Vikramkumar Kishanlal Mehta Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad Deletes Section 68 Addition on Alleged Accommodation Sales; Entire Turnover Cannot Be Taxed When Purchases Are Undisputed
The Ahmedabad Bench of the ITAT partly allowed the assessee’s appeal for AY 2018-19, deleting a major addition of ₹4.34 crore made under section 68 read with section 115BBE on account of alleged accommodation entries with Chaniyara Agro Industries Pvt. Ltd.
On the issue of reopening, the Tribunal upheld the validity of reassessment under sections 147/148, holding that the Assessing Officer had applied his mind to the information received from post-survey material and passed a reasoned order under section 148A(d). Accordingly, the challenge to reopening was rejected.
On merits, however, the ITAT found that although the AO alleged that the assessee had made bogus sales, he had not disputed the corresponding purchases, nor rejected the books of account. All sales were recorded in the books, routed through banking channels, disclosed in GST returns, and the profit element was already offered to tax. The Tribunal held that even if the sales were assumed to be non-genuine, the entire sale consideration could not be added; at best, only the profit element could be brought to tax.
In the absence of any evidence that unaccounted money was routed back to the assessee, and with no finding that the declared profit rate was abnormal, the ITAT held that no addition was warranted at all. Consequently, the addition of ₹4.34 crore under section 68 and the related commission addition under section 69 were deleted.
The appeal was thus partly allowed—reopening sustained, but additions on alleged accommodation entries deleted on merits
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
