OMPRAKASH DEVILAL SHAH,NADIAD V. INCOME TAX OFFICER WARD 1, NADIAD

CO 43/AHD/2025

AI Insights

The case revolves around an appeal by the Income Tax Officer (ITO), Ward-1, Nadiad against the order of the CIT(A) which had deleted an addition of Rs 58,50,000 made under section 69C of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer, alleging that the assessee, Omprakash Devilal Shah, had entered into sham transactions with M/s Bright Corporation. The CIT(A) found that the assessee had provided sufficient evidence to substantiate the transactions, which the Assessing Officer had ignored. The Revenue's appeal contested the CIT(A)'s decision, arguing that the assessee failed to provide detailed evidence of the purchases, a claim the Tribunal found unsubstantiated based on the records presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774986 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 24-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: PIYUSH PANCHAL
• Keywords: Unexplained expenditure; Tax effect; Bogus
• Section: 147; 148; 144; 142(1); 69C; 139

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member The ITO, Ward-1, Nadiad (Appellant) Vs Omprakash Devilal Shah, 1215, Prahladnagar Society, Old Dumral Road, Nadiad PAN: BONPS8604G (Respondent) Omprakash Devilal Shah, 1215, Prahladnagar Society, Old Dumral Road, Nadiad PAN: BONPS8604G (Appellant) Vs The ITO, Ward-1, Nadiad (Respondent) Assessee by: Shri Piyush Panchal, A.R. Revenue by: Shri Abhijit, Sr. D.R. Date of hearing : 09-07-2025 Date of pronouncement : 03-09-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: ITA No. 1547/Ahd/2024 Assessment Year 2018-19 C.O. No. 43/Ahd/2025 (in ITA No. 1547/Ahd/2024) Assessment Year 2018-19 Printed from counselvise.com I.T.A No. 1547/Ahd/2024 & CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 2 The appeal filed by the Revenue and Cross Objection filed by the assessee are against the order dated 29-06-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2018-19. 2. The grounds of appeal are as under:- ITA No. 1547/Ahd/2024 A.Y. 2018-19 “(i) Whether on the facts and in the circumstances of the case, the Ld Commissioner of Income-tax (Appeals) has erred in deleting the addition of Rs 58,50,000/- made u/s 69C of the IT Act, 1961. (ii) Whether on the facts and in the circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in ignoring the information received from the GST department that M/s Bright Corporation does not have any genuine business activity and is merely passing on fraudulent Input Tax Credit while deleting the addition made by A.O.? (iii) The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal.” C.O. No. 43/Ahd/2025 “1. Appeal is made in breach of circular 05/2024, the appeal is allowable as per para 3.1 only on merit of the case in exceptional cases. The appeal is not made on merit. Appeal need to be dismissed. 2. All the relevant documents of purchase in dispute produced before ITO and CIT(A). No adverse comment passed on evidence. So same cannot be challenged in appeal. So appeal need to be dismissed on factual ground. 3. GST department has not initiated action against Assessee for sham transaction as alleged while re-opening the case of assessee and Income tax department without substantiating any necessary proof of such alleged transaction. Therefore there is no such cause of action on the part of the income tax department. Appeal is not justifiable in view of such fact. Printed from counselvise.com I.T.A No. 1547/Ahd/2024 & CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 3 4. Appeal challenging the order is made is not justifiable in law and fact need to be dismissed. 5. Respondent crave leaves to add amend or withdraw in view of just on or before hearing of appeal Total Tax Effect Rs. Rs. 45,31,864” 3. The assessee is an individual and filed his return of income u/s. 139 for A.Y. 2018-19 on 29-09-2018 declaring total income of Rs. 4,74,880/- after claiming deduction under Chapter VI-A of Rs. 1,60,094/-. The A.O. observed that the assessee entered into sham/bogus transaction for an amount of Rs. 58,50,000/- with M/s. Bright Corporation, Ahmedabad. The case was selected under scrutiny u/s. 147 of the Income tax Act with prior approval of the concerned authority. Notice u/s. 148 dated 31- 03-2022 was issued to the assessee which was duly served. In response to the notice u/s. 148, the assessee filed invalid return of income on 27-04-2022 as mentioned by the Assessing Officer in assessment order. Thereafter, the Assessing Officer noted that in absence of valid return u/s. 148, notices u/s. 143(2) could not be issued and therefore the notices u/s. 142(1) of the income Tax Act, 1961 was issued to the assessee. The assessee has not responded show cause notice u/s. 144 dated 21-12- 2022 but has replied show cause notice dated 28-01-2023 vide response dated 25-01-2023 and 27-01-2023. After taking into account the reply, the Assessing Officer observed that M/s. Bright Corporation was involved in availment and utilization of input tax credit fraudulently on the basis of fake invoices and subsequently passing on the same by issuing fake invoices to the end users and manufacturers. The Assessing Officer held that since the assessee has not explained the purchases of Rs. 58,50,000/- and therefore the same amount to unexplained Printed from counselvise.com I.T.A No. 1547/Ahd/2024 & CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 4 expenditure of the assessee and therefore made the addition u/s. 69C of the Income Tax Act and treated the said amount as undisclosed/unexplained expenditure. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The ld. D.R. submitted that the CIT(A) ignored the information received from the GST Department that M/s. Bright Corporation does not have any activity and is merely passing on fraudulent input tax credit. The ld. D.R. submitted that since the assessee has not given any detailed evidences either to the A.O. or to the CIT(A) related to the purchases as contemplated by the assessee, hence the Assessing Officer has rightly made addition of the said purchases u/s. 69C thereby treating it as unexplained expenditure. The ld. D.R. relied upon the assessment order. 6. The A.R. submitted that the CIT(A) has rightly allowed the appeal of the assessee since the assessee has furnished all the invoices of purchase, delivery challans and party ledgers with bank statements on 25-01-2023 to the Assessing Officer. The Assessing Officer has not at all taken into account these evidences and simply observed that the assessee has not explained the expenditure of purchases. The ld. A.R. further submitted that the Assessing Officer accepted that the actual supply took place but has only on the presumption basis held that the assessee involved in fraudulent transfer of credit without further investigating the same and totally ignored the delivery challan on purchase made from Bright Corporation Printed from counselvise.com I.T.A No. 1547/Ahd/2024 & CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 5 during financial year 2017-18. The ld. A.R. submitted that the assessee has also given the details regarding entry and exit vehicles relating to purchases made from Bright Corporation relevant lorry receipts and log book of warehouses. Thus, the ld. A.R. submitted that the CIT(A) has rightly allowed the appeal of the assessee. 7. We have heard both the parties and perused all the material available on record. It is pertinent to note that the assessee is in the business of purchasing of copper scrap for which the assessee has given the item-wise register thereby showing the purchase as well as sale details from various parties including that of Bright Corporation. The Assessing Officer has not at all taken into account the details filed by the assessee vide reply dated 25-01-2023 and 27-01-2023. These details reveal that the assessee has given the details of ledger account of Bright Corporation in assessee’s books account invoice issued from Bright Corporation, delivery challan issued by Bright Corporation, inventory register regarding goods received and goods sold as well as bank statement clarifying the payment made either through NEFT/RTGS transfers. The assessee has also given the details of inward and outward entry and exit of vehicles regarding purchases made from Bright Corporation as well as lorry receipts and log books of warehouses as well. These documents were totally ignored by the Assessing Officer and has not at all disputed by the A.O. at any point of time. Besides this, cancellation of GST registration was w.e.f. 01- 01-2019 and the purchases made by the assessee from Bright Corporation was prior to the said date i.e. 01-01- Printed from counselvise.com I.T.A No. 1547/Ahd/2024 & CO No. 43/Ahd/2025 Omprakash Devilal Shah, A.Y. 2018-19 6 2019. Therefore, the Assessing Officer was not right in making addition when the assessee has explained all the expenditure related to the purchase. The CIT(A) has rightly allowed the appeal of the assessee. There is no need to interfere with the findings of the CIT(A). Hence, the appeal filed by the Revenue is dismissed. 8. As regards CO no. 43/Ahd/2025 filed by the assessee is delayed by 175 days and in support of the order of the CIT(A). Hence the delay is condoned and the CO is allowed. 9. In the result, the appeal of the Revenue is dismissed and the Cross Objection filed by the assessee is allowed. Order pronounced in the open court on 03-09-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 03/09/2025 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 "