TaxTMI 
TaxTMI 
2026 (8) TMI 397
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.... ITAT has erred in reversing the order of the Ld. CIT(A), wherein the Ld. CIT(A) has upheld the action of the AO and thereby confirmed the addition made by the AO u/s. 69C r.w.s. 115BBE of the IT. Act, 1961 at Rs. 104,99,73,370/-?". B. "Whether on the facts and in circumstances of the case and in law, Hon'ble ITAT erred in not following the precedence set by Hon'ble Jurisdictional High Court in the case of M/s. Pooja Paper Trading Co P. Ltd. Vs ITO 4(3) (1), Mumbai [2019] 104 taxmann.com 95 (Bombay) wherein the Hon'ble Court affirmed the action of the AO in treating the bogus purchase as unexplained expenditure u/s. 69C of the Act?" C. "Whether on the facts and in circumstances of the case and in law, Hon'ble ITAT erred in not following the precedence set by Hon'ble Jurisdictional High Court in the case of M/s. Shoreline Hotel (P) Ltd. Vs CIT Central-1 [2018] 98 taxmann.com 234 (Bombay) wherein the Hon'ble Court affirmed the action of the PCIT in invoking section 263 of the Act and directing the AO to add entire bogus purchase?" D. "Without prejudice to the above, whether on the facts and in circumstances of the case and in law, Hon'ble ITAT has erred in ....
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....dent-Assessee, the Assessing Officer proceeded to pass the reassessment order. 7. The final assessment order dated 29 September 2021 came to be passed under Section 147 read with Section 144B of the Act, whereby the total income of the Respondent-Assessee was assessed at Rs. 104,99,73,367/- as against the nil income returned by the Respondent-Assessee. The said addition represented the aggregate amount of the outstanding Letters of Credit (LCs) payable to the banks, which, according to the Assessing Officer, constituted unexplained expenditure liable to be added to the income of the Respondent-Assessee under Section 69C of the Act and chargeable to tax at the rate prescribed under Section 115BBE of the Act. 8. Mr. Sharma has invited our attention to the reassessment order, in particular to paragraph 4 thereof, to contend that the Tribunal erred in doubting the approach adopted by the Assessing Officer, especially when the assessment order was affirmed by the Commissioner of Income Tax (Appeals). According to Mr. Sharma, the present case squarely falls within the ambit of Section 69C of the Act, and the amount in question was rightly treated as unexplained expenditure for the ....
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....unal. 14. We are also of the view that the present case does not attract the provisions of Section 69C of the Act, as the Respondent-Assessee had furnished an explanation supported by documentary evidence before the Assessing Officer. In the absence of any cogent material to discredit such evidence or any independent investigation by the Assessing Officer, the invocation of Section 69C could not have been sustained. The relevant observations of the Tribunal, which merit reproduction, read thus: 12 Ground No. 3 &4 12.1 Ground NO. 3 & 4 are directed against the addition of INR 104,99,73,370/- made by the Assessing Officer under Section 69C of the Act and levy of tax at rate of 60% under Section 115BBE of the Act. 12.2. On perusal of the Assessment Order, we note that while the Appellant has furnished details of stock statement, MVAT assessment, details of purchasers along with corresponding sales with account confirmation given by the parties making purchases from the Appellant, and details of suits for recovery filed by the Appellant in support of the contention that the purchases/sales were genuine and the default made by the Appellant in making paymen....
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....essee is an individual who is engaged in the business of wholesale trading in readymade garments in a proprietorship concern. For the Assessment Year 2011-12, assessee filed a return of income declaring a total income of Rs. 11,81,130/-, which was subject to a scrutiny assessment. In the assessment order, the Assessing Officer has observed that an information was received by him from DGIT(Inv.), Mumbai that the assessee has taken accommodation entries from certain purchase parties. In this context, the Assessing Officer has referred to 7 such parties tabulated in para 6 of the assessment order from whom the total purchases effected amounted to Rs. 37,45,965/-. The Assessing Officer has also observed that enquiries were made by him by issuing notices u/s 133{6) of the Act to such parties which revealed that such parties were not available at the given addresses since the notices were returned by the postal authorities with the remarks 'not known', 'left', 'unclaimed', etc. In this background. the assessee was show caused as to why the purchases. 'amounting to Rs. 37,45,965/- debited to the Profit & Loss Account should not be treated as bogus by invoking Sec. 69C of the Act. In respo....
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.... thereby implying that the source of expenditure stands explained. In fact, the case of Assessing Officer is that the purchase transactions are "only accommodation entries and not really purchases". thereby. implying that as per the Assessing Officer assessee has not incurred such, expenditure. To hold the transactions as mere accommodation entries and not real purchases is quite different from saying that the sources of expenditure for the purchases from the 7 parties in question have not been explained in the context of Sec. 69C of the Act. Therefore, in my view, invoking of Sec. 69C of the Act in the present case to treat the purchases of Rs. 37,45,965/- stated to have been made from the 7 parties in question is on a wrong footing. Thus, on this aspect also, assessee deserves to succeed." (Emphasis Supplied) 12.4. We concur with the above decision of the Tribunal. There is no dispute about the source of expenditure in the facts of the present case. The banks have leveled allegation upon the Appellant for misappropriation/siphoning of funds given by the bank on encashment of LCs in collusion with related parties. Given the aforesaid facts and circumstances, the ....