2025 (11) TMI 1606 - AT - Income Tax

Ex parte dismissal of assessee appeals; cash deposit addition u/s 68 and bogus purchases fully upheld

ITAT Kolkata dismissed the assessee's appeals, proceeding ex parte due to repeated non-appearance and non-cooperation. On the addition u/s 68 relating to ... Addition u/s 68 - cash deposit during the demonetization - HELD THAT:- The counsel was asked to furnish certain details comprising bills, vouchers, invoices of the proof of payments, transport lorry receipts, weigh receipts, etc. and tally receipts etc. However, the counsel thereafter never turned up. The case was again fixed for clarification on 07.11.2025. However, no one appeared on behalf of the assessee despite being informed specifically on telephone. Therefore, we have no option but to dispose off these appeals on the basis of materials available before us with the help of ld. Departmental Representative. Pertinent to state that these appeals were decided ex-parte when the assessee did not respond to the various opportunities before the respective authorities below. Before us also the assessee is totally non-cooperative and is not coming forward with any type of explanation/evidences in support of the cash deposited during demonetization period. Addition on account of bogus purchases - HELD THAT:- As we find that the assessee though made representation on 16.05.2025 before us and requested some more time to prepare and place the evidences on record for the purchase, however, till date of hearing i.e. 07.11.2025, no details were filed and even today when the case of the assessee was called for hearing there was no representation on behalf of the assessee and accordingly, we are deciding the appeal with the assistance of ld. DR on the basis of records available before us. We find that the department has cogent and sufficient evidences in its possession that assessee had made bogus purchase from Rajputana General Commercial Corporation Pvt. ltd. during the year for which no evidences were filed before the ld. AO as well as before the ld. CIT (A). Since, there is no materials placed before us to controvert the findings of the authorities below, we also do not find any reason to interfere in the order of ld. CIT (A). Accordingly, we upheld the order of ld. CIT (A) by dismissing the appeal of the assessee. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether cash deposits made during the demonetization period could be treated as unexplained in the absence of any supporting evidence or explanation from the assessee, and whether the ex-parte additions made by the authorities below warranted interference. 1.2 Whether purchases claimed from a concern identified in a search and survey action as a provider of accommodation entries were liable to be treated as bogus purchases, and whether the additions made on that basis could be sustained when the assessee failed to produce any evidences in assessment or appellate proceedings. 1.3 Whether the findings and conclusions on bogus purchases and unexplained demonetization cash deposits in the lead appeals would apply mutatis mutandis to the connected appeals for other assessment years and related assessees. --- 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Treatment of cash deposits during demonetization as unexplained Interpretation and reasoning 2.1 The Tribunal recorded that in the lead appeal on demonetization-related deposits, detailed queries had been raised and the assessee was specifically directed to file supporting evidences such as bills, vouchers, invoices, proof of payments, transport lorry receipts, weigh receipts and tally records to justify the source of cash deposits made during the demonetization period. 2.2 Despite initial appearance and request for time, the assessee did not subsequently appear, did not respond to further notices, and failed to file any of the directed evidences. The matter was ultimately proceeded ex-parte, with the Tribunal relying only on material available on record and the submissions of the Departmental Representative. 2.3 The Tribunal noted that the assessee had similarly not cooperated before the lower authorities and that the additions on account of cash deposits had already been made ex-parte there as well. No material was produced before the Tribunal to rebut or displace the factual findings or to substantiate the claim that the cash deposits were explained by genuine business transactions. Conclusions 2.4 In the absence of any evidence or explanation from the assessee, the Tribunal found no basis to interfere with the additions made by the authorities below in respect of cash deposited during the demonetization period, and the appeal on this issue was dismissed. 2.5 For the connected appeal involving cash deposits during demonetization in another case for the same assessment year, the Tribunal held that the issue was identical to that decided in the lead appeal and applied its decision mutatis mutandis, resulting in dismissal of that appeal as well. --- Issue 2: Addition on account of alleged bogus purchases based on information from search and survey proceedings Legal framework (as discussed) 2.6 The Tribunal noted that the assessment had been reopened under section 147 of the Income-tax Act, 1961, and that the re-assessment order was framed under section 147 read with section 144. The reopening was based on information received from the investigation wing/assessing authority in consequence of search and survey operations in the case of a third party where statements under section 132(4) had been recorded. Interpretation and reasoning 2.7 The Assessing Officer received information from the concerned Central Circle that, during search and survey operations in the case of a third party, the person searched had in a statement under section 132(4) admitted that his group concerns were engaged in providing accommodation entries of bogus purchases and bogus sales, and that accommodation entries had been provided to the assessee through a specified concern. 2.8 The Assessing Officer, on the basis of this information and in the absence of any compliance from the assessee to the notices and questionnaire issued in reassessment proceedings, treated the entire purchases from the named concern as bogus and made an addition of the full purchase amount. 2.9 In appellate proceedings before the first appellate authority, the assessee similarly remained non-compliant, did not respond to repeated notices, and did not file any evidence such as purchase bills, confirmations, transport or delivery documents, or proof of payment to establish the genuineness of the purchases. The appellate authority, after discussing the search material and the non-compliance, upheld the Assessing Officer's action. 2.10 Before the Tribunal, the assessee initially appeared and sought time to place evidences regarding the impugned purchases on record. However, no documents were filed thereafter, and at subsequent hearings no one appeared on behalf of the assessee. The Tribunal therefore proceeded to decide the matter with assistance from the Departmental Representative and based on the record. 2.11 The Tribunal observed that the department held cogent and sufficient evidence from the search and survey proceedings that the supplier concern was an accommodation entry provider and that the assessee had obtained bogus purchase bills from it for a substantial amount. At no stage-assessment, first appeal, or second appeal-did the assessee place any material to rebut this evidence, to demonstrate actual movement of goods, or to prove the genuineness of the supplier and the transactions. 2.12 In the absence of any countervailing material, and given the categorical findings of the authorities below based on information from search and recorded statements, the Tribunal found no reason to interfere with the conclusion that the purchases in question were bogus. Conclusions 2.13 The Tribunal upheld the addition made on account of bogus purchases, affirming the order of the first appellate authority and dismissing the assessee's appeal. 2.14 For the other assessment years and connected appeals where the issues and factual matrix regarding bogus purchases were found to be similar, the Tribunal applied its findings and decision in the lead appeal mutatis mutandis and dismissed those appeals as well.