Shakti Agencies Private Limited Vs ACIT (ITAT Patna)
The Income Tax Appellate Tribunal (ITAT), Patna Bench, partly allowed the appeal filed by the assessee against the reassessment order for AY 2018-19 concerning alleged bogus purchases and bogus sales. The assessee had originally filed its return declaring income of Rs. 4,14,700. The reassessment proceedings were initiated after information received through the Income Tax Department’s Insight Portal alleged bogus purchases from M/s Sunil Enterprises amounting to Rs. 26,48,100 and bogus sales to M/s Rajendra Ispat amounting to Rs. 5,01,39,337. The Assessing Officer (AO) issued notices under Sections 148A(b), 148 and 143(2) of the Income Tax Act and ultimately made additions of Rs. 31,24,759 under Section 37 for alleged bogus purchases and Rs. 5,24,89,337 under Section 68 for alleged bogus sales.
The AO observed that notices issued to M/s Sunil Enterprises under Section 133(6) remained uncomplied with and a physical verification reportedly showed the address to be a residential property. According to the AO, the assessee failed to produce delivery challans and confirmations to establish genuineness of purchases. The AO therefore treated the purchases as bogus and disallowed the expenditure under Section 37.
Regarding sales to M/s Rajendra Ispat, the AO relied upon a survey conducted under Section 133A at the business premises of Rajendra Ispat, statements recorded during the survey, and a verification report stating that no such business was operating from the stated address. The AO concluded that Rajendra Ispat and connected entities were issuing accommodation bills without actual supply of goods. Since the assessee allegedly failed to substantiate the genuineness of sales with delivery challans and transport documents, the AO treated the entire sales amount as unexplained cash credits under Section 68.
