TaxTMI 
TaxTMI 
2026 (6) TMI 816
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....n M/s. R.K. Traders, M/s. R.K. Impex, M/s. R.L. Textile whereby it is established that the said group is involved in providing accommodation entries in the form of bogus purchase and sales. During the survey action on a group named "One World Group" it was found that the assessee had made a bogus purchase transactions amount to Rs. 1,86,34,353/- during the assessment year from various entities. As mentioned above, the assessee's case was reopened u/sec. 147. The assessment was framed and the Ld. AO determined the total assessed income amount to Rs. 2,22,34,406/-. The addition was made on account of disallowance as per section 37 of the Act related to expenses amount to Rs. 2,17,06,436/-. The aggrieved assessee filed an appeal before the Ld. CIT(A). the Ld. CIT(A) uphold the impugned addition. Being aggrieved assessee filed an appeal before u/sec. 3. The Ld. AR argued filed a paper book comprising pages 1 to 173 which has been placed on record. The Ld. AR submitted the details fact related to assessment and in appellate proceeding. The statement of fact is reproduced as below: "1. The appellant is an individual, Proprietor of "Overseas Textile Company" doing business of ....
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.... 14. The appellant then received another Show Cause Notice (SCN) on 26.05.2023 for making disallowance of expenses claimed of Rs. 2,17,06,436/- (in earlier SCN such disallowance was proposed at Rs. 1,86,34,353/-) for purchases from R K Group at 8:00 pm fixing the hearing on 27.05.2023 on the very next date i.e. Saturday. The hearing was fixed within very short period of time by the AO thereby not granting the appellant reasonable time and opportunity. 15. The appellant had reply on 27.05.2023 against the said Show Cause Notice. 16. The appellant had requested cross examination of the parties whose statement has been relied upon vide letters dated 15.12.2022, 22.05.2023, 24.05.2023 & 27.05.2023, however no such cross examination opportunity was granted. 17. The Order u/s 147 r.w.s. 1448 was passed on 29.05.2023 assessing income at Rs. 2,22,34,406/- 18. The difference between the Returned Income of Rs. 5,27,971/- and Assessed Income of Rs. 2,22,34,406/- as per assessment order is Rs. 2,17,06,436/- on account of following: - * Disallowance of ineligible expenses u/s 37 of Rs. 2.17,06,436/- (purchases from R K group). 19. The ....
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....Few invoices for sale of the goods pertaining to purchases from the parties R.K Traders, R.K Impex and M/s R.M Textiles (Refer Factual Paper Book-II Pg. No. 76-116) * Details of Sundry Debtors and Sundry Creditors * Stock records depicting opening, purchase, sale and closing (Refer Factual Paper Bookil Pg. No. 167). Kindly note there is opening and closing stock, all purchase made have been sold during the year * Bank statements of all bank accounts for F.Y 2016-17" 5. The Ld. AR contended that the Ld. AO observed that the total transaction was made with the R.K. Group amount to Rs. 1,86,34,353/- but the addition made in the impugned assessment order amount to Rs. 2,17,06,436/-. The reasonable cause was not duly cited for enhancement this expenses from Rs. 1,86,34,353/- to 2,17,06,436/-. The said grievance was duly submitted before the Ld. CIT(A). But the Ld. CIT(A) had rejected the assessee plea and uphold the addition which is unjustified. The Ld. AR further invited our attention in the details of stock records depicting opening purchase as well as closing stock which is submitted in a tabular format which is reproduced as below: Overseas Te....
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....esent appeal under Section 260A of the Act. 16. In view thereof, the appeal filed by the Appellant/ Revenue is dismissed, as no substantial question of law arises for consideration. No costs." 7. The Ld. DR argued and contended that a search was conducted in the R.K. Group and it is factually correct that the assessee had made a purchase from the three entities of the "R.K. Group". The department found that the said group, is the entry providers so, the purchase made by the assessee is from bogus entity. Admittedly, the addition made by the Ld. AO and sustained by the Ld. CIT should be uphold. The Ld. DR has drawn our attention the observations in impugned appellate order in paragraph no. 7.53 which is reproduced as below: "7.53 Therefore, to sum up the crux of all the judgement, it is held by all the courts that when there is a bogus entry then the right step is to over all delete that entry. In the present case, the Ld. AO has shown that the parties through which purchases were made i.e. M/s. R. K. Traders, M/s. R. K. Impex and M/s. R. L. Textiles were involved in bogus purchase and sale transactions and no actual genuine business activities were being carrie....