TaxTMI 
TaxTMI 
2025 (11) TMI 1945
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.... The Ld. CIT(A) has erred in deleting the addition of Rs. 7,67,89,408/- because mere transactions routed through the banking channel is not sufficient evidence to prove the genuineness of transactions. 3. The Ld. CIT(A) has erred in deleting the addition of Rs. 7,67,89,408/- because the modus operandi adopted by the assessee, as clearly accepted / explained before the officers of DGGI by the entry operator that all such transactions are routed through the banking channel but not the genuine business transactions. 4. The Ld. CIT(A) has erred in deleting the addition of Rs. 7,67,89,408/- because the payments through banking channel does not give certificate to the assessee that the transaction made by him were genuine. Support is drawn from the decision of Hon'ble ITAT, Jaipur in the case of M/s Kachwala Gems Vs. JCIT (ITA No. 134/JP/2002 dated 10.12.2003), affirmed by the Hon'ble Supreme Court in the case of M/s Kachwala Gems Vs. JCIT (2006) 206 CTR (SC) 585; 288 ITR 10 (SC), in which it has been held that even payment of account payee cheque is not sufficient to establish the genuineness of the purchases. When the entry operator himself accepted that he had given ....
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....n to income is a jurisdictional error which is incurable u/s 292BB of IT Act. 5. The Ld. AO has erred both in law and in facts of the case in making addition of Rs. 7,67,89,408/- u/s 69C of IT Act treating such purchases as bogus purchases without rejecting the books of accounts u/s 145(3) of IT Act. The assessee initially filed application u/s 27 of ITAT Rules, 1963 on 14-05-2025 assailing reassessment jurisdiction on legal grounds. Subsequently, the assessee has preferred cross-objections on similar grounds. 1.3 The Ld. CIT-DR advanced arguments supporting the assessment as framed by Ld. AO. The Ld. AR, on the other hand, drew attention to factual finding of Ld. CIT(A) in the impugned order. The Ld. AR also advanced legal arguments as taken in assessee's cross-objections. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 2.1 In the assessment order, the assessee is alleged to have undertaken bogus purchases of Rs. 738.35 Lacs from an entity namely M/s Jai Bhagwati Sales Corp. (prop. Shri Vikas Jain PAN AHQPJ3832-L). The Ld. AO alleged that Income Tax Return as filed by the assessee was ....
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.... to destination and transport payment details etc. Therefore, these purchases were established to be genuine. 2.4 However, Ld. AO rejected the aforesaid submissions of the assessee in the background of the fact that the proprietor of M/s JSB admitted before DGGI of carrying out bogus sales. Finally, the aggregate amount of Rs.767.89 Lacs was added to the income of the assessee u/s 69C and the assessment was framed which was subjected to further challenge in the first appeal. Appellate Proceedings 3.1 The assessee assailed the reassessment jurisdiction on legal grounds as well as on merits by way of elaborate written submissions which have already been extracted in the impugned order. The Ld. CIT(A) rejected the legal grounds as urged by the assessee by observing that the case was reopened by following due procedure after taking due approval from approving authority. 3.2 On merits, the Ld. CIT(A) noted the various documents furnished by the assessee. It was observed that all transactions were carried out through banking channels which was one of the evident proofs for genuineness of the transactions. The assessee had filed substantial evidences with regard to purchase ma....
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....n, vehicle numbers, weight, from and to destination and transport payment details etc. to Ld. AO in response to notice issued u/s 148A(b) which has been rejected merely on the fact that notice u/s 133(6) remained unresponsive. However, this fact alone could not be pitied against the assessee without there being any corroborative evidences to support the allegation that the purchases made from M/s JSB were bogus, in any manner. The payments to the supplier have been made through banking channels. On these facts and circumstances, the impugned purchases along with estimated alleged commission could not be considered to be the income of the assessee. The case law of Hon'ble Apex Court in the case of M/s Odeon Builders Pvt. Ltd. (418 ITR 315) duly supports the adjudication of Ld. CIT(A). In that case, it was held by Hon'ble Court that addition based merely on third-party information as gathered by investigation wing could not be sustained for want of cross-examination and in a case where the assessee prima facie discharged the initial burden of substantiating the purchases through various documentations. Considering the totality of factual matrix, we find no reason to interfere in the ....