SOBIT METALS PVT LTD.,DELHI V. ITO,WARD-24(1), DELHI

ITA 4774/DEL/2024

AI Insights

Sobit Metals Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which confirmed the additions made by the Assessing Officer during reassessment proceedings. The additions were based on the allegation that the company received accommodation entries for bogus sales. The Tribunal examined the evidence presented, including invoices and stock registers, and noted that the original assessment had accepted the company's records. The Tribunal criticized the reassessment for relying on unverified statements and not allowing cross-examination, leading to the decision to delete the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312950 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: J. M. Wire Industries vs. State
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: VED JAIN; UMA UPADHYAY
• Keywords: Income from undisclosed sources; Bogus purchase; Accommodation entries; Bogus
• Section: 148; 143(3); 68; 133(6); 69C

Judgement Text

" 1 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI) BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 4774/Del/2024 (A.Y. 2012-13) Sobit Metals Pvt. ltd. C-143, Anand Vihar Vikas Marg Delhi, New Delhi PAN: AAACS1789H Vs. ITO Ward-24(1) New Delhi Appellant Respondent Assessee by Adv Ved Jain, CA Uma Upadhyay and Aditya Garg, AR Revenue by Sh. Sahil Kumar Bansal, Sr. DR Date of Hearing 16/04/2025 Date of Pronouncement 30/04/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (‘NFAC’ for short) dated 30/09/2024 pertaining to Assessment Year 2012-13. 2. Brief facts of the case are that, the Assessee is a Company engaged in the business of manufacturing of agriculture equipment and trading of iron and steel. The return of income for the year under consideration 2 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO was filed on 28/09/2012 declaring total income at Rs. 9,27,969/-. Originally, the assessment u/s 143(3) of the Income Tax Act, 1961 (‘Act’ for short) was completed in the case of the Assessee in terms of order passed on 25/02/2015, wherein the income declared by the Assessee was accepted with a minor adjustment of Rs. 19,253/- on account of disallowance of certain expenses.During the course of original assessment proceedings, the Assessee filed all the necessary details as called for from time to time with regard to the purchases, sales and inventory maintained by the Assessee on day to day basis. 3. Subsequently, the case of the Assessee wasreopened by way of issuing the notice u/s 148 of the Act on 29/03/2019. The reason for reopening was that the Assessing Officer received certain information from the office of DDIT, Investigation, Noida that the Assessee has received accommodation entries in the form of bogus purchases/sales of Rs. 10,00,000/- from M/s Multi Blizz Construction Pvt. Ltd. and of Rs. 30,00,000/- from M/s Akshay Sales Corporation. Based on the said information, the A.O. made the enquiry during the course of re- assessment proceedings and further notice u/s 133(6) of the Act were issued to those parties. However, no compliance were made by those Companies and thereafter the A.O. by holding the said total receipts of 3 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO Rs. 40,00,000/- as unaccounted income of the Assessee, accordingly made the addition u/s 68 of the Act in the hands of the Assessee Company. Besides, an addition of Rs. 60,000/- wasalso on account of commission @ 1.5% paid in cash for obtaining such accommodation entry of Rs.40,00,000/-. 4. As against the Assessment order dated 25/12/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide impugned order dated 30/09/2024, confirmed the addition made in the Assessment order by dismissing the Appeal of the Assessee. Aggrieved by the order of the Ld. CIT(A), the Assessee is in Appeal before this Tribunal. 5. During the course of hearing, the Ld. Assessee's Representative made submissions only on ground of Appeal No. 9 & 10 and the Grounds of Appeal No. 1 to 8 are not pressed. Therefore, the Ground No. 1 to 8 of the Assessee are dismissed as not pressed. 6. In Ground of Appeal No. 9 & 10, the Assessee challenged the action of the Ld. CIT(A) in confirming the addition of Rs. 40,00,000/- made by the A.O. u/s 68 of the Act and Rs. 60,000/- u/s 69C of Act. The grounds of Appeal No. 9 & 10 are reproduced as under:- 4 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO “9. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 40,00,000/- on account of sales receipts credited in the bank account treating the same as bogus invoking section 68 of the Income Tax Act. (ii) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought on record by the assessee in this regard. (iii) That the abovesaid addition has been confirmed rejecting the contention of the assessee that the provisions of section 68 are not applicable to the facts of the case. 10. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 60,000/- on account of commission paid on above addition under section 69C of the Income Tax Act. (ii) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought on record by the assessee in this regard.” 7. Before us, the Ld. Assessee's Representative submitted that the assessment in the case was completed u/s 143(3) of the Act on 25/02/2015, wherein during the course of assessment proceedings, all the evidences with respect to the purchases and sales such as purchase register, purchase ledger in the books of the Assessee, month wise sales register, sales ledger maintained in the books of the Assessee company were submitted before the A.O. The copy of those documents were 5 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO placed in the paper book pages 27 to 87 respectively. The ld. Assessee's Representative further submitted that, the Assessee is maintaining day to day stock register of raw material sales of goods and scrap and copy of the same were also filed before the A.O. who after verifying all the details with reference to books of account and bills and vouchersproduced, concluded that the trading stock declared by the Assessee are correct and no discrepancieswere pointed out with respect to the maintenance of the books of accounts of the Assessee company. Once the necessary enquires have been made with regard to the sale, in the re-assessment proceedings, the A.O. alleged that the sales made to M/s Akshay Sales Corporation and M/s Multi Blizz Construction are not genuine and the amounts received as sale consideration is accommodation entry. 8. The Ld. Assessee's Representative submitted that the A.O. alleges that no details of books sold were mentioned in the bills, nor the case were ever transported. To counter the same, the Ld. Assessee's Representative drawn our attention to the copies of invoices made available in the paper book page 330 onwards, wherein the description of goods along with quantity thereof is specifically mentioned and also the vehicle number through which the goods were transported are also 6 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO mentioned. It is further submitted by Ld. Assessee's Representative that payments were received through banking channels and duly recorded in the stock registers, therefore, it cannot be held that goods were never physically and actually sold to these parties. Ld. Assessee's Representative placed reliance on the judgment of Hon’ble Jurisdictional High Court in the case of J. M. Wire Industries reported in 2010 (7) EMI 778, wherein the Hon'ble High Court held that without disproving the stock or purchase date, the A.O. cannot make addition on mere suspicion to hold sales as bogus. Accordingly, the Ld. Assessee's Representative prayed for the deletion of the addition made. 9. On the other hand, Ld. Departmental Representative vehemently supported the orders of the Lower Authorities and submitted that the A.O. has received specific information from the Investigation wing, that the Assessee has received accommodation entries from those two parties and they in their statements, have admitted that they are engaged in providing bogus bills to various persons and therefore, the action of the A.O. in making addition of the sales by holding the same as accommodation entry deserves to be upheld. Thus sought for dismissal of the Appeal. 7 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO 10. We have heard both the parties and perused the material available on record. In the instance case, originally the assessment was completed u/s 143(3) of the Act, wherein all the details with respect to purchase and sales were filed by the Assessee and the same were examined by the then Assessing Officer. It is also pertinent to note that, stock records maintained by the Assessee Company on day to day basis were also examined by the A.O. and after such examination, the Ld. A.O. accepted the books of accounts. However, in reassessmentproceedings despite of all the material available on record, the A.O. alleged that very same sale made by the Assessee to these two parties as bogus,which is solely on the basis of their statements, wherein they stated that they are providing accommodation entries for bogus bills of sales. However, no opportunity of cross-examination has been given to the Assessee. 11. Apart from the same, the Assessee has demonstrated that goods were actually delivered to the parties. It is also seen that the goods so sold were out of the regular stock maintained for which necessary entries are also found recorded in the records. This being so, in our considered opinion, merely on the fact that the other party had refused and denied the transaction, without providing the opportunity to the 8 ITA No. 4774/Del/2024 SobitMetals(P) Ltd. Vs. ITO Assessee to cross-examination of those persons, no addition could be made holdingthat the sales are not genuine. In view of these facts, we hereby delete the additionsmade by the A.O. which has been confirmed by the Ld. CIT (A). Accordingly, we allow Ground No. 9 & 10 of the Assessee. 12. In the result, the Appeal of the Assessee is allowed. Order pronounced in the open court on 30th April, 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 30 .04.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "