TaxTMI 
TaxTMI 
2026 (1) TMI 545
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....arising out of assessment order dated 13.03.2023 of the Learned Assessing Officer/Assessment Unit (hereinafter referred to as "Ld. AO") under Section 147 of the Act for assessment year 2018-19. 2. Brief facts of the case are that the assessee filed Income Tax Return declaring total income of Rs. 7,85,160/- on 29.10.2018. Information was available that assessee has taken accommodation entry through bogus bill/invoices of Rs. 3,02,25,247/- during the financial year 2017-18 from M/s Shree Balaji Wooltex, M/s Soni Textiles and M/s Maakarni Yarns of Sh Rajesh Mittal group concerns. Shri Rajesh Mittal along with Shri Vipul Jindal and Shri Satyanarayan Rohilla @ Vijay Rohilla, Advocate has floated 19 fake firms by using documents of different p....
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....nds: "1. That on the facts and circumstances of the case and in law, the order dated 10.03.2025 by the Principal Commissioner of Income Tax ['PCIT'], under section 263 of the Income Tax Act, 1961 ('the Act') setting aside the assessment order dated 13.03.2023 passed by the the Assessing Officer as erroneous and prejudicial to the interest of the Revenue is without jurisdiction, bad in law and void-ab-initio. 2. That the PCIT has passed the impugned order in violation of principles of natural justice. 3. That the PCIT erred on facts and in law, so much so that, the assessment order passed by the Assessing officer do not satisfy the statutory twin conditions prescribed down under section 263 of the A....
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.... u/s 133(6) and utilized the Verification Unit to verify the existence of the parties. The Ld. AO came to the conclusion that the genuineness of the transactions made with the three aforementioned entities could not be established with supporting evidences and thus, the said transactions were bogus. The Ld. AO passed the final assessment order on 13.03.2023 disallowing the entire purchase amount of Rs. 3,26,40,355 and adding it to the total income of the Appellant under s. 37(1) of the Act as bogus purchases. The Ld. AO also made a separate addition of Rs 48,302 for commission, charging it as unexplained expenditure under Section 69C of the Act. 4.1 Ld. PCIT, issued show cause notice under Section 263 dated 06.02.2024. The Ld. PCIT alleg....
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....nce of expenses found to be not genuine. of the assessee are allowed in above terms. 4.5 Ld. PCIT's allegation of "lack of inquiry" in the instant case is baseless as the assessment order itself shows that the Ld. AO: * Issued notices u/s 133(6) to the supplier parties (refer Page 19 to 21 of Appeal Set) * Referred the matter to the Verification Unit for physical verification (refer Pages 19 to 21 of Appeal Set) * Relied on the statement of third party (refer Pages 17, 19, 23 and 26 of Appeal Set) * Passed a speaking order discussing the non-existence of parties. (refer Pages 20, 21 and 24 of Appeal Set) * Made the addition on this very issue (refer Pages 23, 25 and 26 of Appeal Set) ....
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....try and are not in nature of business transaction. Ld. PCIT held that Ld. AO has not passed the assessment order in accordance with the decision rendered in the case of N.K. Protiens Ltd. vs. DCIT and the bogus purchases were in the nature of accommodation entries and was not in nature of business transaction and accordingly required to be taxed under Section 69C of the Act. 6.1 A Co-ordinate Bench of ITAT, Delhi in ITA No.4348/Del/2025 in the case of Sandeep Kumar Vs. ITO in para nos. 14 to 19 held as under: "14. From the perusal of section 69C, it is observed by us that provisions of section 69C are applicable where assessee incurred any expenditure for which he has failed to offer any Explanation or the Explanation given was ....
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.... scope of section 69C is totally different from the disallowance of expenses found to be not genuine. The basic premise with the Id. Pr. CIT therefore for finding error in the order of the AO, that the disallowance made by him of contractors' expense came under the purview of section 69C of the Act is found to be untenable in law. This finding of error, as a consequence whereof, that the same not being subjected to tax at a special rate provided under section 1158BE of the Act also as a result does not survive." 17. Further this view is followed by the Co-ordinate Bench of ITAT, Rajkot in the case of Vijuba Jutubha Jadeja vs. PCIT reported in [2023] (9TMI 206). 18. In view of the above discussion, in our considered opi....