ITO Vs Jagdish Udhavdas Bajaj (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai bench, has sent back a case involving alleged bogus purchases by assessee Jagdish Udhavdas Bajaj to the Assessing Officer (AO) for a fresh examination. The tribunal’s decision came while hearing cross appeals filed by the Revenue and the assessee against an order passed by the Commissioner of Income-tax (Appeals) [CIT(A)] for the assessment year 2018-19.
The dispute centres on purchases amounting to Rs. 1,09,38,553 made by the assessee from M/s Zephyr Fabric Trading LLP, an entity allegedly part of the “one world group” which was subjected to a survey and search action in November 2019. Information unearthed during the action suggested that entities within this group were providing accommodation entries, including bogus purchase/sale transactions.
Based on this information, the Assessing Officer initiated reassessment proceedings against Mr. Bajaj. The AO asked the assessee to prove the genuineness of the purchases from Zephyr Fabric Trading LLP, including supporting documents for the delivery of goods. However, the assessee only furnished copies of the ledger account and purchase/sale bills related to the party, failing to provide bank transaction statements or otherwise satisfy the AO about the authenticity of the transactions.
Consequently, the Assessing Officer concluded that the genuineness of the purchases remained unproved and treated the entire amount of Rs. 1,09,38,553 as unexplained expenditure under Section 69C of the Income-tax Act, 1961, making a 100% disallowance.
