Nirmala Mobile Net Services Pvt. Ltd. Vs ITO (ITAT Kolkata)
Insight Portal Is a Starting Point, Not a Substitute for Insight—Reopening on a Non-Existent Return Default Quashed; Tax Components Cannot Become Undisclosed Purchases
The Kolkata ITAT has delivered an important ruling on two recurring controversies arising from data-driven assessments. First, a difference between purchases reported by a supplier & purchases recorded by the buyer cannot mechanically be treated as unexplained expenditure u/s 69C, when the difference merely represents VAT, GST, cess, trade discount and other components separately accounted for in the books. Secondly, reopening cannot survive where its very foundation—that the assessee had not filed its return—is demonstrably false from the Department’s own portal.
The assessee was engaged in the wholesale trading of cigarettes. For AY 2017-18, it filed its return declaring an income of ₹14.48 lakh. Information flagged on the Insight portal under the High-Risk CRIU/VRU category indicated that purchases reported by the assessee were ₹134.29 crore, whereas purchases reported by ITC Ltd. were ₹148.72 crore. Treating the difference of ₹14.43 crore as undisclosed purchases, the AO reopened the assessment and, in the absence of compliance, completed an ex parte assessment u/s 147/144 r.w.s. 144B, making an addition u/s 69C.
