ITO Vs Ritu Bala (ITAT Delhi)
Reassessment Void Without Notice u/s 143(2) – Additions for Bogus Purchases & Unexplained Cash of ₹6.88 Cr Deleted- ITAT Delhi
Facts in Brief
Revenue filed appeal against CIT(A)’s order deleting additions of ₹2.64 crore (bogus purchases) & ₹4.23 crore (unexplained cash) made in the reassessment of Ritu Bala. The case was reopened u/s 147 on information from the Risk Management Strategy (CBDT) alleging that Assessee had taken bogus accommodation entries from entities like Rajiv Dhar, Hanuman Trading Co., Ultra Trade Mart, & Lutan Pandit during FY 2017-18. The AO made additions of: ₹2,64,84,517 u/s 69C (bogus purchases), & ₹4,23,21,000 u/s 69A (unexplained cash).
CIT(A) deleted both additions, holding the reassessment itself invalid as no notice u/s 143(2) was issued & that the AO made inconsistent & unsubstantiated additions.
CIT(A)’s Key Findings Invalid Reassessment:
The AO failed to issue a mandatory notice u/s 143(2) even though the Assessee had filed an original return u/s 139(1) on 25-10-2018. Hence, the entire reassessment u/s 147 r.w.s. 144B was void.
Bogus Purchases:
- AO was uncertain about the applicable section—sometimes citing s.69C, sometimes s.37.
- Assessee stated no purchases were made from the alleged entities & no such expenses were claimed in books.
- Since no expense existed, no disallowance could be made.
- Addition of ₹2.64 crore deleted.
Unexplained Cash (s.69A):
- AO alleged large withdrawals of ₹4.23 crore without proper explanation.
- Assessee produced books, bank statements, balance sheet & audit report showing that withdrawals were duly recorded.
- AO failed to rebut evidence or prove that the money was unrecorded.
- Section 69A not applicable; addition deleted.
ITAT’s Observations & Decision
