AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1468
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....bogus purchase/sale is chargeable to tax when it is established that the assessee is involved in bogus purchase transactions. 2. Alternatively, Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct on facts and in law in computing the gross profit to mere 0.76% of bogus purchases and sales whereas in one of the order of Tribunal on which Ld. CIT(A) has placed reliance, disallowance has been computed by ITAT at 12.5% of bogus purchases (refer- Pooja Paper Trading Co (P.) Ltd v. ITO (2019) 104 taxmann.com 95/264 Taxman 260(Bom.). In the another order relied upon by Ld. CIT(A) in the case of Pr. CIT V. Synbiotics Ltd. (2019) 106 taxmann.com 316/265 Taxman 34 (Gujarat) (Mag.), the disallowance has been computed to the extent of 25%. 3. That the appellant craves leave to add/alter/delete/modify any/all the grounds of appeal before or during the course of hearing of the appeal." Grounds of Cross Objection: "1. That based on admitted and undisputed facts impugned assessment order passed u/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid being founded on patently illegal and unlawful impugned "reopening" act....
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.... u/s 144B of the Act and valid cross examination of revenue's witness. 9. That based on admitted and undisputed facts impugned assessment order passed w/s 147/144B dated 29.03.2024 and impugned first appeal order dated 30.08.2024 are both invalid as ld. CIT-A ought to have deleted the total additions made in impugned assessment order." 2. Facts of the case may be narrated as that the assessee has filed its return of income for the A.Y. 2019-20, on 31.10.2019 declaring total income of Rs. 3,51,740/-. As per the information received in the case of assessee in accordance with the Risk Management Strategy formulated by CBDT, on insight portal maintained by the Income Tax Department, under the head High risk CRIU/VRU cases, the assessee, M/s BC Enterprises, has carried out certain transactions during the financial year 2018-19, relevant to the assessment year 2019-20 and the case was selected for reassessment under Section 147 r.w.s. 148 of the Income Tax Act, 1961, ("the Act", for short). In compliance with notice u/s 148, the assessee filed its return of income on 09.02.2024 declaring a total income of Rs. 3,51,740/-. The Assessment has been completed on a total income of Rs. 4....
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.... desired cross examination couldn't took place and the addition in question made on the basis of uncrossed statement as mentioned above and when such a material issue raised before the Learned CIT(A) by way of appeal, it is observed that the Learned AO has made every efforts to provide cross examination but in our humble opinion there is vast difference between making efforts and making ensure. It is also submitted that the notice in question SCN u/s 148A(b) issued to assessee is quite vague lacking application of mind. 9. There is material substance in the submission advanced on behalf of the assessee that the Learned AO solely relied upon the statement of Shri Ashok Kumar Gupta recorded during search and held that Shri Ashok Kumar Gupta himself admitted that he was engaged in providing accommodation entries of non-genuine purchases and non-genuine sales to various parties. The Learned AR in support to above submissions, relied upon assessee's own case for A.Y. 2018-19 in ITA 4972/Del/2024 in the case of ITO Delhi v/s B.C. Enterprises, order dated dated 04-04-2025 which is squarely identical with present case, relevant extract thereof as under: - "12. From the perusal of the pr....
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....ctions were alleged as accommodation entry of purchases alongwith the notice u/s 148A(b) of the Act. It appears that the AO simply proceeded to reopen the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary as he failed to appreciate the intent of the legislation behind introduction of provisions of section 148A beforessue of notice u/s 148 of the Act. The AO not only proceeded to issue notice u/s 148A(a) without making verification of the vague and insufficient information available with him to satisfy himself that income chargeable to tax has escaped assessment but at the same time also failed to provide the material relied upon to the assessee along with notice u/s 148A(b) of the Act. The Hon'ble Supreme Court in the case of Ashish Agarwal (supra) has held that AO should supply the relied upon material to the assessee so as to enable him to respond the show cause notice issued by AO. ....
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....l to have guesswork as to for what purposes the appellant wanted to cross examine those dealers and what extraction the appellant wanted from them." [Emphasis supplied)" 15. The Co-ordinate Bench of Tribunal in the case of Best City Infrastructure Ltd. vide order dated 31.05.2016 has held that not providing opportunity of cross examination makes the addition invalid. This order is upheld by Hon'ble Delhi High Court as reported in 397 ITR 82. Similar view is expressed by Hon'ble High Courts in following cases: -PCIT vs. Pavitra Realcom Pvt. Ltd. in ITA No.579/2018 (Delhi) -PCIT vs. Esspal International Pvt. Ltd. in ITA No.25/2024 (Rajsthan) -Dr. M. Malliya vs. ACIT in TCA No.284/11 (Madras). Therefore, not providing the opportunity to cross examine the witness whose statements are relied upon by the Revenue is gross violation of principal of natural justice. Moreover, the AO has failed to consider the reply filed by the assessee in response to notice issued u/s 148A(b) of the Act. Hon'ble Rajasthan High Court in the case of R.K. Buildcreations (Pvt.) Ltd. vs. ITO reported in [2024] 462 ITR 478 (Raj) has held as under: "It is mandatory for the AO to pass speak....