ITO Vs Kartik Gunwantrai Shah (ITAT Mumbai)
Mumbai ITAT Restores Bogus Purchase Case – Matter Sent Back to AO- CIT(A) Erred in Not Restoring – ITAT Sends Case Back to AO
The Revenue appealed against the order of CIT(A dated 10.01.2025 restricting addition on bogus purchases to 5% of ₹3,51,358 as against 100% addition made by AO.
Assessee, proprietor of Gati Solvochem, had filed return declaring income of ₹2,59,000. Based on Sales Tax Department information, AO found purchases of ₹3,51,358 from hawala entry providers & issued notice u/s 148. As there was no response, assessment was completed ex-parte u/s 144 r.w.s. 147 on 25.03.2015, adding entire purchases as bogus.
Before CIT(A), Assessee filed additional evidence under Rule 46A, but the same was rejected. CIT(A), however, partly allowed relief by restricting addition to 5% of purchases, treating it as profit element in line with judicial precedents.
Revenue argued before Tribunal that in absence of any details from Assessee, 100% addition should have been sustained. Tribunal noted that though CIT(A) had powers under amended s.251(1)(a) to restore case to AO, he did not exercise such powers. Since additional evidence was rejected & Assessee was denied fair opportunity, Tribunal considered it fit to restore matter to AO for de novo adjudication. Accordingly, Tribunal set aside CIT(A)’s order & restored matter to AO, directing fresh adjudication after giving Assessee full opportunity to substantiate purchases. Appeal of Revenue was thus allowed for statistical purposes.
