earned from M/s. Shakti Agrochem. 4. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A), who affirmed the action of the AO determining 2% on the transactions. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 5. Before us, the Ld. AR contended that the Assessing Officer made an arbitrary and excessive addition without any direct evidence or verification and merely on estimated basis. The Ld. AR submitted that the reopening was bad in law as there was no tangible material justifying such action. No discrepancy was found between the books of accounts and VAT returns. The Ld. AR also submitted that the Commercial Tax Officer had accepted the sales and purchases, and no independent inquiry was conducted by the Assessing Officer. That principles of natural justice were violated since cross-examination of the Commercial Tax Officer and Investigation Wing officer was not allowed, despite specific requests. The Ld. AR argued that the rejection of books of accounts under Section 145(3) of Printed from counselvise.com ITA No. 381/Ahd/2025 Late Babulall M. Dugar thru Legal Rep. Amrav B. DugarVs. ITO Asst. Year : 2011-12 - 3– the Act was unwarranted as no defect or inconsistency in accounting method was pointed out by the Assessing Officer. 6. We have considered the rival submissions and perused the material available on record. The core issue is the estimation of income based on alleged bogus transactions without proper inquiry or opportunity of cross-examination. We find from the record that the reopening is solely based on third-party information without any independent verification. It is also a fact on record that the Assessing Officer neither summoned nor cross-examined the officers whose statements formed the basis of reopening. It is also a fact on record that the Assessing Officer has failed to point out specific defects in the books or in the method of accounting consistently followed by the assessee. Having, given that the name of the assessee appeared in the list of suspicious dealers, and a level of estimation is justified. The litigation has to end conclusively. Keeping in view the specific facts of the case, lowest volume of tax implication and in the interest of justice, we consider it fair and reasonable to estimate the income @ 1% of the total alleged purchases and sales of Rs.2,06,68,791/-, which works out to Rs.2,06,688. The Assessing Officer is directed to restrict the addition to Rs.2,06,688/- and allow credit for income of Rs.5,796/- already declared, thus making net addition of Rs.2,00,892/-. 7. In the result, the appeal of the assessee is partly allowed. The order is pronounced in the open Court on 29.07.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 29.07.2025 **btk Printed from counselvise.com ITA No. 381/Ahd/2025 Late Babulall M. Dugar thru Legal Rep. Amrav B. DugarVs. ITO Asst. Year : 2011-12 - 4– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 21.07.2025 2. Date on which the typed draft is placed before the Dictating Member ….28.07.2025 3. Other Member …28.07.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S ….28.07.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement …29..07.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S …….29.07.2025 7. Date on which the file goes to the Bench Clerk ……29..07.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "