Rainbow Vanijya Private Limited Vs ACIT (ITAT Kolkata)
No 145(3), No Guesswork: E-Way Bills Don’t Lie—Bogus Purchase Enhancement Struck Down- ITAT Axes 1% Commission Theory- Accommodation Entry Label Alone Can’t Justify ₹66 Cr Enhancement
Kolkata ITAT ‘D’ Bench in Rainbow Vanijya Pvt. Ltd. Vs. ACIT, [ITA No. 1891/KOL/2025, AY 2020-21, order dated 31.12.2025] allowed Assessee’s appeal and set aside both the addition made by AO as well as enhancement by CIT(A). AO had treated Assessee as an accommodation entry provider and made addition of ₹1,33,61,982 by estimating 1% commission on aggregate of purchases, sales and loans & advances, despite not rejecting books of account u/s 145(3). On appeal, CIT(A) went a step further and enhanced income by ₹66.12 crore by treating entire purchases as bogus, even though corresponding sales were accepted and supported by e-way bills, GST returns and transport documents.
Tribunal noted that Assessee was a pacca arahitya, directly arranging delivery of goods from suppliers to customers, earning a thin margin of about 1%, with books duly audited u/s 44AB and supported by stock register, purchase invoices, e-way bills, GSTR-1, GSTR-3B and GSTR-2A. Neither AO nor CIT(A) rejected books or doubted sales and loans. Tribunal held that estimation of income without rejection of books is impermissible, relying on PCIT Vs. Forum Sales Pvt. Ltd. (Delhi HC). It further held that CIT(A)’s enhancement by treating entire purchases as income, without any fresh enquiry or material, was beyond jurisdiction and misplaced reliance on PCIT Vs. Konak Impex (Bom HC), which was distinguishable on facts. Since purchases were supported by e-way bills and movement of goods was established, they could not be treated as non-genuine. Consequently, Tribunal directed AO to delete entire addition and quashed enhancement by CIT(A). Appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
