VIJAY KUMAR CHHATTANI, RAIPUR,RAIPUR V. INCOME TAX OFFICER, WARD-1(2), RAIPUR, RAIPUR

ITA 120/RPR/2024

AI Insights

The case involves Vijay Kumar Chhattani, who was accused of engaging in transactions involving bogus bills for the purchase of paddy and rice, which were used to inflate expenses and evade taxes. The Income Tax Officer disallowed 25% of the purchase expenses as bogus, leading to an increased tax liability. The CIT(A) upheld this decision, finding that the transactions lacked genuine movement of goods and were merely paper transactions for commission. The Tribunal, while acknowledging the serious nature of the allegations and the evidence presented, decided to remand the case for a detailed examination of the facts and adherence to the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708439 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Sanjay Oil cake Industries Vs. CIT, Ratnagiri Stainless (P.) Ltd, Ashwin Purshotam Bajaj, Delhi Transport Corporation vs. DTC Mazdoor Union, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar, Mc Dowell & Company Ltd. Vs. CTO, Badami (deceased) by her LRs v. Bhali, Smt. Shrist Dhawan v. M/s. Shaw Brothers
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE GETTING REDRESSAL FROM TRIBUNAL EVEN WITHOUT; PRIYANKA PATEL
• Assessee Lawyers: ABHISHEK MAHAWAR; THESE
• Keywords: Set aside; Opportunity of being heard; Bogus purchase; Principle of natural justice; Sham transactions; Accommodation entries; Validity of assessment; Bogus
• Section: 271(1)(c); 131; 133A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.120/RPR/2024 Ǔनधा[रण वष[ /Assessment Year: 2016-17 Vijay Kumar Chhattani, S.S.D. Agro Tech Building, Village Tulsi, Neora, Tilda, Raipur, Chhattisgarh PAN: AFAPC4410R .......अपीलाथȸ / Appellant बनाम / V/s. Income Tax Officer, Ward 1(2), Income Tax Office, Ayakar Bhawan, Civil Lines, Raipur, Chhattisgarh 492001 ……Ĥ×यथȸ / Respondent Assessee by : Shri Abhishek Mahawar, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 04.07.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 14.07.2025 2 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 24.08.2023 for the assessment year 2016-17 as per the grounds of appeal on record. 2. The facts of the case as recorded by the AO are as follows: “During the year under consideration the assessee has derived income from business of manufacturing of Rice and trading of paddy, rice, broken rice etc. All books of accounts were produced for examination. The same have been examined by test-check. On verification of purchase bills it was noticed that the assessee had purchased paddy/broken from outside State and from local parties. Out of total purchases the assessee has purchases from local parties as under:- S.No. Name of the party Total purchase 1 M/s Annapurna Foods 28,50,000/- 2 M/s Shri Shyamji Rice Agrotech 28,50,000/- 3 M/s Shri Tulsi Agro 1,19,87,500/- 4 M/s Shri Sainath Agrotech 9,25,000/- 5 M/s Balaji Food Ricetech 33,25,000 Total 2,19,37,500/- 4. Survey operations u/s 133A were conducted by the Jt. CIT Range-1 Raipur in the business premises of Shri Sanjay Sharma, Hanuman Market, Raipur and Shri Kamlesh Kesharwani, Canvassing Agent, Ramsagarpara, Raipur and three Rice millers of Tilda Distst. Raipur on 15/03/2016. The point of inquiry was of bogus bills that were required through the brokers and entry 3 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 providers to the rice millers and rice traders. These brokers and entry providers were individuals related to the rice milling and rice trading business. Fake or bogus bills were provided to the rice millers by the broker himself or through entry providers. This meant that bogus bills were given to the rice millers and traders as per their demand but no actual purchase and selling of goods had taken place. During the survey operation, the premises covered unraveled a whole lot of material like, bill books of various paper firms run by these entry providers. They used these paper firms to open bank accounts through which they operated this business of providing bills. These bogus firms that were created only on paper by a set of brokers and entry providers, were also used to open bank accounts which were operated by these brokers and entry providers themselves. Survey action was also carried out in the case of Nagrik Sahakari Bank, Raipur where some of these bank accounts were maintained. The officials statements were recorded where they have admitted that they were aware that these accounts were run by a few other individuals (entry providers). It would be pertinent to mention here that all these bogus firms' operators (brokers and entry providers) have admitted on oath at the time of their statements recorded u/s 131 of the IT. Act that they never owned or operated any godowns or mills or never owned any stock in order to carry out any sale and purchase of goods. Their only work was to provide bogus bills to rice traders and millers. In their statements, it was categorically admitted that they acted as an intermediary in arranging the bogus sale and purchase bills between the parties without actual delivery of goods. It was revealed from their statements that the modus operandi of these firms is to provide bogus purchase bills. Brokers Shri Sanjay Sharma, Shri Aditya Sharma, Shri Kamlesh Kesharwani, Shri Ghanshyam Rijwani, Shri Narad Sahu and Proprietors of bogus firms have stated on oath that they provided bogus entries or bogus bills to various rice millers in lieu of which they received commission income only. It was stated that after receiving the payment from the rice millers in their respective bank accounts, the same were withdrawn in cash on the same day. Later-on, the cash withdrawn was given back to these millers after deducting their commission. These bogus bills had no transport or bilti/transport challans or weigh bridge slips in support of its genuinity. In normal course of business events, the bills of purchases are accompanied by the bills of transport and weigh bridge slips. This is more important in present scenario where volume of goods purchased and transported is in huge quantity. But factually, since no such physical movement of goods ever occurred, the bills do not accompanied the aforesaid vital documents. The survey action at multiple points supported the fact that these bogus bills were provided to the rice millers and traders on their demand. These demands were usually received by brokers directly who provide the bill himself or through any entry provider. The rice millers then made an RTGS payment on these bogus bills into the bank account of these bogus firms. Cash was withdrawn by these operators from the banks and given back to the rice millers. 4 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 The benefit of this practice is directly received by the rice millers. The millers by acquiring a bogus bill are able to bring to their books of account their unaccounted stock and cash purchases. In the state of Chhattisgarh, the rice millers can acquire paddy only through the state governed Mandi. The State has prohibited direct selling of paddy to the millers. However, this is openly violated by millers and the farmers and such direct selling and purchasing between the farmers and millers is a well known fact. This is especially true if the farmer's production does not meet the mandated norms set by the State Govt., in that case he prefers to sell to the millers. In case of the millers, during his manufacturing activities, lots of by-product is produced like, broken rice, bran, husk, etc. The Food Act of State has although set norms in terms of general percentage of production of rice and its by-products. In actuality, lot more quantity of broken rice and bran is generated that is not reported. To create movement of these extra products that is not accounted in the books of account of millers, they use this modus operandi to acquire bogus bills in order to create movement of cash purchase (from farmers and others). Amongst the persons whose statements were recorded during survey proceedings also consisted of rice millers who had mills but actually gave bogus bills. That is, only bills were given without having any stock transfer. It is also stated by them that they received a higher commission on these bogus bills as they also owned rice mills and their bills would qualify as more authentic. The rice millers have also accepted these facts during the cross examination before the Jt. CIT-Range-1 Raipur. Extracts of Statements of all individuals recorded u/s 131 of the 1.T. Act are attached herewith (Formed part of this Order as Annex-A) who confirmed the above explained modus operandi. In fact the entry providers and brokers were cross examined with rice millers in order to establish positive evidence to this unholy nexus of rice millers, brokers and entry providers. The entries of these nexus were to bring into account the unaccounted stock and unaccounted cash purchase of the rice millers. 8. As mentioned in point 11-13 of the above referred order, the disallowance of 25 of the bogus purchases which clearly applies to the present case also. Accordingly, the submission of the assessee is not accepted and 25% of such purchase expenses of the assessee are not allowed on account of bogus purchases. The facts mentioned above reveals the said amounts of bogus purchase which leads to rejection of books of account for the specific purpose as per the provisions of section 145(3) of the LT. Act. For the reasons detailed above, the purchases recorded in the books of account of the assessee amounting to Rs. 1,96,12,500/- are held to be bogus and 25% of such purchase amount works out at Rs.49,03,125/- is hereby added to the total income of the assessee in respect of transaction shown to have been made with different bogus firms. The 5 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 assessee has furnishing inaccurate particulars of his income, Penalty proceedings u/s 271(1)(c) of the LT. Act are initiated separately. (Addition of Rs.49,03,125/-) Subject to the above discussions, the total income of the assessee is assessed as under: Total income as shown in the return Rs.4,31,760/- Add: 1. Addition as discussed in para-8 Rs.49,03,125/- Rs.49.03.125/- Total Income of the assessee Rs.53,34,885/- R/o Rs. 53.34.890/- 3. That vide these facts and circumstances, through an ex-parte order dated 24.08.2023, the Ld. CIT(A)/NFAC has held as follows: “5. Adjudication; The accommodation entry provider has deposed and admitted before the Investigation Wing that they were engaged in providing bogus accommodation entries wherein bogus sales bills were issued without delivery of goods, in consideration for commission It was was found that the appellant was one of the beneficiaries of these bogus entries. These accommodation entry providers on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts which were returned to beneficiaries of bogus bills after deduction of their agreed commission. The assessing officer verified all evidences and has established that transactions M's Shrikhand Agrotech are bogus. The weight bridge slips and challan of transportation submitted were incomplete and improper. In this case, the finding by assessing officer based on statement given during survey u/s 133A, was that actual movement of goods never happened. The salient feature of accommodation entry is that all cash and bank transactions along with paper works will be clear except the actual stock transfer. Though payments made by the assessee towards the purchases are through banking channels, it is also revealed that the supplier was issuing bogus bills and vouchers to various parties. In this situation, producing the bills and vouchers and evidencing the payment made through cheque alone will not establish that the transactions are genuine. The assessing officer relied on the decision 6 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 in similar case of Sanjay Oil cake Industries Vs. CIT (2009) 316 ITR 0274 by High Court of Gujrat and disallowed 25% of such purchase expenses on account of bogus transactions 5.1 In the case of Ratnagiri Stainless (P.) Ltd [2017, 164 ITD 136], ITAT Mumbai held that, the assessee failed to prove the onus cast upon it to prove that purchases made by the assessee were genuine purchases, which were held by the authorities below to be bogus purchases as no material was supplied to the assessee by these suppliers which material in fact was purchased from grey market at lower price which led to higher margin of profits which need to be estimated and added to the income of the assessee. The learned CIT(A) confirmed the additions. These are information which are especially in the knowledge of the assessee and the onus is on the assessee to prove that purchases are genuine as these purchases are recorded in the books of accounts of the assessee. Section 106 of Indian Evidence Act, 1872 clearly stipulates as under: \"106. Burden of proving fact especially within knowledge When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The assessee was not able to discharge burden cast u/s 106 of 1872 Act as the assessee did not produce the original documents before the A.O. The assessee also did not file documents for showing movement of goods from supplier to assessee and from assessee to customer as evidence although it stated in its reply that said documents are being filed. The assessee did not submitted documentary evidence to show that there was movement of goods. In such circumstances, GP ratio needs to be estimated which definitely involved some estimation/guess work but the said estimation/guess work should be fair, honest and rational keeping in view factual matrix of the case and cannot be arbitrarily applied at the discretion of authorities. High Court Of Bombay in Income Tax Appeal No. 576 Of 2018 (12th JULY 2023) in the case of Ashwin Purshotam Bajaj held that, the A.O. has observed that respondent has purchased material from someone else while bogus bills were organized by these Hawala Traders. Therefore, at least to the extent even if it has been purchased from Hawala Traders the indisputable fact is that the purchases have been made and admittedly quantitative reconciliation of the stock was done by respondent of sale and purchase. The profit element in these accommodation entries are to be added to the income. Based on above discussions it is held that, in the instant case, the addition of 25% of payment to accommodation entry provider made by the assessing officer is correct and reasonable. As a result, the appeal is dismissed.” 7 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 4. After having heard the parties and on careful consideration to the materials/documents on record, we are of the considered view that this is not just a simple case of an ex-parte order wherein the matter is to be remanded to CIT(A)/NFAC but it is a case which has a pan India impact and presence for the fact that there are intermediaries/brokers working in the realm of rice mill and these brokers are providing bogus purchase bills, bogus sale bills to the rice mills owners for a commission. There is co-operative bank which is generally opened wherein the total amount is first deposited and after deducting the commission amount the remaining is refunded back through back door to the rice mill owners. Further, in this case the official statements have been recorded, where the entry providers have admitted on oath at the time of their statements recorded under Section 131 of the Act that they never owned or operated any mill/godown or never owned any stock in order to carry out any sale and purchase of goods. Their only work was to provide bogus bills to rice traders and millers. Therefore, it is the onus on the part of the Ld. CIT(A)/NFAC to conduct specific enquiry in the case of the assessee to find out whether any legitimate taxes that was to be paid to the Department remains unpaid or whether any colourable devices had been adopted by the assessee committing fraud on the revenue. In such scenario, fraud vitiates everything even natural justice and in such case addition has to be retained in the hands of the assessee. At the same time, 8 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 we refer to our judgment in the case of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos. 1 to 6, 8 & 9/RPR/2025, dated 20.03.2025 wherein we had dealt with similar issue on the same parameters of ex-parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC observing as follows: “7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld.CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions. 8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his 9 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 case before the first appellate authority, the position of the revenue will also not be jeopardized. 9. Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex-parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee. 10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India. 11. The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated 10 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice. 12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld.CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld.CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld.CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex- parte order passed by the Ld. CIT(Appeals), of course due to non- compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of 11 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee. 13. In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.” 5. Respectfully following the aforestated judgment and as per the directions in the foregoing paragraphs, we set-aside the order of the Ld. CIT(A)/NFAC and remand the matter back to its file for de novo adjudication as per law while complying with principles of natural justice. And at the same time, this being the final opportunity provided to the assessee, he shall represent his case merits and comply with all the hearing notices. 6. We also observe that the primary source from which all these matters have emanated is the investigation report of the department. It has been unearthed that the modus-oparandi adopted by the assessee is obtaining share application money a/w. premium from shell/bogus companies, which are having no credentials and only act as conduits to layer the transactions related to rotation of funds which are ultimately received by the beneficiary in the form of share application money/share premium. In other words, as per report of investigation, these practices 12 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 are colourable device in order to defraud the revenue. We are of the considered view that these matters are not simply ex-parte matters but since formation/basis of these matters is investigation report, it is now the onus on the part of the Ld. CIT(Appeals)/NFAC to verify and examine in detailed manner whether any fraud has been committed by the assessee towards department. That though on the ground of natural justice, one final opportunity has been given to the assessee company but the genesis of the entire facts and circumstances needs proper verification in light of the investigation report of the department so to find out whether any lawful taxes remain unpaid to the department due to sham transactions adopted which will be within purview of tax evasion amounting to fraud to the revenue and in such case, fraud vitiates everything including natural justice. 7. The application of principle of fraud was even considered by the Hon'ble Supreme Court in the case of Badami (deceased) by her LRs v. Bhali in Civil Appeal No.1723/2008, dated 22/05/2012 wherein the Hon'ble Supreme Court has held as follows:- \"20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others AIR 1994 SC 853 this court commenced the verdict with the following words:- \"Fraud-avoids all judicial acts, ecclesiastical or temporal\" It had been held that the courts of law are meant for imparting justice between the parties and one who comes to the court, must come with 13 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 clean hands. A person whose case is based on falsehood has no right to approach the Court. 8. In another decision of the Hon’ble Supreme Court in the case of Smt. Shrist Dhawan v. M/s. Shaw Brothers AIR 1992 SC 1555, it has been held that fraud and collusion vitiates even the most solemn proceedings in any civilized system of jurisprudence including natural justice. Further, the Hon’ble Supreme Court in the case of Mc Dowell & Company Ltd. Vs. CTO [1985] 154 ITR 148 (SC) has held that \"Tax planning may be legitimate provided it is within the framework of law, Colourable devices cannot be part of tax planning....\". 9. Therefore, in our considered view, in all these matters, it is the responsibility of the revenue authorities to investigate the matter in detailed manner as per law whether there is tax planning or tax evasion as per the transactions entered into by the assessee. If tax evasion is determined by the revenue in such circumstances additions are to be sustained in the hands of the assessee. 10. As per the aforesaid terms, the grounds stands allowed for statistical purposes. 14 Vijay Kumar Chhattani Vs. Income Tax Officer Ward-1(2), Raipur ITA No.120/RPR/2024 11. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 14th day of July, 2025. Sd/- Sd/- ARUN KHODPIA PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर / Raipur; Ǒदनांक / Dated : 14th July, 2025 ***SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur "