ITO Vs Vikas Jain (ITAT Chandigarh)
The Income Tax Appellate Tribunal (ITAT), Chandigarh, adjudicated an appeal by the revenue concerning Assessment Year (AY) 2018-19 in the case of alleged bogus purchases by the assessee. The appeal arose from an order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 10-06-2024, which had deleted an addition of Rs. 7,67,89,408 made by the faceless assessment unit. The addition comprised Rs. 7,38,35,970 as alleged bogus purchases from M/s Jai Bhagwati Sales Corp. (JBS) and Rs. 29,53,438 as commission payments. The revenue contended that the deletion was erroneous, arguing that transactions routed through banking channels alone do not establish genuineness. It relied on precedent in M/s Kachwala Gems vs. JCIT (2006), wherein even payments via account-payee cheques were held insufficient to prove genuine purchases, and highlighted admissions by the entry operator of JBS regarding accommodation entries.
The assessee contested the reassessment on multiple grounds. Legally, it argued that the reassessment was invalid and without jurisdiction because the declared income exceeded Rs. 15 lakh, placing it under the Circle Officer rather than the Jurisdictional Assessing Officer (JAO), citing CBDT Instruction No. 1/2011. Further, the reassessment notice under Section 148 was issued by the JAO in violation of Section 151A, following a CBDT notification dated 29-03-2022, rendering the proceedings void ab initio. Additionally, the assessee contended that the addition under Section 69C of the Income Tax Act was legally unsustainable, as the purchases were recorded in books of accounts, with payments made through banking channels, and no cash transaction existed. The assessee also argued that the AO failed to reject its books under Section 145(3), making invocation of Section 69C incorrect.
