PUNEET GUPTA,DELHI V. INCOME TAX OFFICER, DELHI

ITA 1219/DEL/2024

AI Insights

The case involves Puneet Gupta, the appellant, who contested the reopening of his income tax assessment for the assessment year 2012-13 and the subsequent addition of Rs.16,00,000 as income from bogus sales. The Assessing Officer had reopened the assessment based on information from the DDIT (Inv.) suggesting that the assessee received accommodation entries from M/s Astro Informatics. However, the Tribunal found that the reopening was done mechanically without proper investigation or application of mind, and the sales in question were legitimate transactions of trading in Indian spices, specifically Badam and Cloves, which were supported by invoices and bank transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298836 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH TIWARI
• Assessee Lawyers: S ANUP MEHTA; NIRBHAY MEHTA
• Keywords: Set aside; Difference of opinion; Change of opinion; Reopening of assessment; Accommodation entries; Bogus
• Section: 148; 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “एस एम सी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.1219/िदʟी/2024 (िन.व. 2012-13) ITA No.1219/DEL/2024 (A.Y.2012-13) Puneet Gupta, C-7, Kalindi Colony, South Delhi, Delhi 110065 PAN: AAFPG-1460-R ...... अपीलाथᱮ/Appellant बनाम Vs. Income Tax Officer, Ward-48(4), Delhi ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : S/Shri Anup Mehta & Nirbhay Mehta ŮितवादीȪारा/Respondent by : Shri Rajesh Tiwari, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 09/12/2024 घोषणा कᳱ ितिथ/ Date of pronouncement : : 27/02/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as 'the CIT(A)') dated 19.01.2024, for assessment year 2012-13. 2. Shri Anup Mehta, appearing on behalf of the assessee submits that the assessee in appeal has assailed findings of the CIT(A) in upholding addition of Rs.16,00,000/- and rejecting assessee's jurisdictional ground challenging validity of reopening of assessment. 2 ITA No. 1219/Del/2024 (AY 2012-13) 3. The ld. AR of the assessee narrating facts of the case submits that the assessment for AY 2012-13 was completed u/s.143(3) of the Income Tax Act,1961(hereinafter referred to as 'the Act') vide order dated 30.01.2025. The Assessing Officer (AO) completed the assessment making disallowance of expenditure Rs.42,000/-. No other addition/disallowance was made by the AO. The assessee accepted the addition and made no further appeal against the said assessment order. Thereafter, on the basis of information received from DDIT (Inv.), the Assessing Officer reopened the assessment after four years. The AO without proper application of mind in a mechanical manner on the basis of information received from DDIT (Inv.) recorded reasons for reopening and issued notice u/s. 148 of the Act. The reasons recorded for reopening are at page 19 to 21 of the paper book. A perusal of reasons for reopening would show that the DDIT (Inv.) found that frequent high value cash deposits, transfers and RTGS credits followed by immediate transfers and RTGS debits were carried out in the bank account of M/s Astro Informatics. It is alleged that the said company is providing accommodation entries. During the period relevant to assessment year under appeal, the assessee had received an amount of Rs.16,00,000/- from the said company according to AO the amount received by assessee was accommodation entry. Hence, the assessment for AY 2012-13 in the case of assessee was reopened. 4. The ld. AR further submits that the assessee is engaged in trading of Indian spices. During the period relevant to assessment year under appeal, the assessee had sold ‘Badam’ and ‘Cloves’ to M/s Astro Informatics. The invoice dated 20.05.2011 for sale of Badam for an amount of Rs.10,74,217/- is at page 74 of the paper book and the invoice dated 21.05.2011 for sale of Cloves to M/s Astro 3 ITA No. 1219/Del/2024 (AY 2012-13) Informatics aggregating to Rs.5,44,559/- is at page 75 of the paper book. Against the aforesaid invoices, the assessee received payment of Rs.16,00,000/- from M/s Astro Informatics on 05.05.2011 through banking channel. The said amount is reflected in bank account of assessee's proprietorship firm M/s. JM International. The remaining amount of Rs.18,776/- was received by the assessee from M/s Astro Informatics by way of cheques on 26.05.2011. These amounts are duly reflected in bank statement at page 76 and 77 of the paper book. The assessee furnished all these details before the AO and the CIT(A), however, authorities below failed to appreciate the evidences furnished by the assessee and made addition of Rs.16,00,000/-. 4.1. On legal issue of validity of reopening, the ld. AR of the assessee submits that a bare perusal of reasons recording for reopening would show that they have been recorded in a mechanical manner without application of mind. The Assessing Officer while framing the assessment u/s. 143(3) has examined entire details and thereafter, made one addition of Rs. 42,000/- on account of disallowance of expenditure. The Assessing Officer in scrutiny assessment proceedings raised no doubt over the sales. Thus, it is a clear case of change of opinion on the basis of information received from DDIT (Inv.). 5. Per contra, Shri Rajesh Tiwari representing the department vehemently defended the impugned order and dismissing appeal of the assesssee. 6. Both sides heard, orders of the authorities below examined. The assessee while challenging reopening of assessment has alleged that assessment has been reopened beyond four years, merely, on the basis of information received from DDIT (Inv). The AO has not independently carried out investigation and applied his 4 ITA No. 1219/Del/2024 (AY 2012-13) independent mind on the information received. On reading of reasons recorded for reopening at page 19 of the paper book it is evident that reopening of assessment for AY 2012-13 in the case of assessee stems from information received from the Office of DDIT (Inv.). It is alleged that M/s Astro Informatics is engaged in providing accommodation entries and assessee is one of the beneficiary. The accommodation entries provided by the said company are in the form of share capital/share premium/ share application money/ unsecured loans. At the outset, I observe that the transaction between M/s Astro Informatics and the assessee is in the nature of purchase and sale of commodity (Badam and Cloves). The assessee had sold Badam and Clove against invoice to M/s Astro Informatics. The amount received against aforesaid invoices has been credited in the bank account of the assessee in two installments of Rs.16,00,000/- and Rs.18,776/-. Therefore, the reasons recorded for reopening in the instance case is contrary the facts on record. Therefore, I find merit in the submissions of assessee that reasons have been recorded by the AO in a mechanical manner without proper application of mind and appreciation of facts. The AO has merely on the basis of borrowed information from DDIT (Inv.) has recorded the reasons and has reopened the assessment. It is a well settled law that reopening on the basis of borrowed reasons is unsustainable and is bad in law. Therefore, I find merit in ground no. 2 of appeal and hold reopening of assessment without jurisdiction. The assessee succeeds on ground no. 2 of appeal. 7. Even on merits the addition of Rs.16,00,000/- made by the AO is unsustainable. The AO has made addition of Rs.16,00,000/- stating it to be bogus sales. The assessee has placed on record invoices at page no. 2 and 3 of the paper book for sale of Badam and Cloves to M/s Astro Informatics. The aggregate value of invoices dated 20.05.2011 and 21.05.2011 is Rs.16,18,776/-. The assessee has 5 ITA No. 1219/Del/2024 (AY 2012-13) received payment against aforesaid invoices on 05.05.2011 Rs.16,00,000/- and on 26.05.2011 Rs.18,776/-. Both these payments are reflected in bank account of the assessee. It is not the case of Revenue that aforesaid sales are not recorded in the books of assessee. If the aforesaid sales have been recorded in the books of assessee and the return of income has been filed based on said books, such sales have been offered to tax by the assessee. Hence, there is no question of again taxing the same amount on account of bogus sales. Thus, even on merits, the assessee has a good case. The assessee succeeds on ground no.3 of appeal, as well. 8. In the result, impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Thursday the 27th day February, 2025. Sd/- Sd/- (VIKAS AWASTHY) ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 27.02.2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. 6 ITA No. 1219/Del/2024 (AY 2012-13) BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "