2026 (3) TMI 687

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....in the business of wholesale trading and distributorship of FMCG goods. The return of income was originally processed u/s 143(1). Subsequently, the assessment was reopened u/s 147 on the basis of information received from the Investigation Wing alleging that the assessee had obtained accommodation entries aggregating to Rs.55,11,843/- in the form of fictitious sales to M/s Jash Dealmark Ltd. In the reassessment proceedings, the Assessing Officer treated the entire amount of Rs.55,11,843/- as unexplained cash credit u/s 68 of the Act and added the same to the total income. 3. Before the learned CIT(A), the assessee contended that the impugned amount represented sales duly recorded in the regular books of account; the same had been credite....

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.... to have confirmed the entire addition instead of restricting it to 2.73%. According to the learned DR, once the genuineness of the transactions is in serious doubt, no relief ought to have been granted. 5. The learned Authorised Representative, on the other hand, submitted that the impugned amount represented recorded sales forming part of the regular turnover of the assessee. It was contended that the sales were duly reflected in the books of account, GST had been paid, payments were received through banking channels and the books were audited. It was emphasized that this was not a case of bogus purchases where income is suppressed by inflating expenditure, but an allegation of bogus sales, which stand already credited to the Profit & ....

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....se is of bogus sales and not bogus purchases. In cases of bogus purchases, the purchases are alleged to have been inflated to suppress profit and therefore only the profit element embedded therein is brought to tax. Here, however, the sales are alleged to be fictitious. If the sales were to be treated as nongenuine, the logical consequence would be adjustment of turnover or rejection of books leading to re-computation of trading results. It cannot result in estimation of higher profit on sales which are already recorded and accepted as part of turnover, particularly when the books of account have not been rejected and no specific defects in trading results have been pointed out. 9. The learned CIT(A) sustained addition to the extent of 2....