Rajendra Shangari Vs DCIT (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata bench has ruled in favor of assessee Rajendra Shangari, stating that an Assessing Officer (AO) cannot make additions to income based on alleged bogus purchases without first rejecting the assessee’s books of account or disputing reported sales. The Tribunal’s decision effectively deletes an addition of Rs. 38,46,188/- made by the AO for the assessment year 2018-19.
The case involved Rajendra Shangari, an individual engaged in contractual work for Tata Steel and the state government. For the assessment year 2018-19, Mr. Shangari filed his return declaring an income of Rs. 2,58,20,920/-. Subsequently, the AO initiated proceedings under Section 148 of the Income Tax Act, completing the assessment under Section 147 read with Section 144B. The AO added Rs. 38,46,188/- to Mr. Shangari’s income, categorizing this amount as “bogus purchase.”
Mr. Shangari appealed the AO’s order before the National Faceless Appeal Centre (CIT(A)), but his appeal was dismissed, and the reassessment order was upheld. Aggrieved by this decision, he then filed an appeal with the ITAT Kolkata.
The core of Mr. Shangari’s argument before the ITAT was that both the AO and the CIT(A) erred by upholding the addition when his books of account had not been rejected. His representative emphasized that the assessee’s audited books were accepted during the assessment proceedings, and the AO had accepted the declared income and sales figures. The contention was that it is impermissible to selectively dispute purchase figures without any cogent material, especially when the corresponding revenue from sales is accepted. The representative argued that such an approach violates principles of natural justice, as the AO cannot accept sales on one hand and reject corresponding purchases on the other.
