TaxTMI 
TaxTMI 
2025 (12) TMI 925
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....2.07.2025 and the appeal was fixed for hearing and was heard on 25.09.2025. 3. Brief facts of the case: In the instant case, Income Tax Return was e-filed by the assessee on 24/09/2015 vide acknowledgement No. 815317531240915 showing total income of Rs. 7,983/-.The case was selected for scrutiny assessment through CASS under the category "Limited Scrutiny" and accordingly notice u/s. 143(2) of the Act was issued on 21/04/2016 and duly served upon the assessee. The Assessing Officer noted that during the relevant previous year, the assessee claimed to have earned income from Sale of Cotton Knitted Fabrics and sale of shares. 3.1. The AO noted from the assessment order passed u/s. 143(3) of the Act in the case of the assessee for the previous assessment year i.e. A.Y. 2014-15, passed by the same office, wherein the AO had concluded that the assessee was a mere name lender and had acted as a conduit for parties / beneficiaries behind the company, and the assessee had not done any actual purchase or sale. According to the AO, these facts showed that sundry debtors of Rs. 26,05,460/- was created from fictitious sale made during the A.Y. 2014-15 had no worth and was only a book ent....
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.... Audited Accounts of the company duly filed before our honour. The details of sales & purchase A/C of shares & Cotton knitted Fabrics alongwith the Sales & Purchase bill are enclosed herewith. From the enclosed details it may be evident that all the information required about the goods so purchased and sold are duly clarified in the bills and proper entries duly been incorporated in the Books of Account maintained by the company. The books of accounts duly been audited by the Auditor and on this basis the annual accounts were drawn and duly audited. Hence, there is nothing is genuine question of addition to the total income does not arise." 3.3. However, the AO observed that the assessee had failed to submit any of the evidence in support of its claim that the sales was genuine and from the perusal of the details submitted by the assessee for the current year, the AO observed that same facts emerged as was emerged in the immediate previous year i.e. "From, the perusal of the above submission it can be said that assessee has failed to submit any fresh evidence in support of his claim that sale is genuine. From perusal of the details submitted by the assessee for the curr....
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.... of the assessee and rejected the ground of the assessee that the assessment order passed by the AO and the additions made therein beyond the scope of the 'limited scrutiny' by observing as under: "I have considered the facts of the case, the basis of addition made by the AO and the arguments of the AR during assessment as well as appellate proceedings A. This matter has been examined. The AO has put the reasons for picking up the case for scrutiny. The AO has sought all the replies pertaining only to the issues as per criteria for scrutiny selection. This ground is not tenable. This ground is dismissed. It must be understood that in matter involving a corporate entity having engaged in complex transactions, it is but required to raise and seek replies to some queries in order to reach a reasonable and lawful conclusion. Similar issue has been decided in the cases pertaining to the group This ground is therefore, dismissed. 4.1. The Ld. CIT(A) also dismissed the appeal of the assessee on merits in respect of the addition of Rs. 65,19,810/-, wherein he agreed with the AO, that in view of the peculiar facts of the case, where the basic features of any commercial ....
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....dry Debtors are fictitious is contrary to the settled principles of law and the addition is arbitrary, excessive and illegal. 2. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm the addition of Rs. 65.19.810/- made by the A.O. as unexplained investments by partly treating the bogus Sundry Debtors of A.Y. 2014-15 is against the settled principles of law and the addition is arbitrary, excessive and illegal. 3. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to hold that the sales for AY 2014-15 & 2015-16 were not genuine on the basis of expenses debited in the Profit & Loss Account is contrary to the material evidences on record and contrary to the expenses claimed and debited in the Profit & Loss Account and therefore, the addition confirmed by the Ld. CIT(A) of Rs. 65.19.810/- is illegal and bad in law. 4. That on the facts and in the circumstances of the case the action Ld. CIT(A) to confirm the assessment made by the AO by rejecting the scope of limited scrutiny having being expanded by the AO without prior permission is in violation of the provisions u/s. 119 of the Act a....
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.... of sundry debtors could be made by the Assessing Officer during the present assessment year. 7. The Ld. Sr. DR relied upon the orders of the authorities below. 8. We have heard both the parties and perused the material available on record. In this case, the AO added a sum of Rs. 26,05,460/- towards sundry debtors relating to Assessment Year 2014-15 and a sum of Rs. 39,14,350/- for Assessment Year 2015-16 totalling Rs. 65,19,810/-on the ground that the same was fictitious and not genuine as the assessee did not carry out genuine business as detailed earlier in this order. We further notice that on perusal of page no 12 of the Paper Book filed by the assessee, the trade receivable / sundry debtors balance as on 31.03.2015 was 'Nil'. We agree with the submission of the Ld. AR that on similar facts, as narrated by him and noted in para no 6 of this order, the coordinate Bench of the Tribunal in the case of Fabulous Nivesh Pvt. Ltd. vs. ACIT (supra) deleted similar addition of sundry debtors. The relevant findings of the Tribunal of the said order are reproduced as under: "5. We have heard both parties and have perused the material available on the record. The assessment....