Additions Made By AO Once Deleted By Appellate Authority With Reasoned Order, Merits Status Quo In Identical Cases: Mumbai ITAT

Relying upon the decisions of the Co-ordinate Bench, the Mumbai ITAT upheld the decision of CIT(A) in deleting the addition made u/s 68 read with section 147 of the Income Tax Act, 1961.

The Bench comprising of Sandeep Singh Karhail (Judicial Member) and Prashant Maharishi (Accountant Member) observed that, “The co-ordinate Bench in paragraph no.6 and 7 after considering the remand report upheld the order of the CIT (A) with respect to bogus purchase and addition under Section 68 of the Act. Similarly, in case of the sisters concern in ITA No.2780/Mum/2022 for A.Y. 2013-14 in case of Preeti Construction dated 3rd may, 2023, the assessment order was passed under Section 143 read with section 147 of the Act making identical additions deleted by the learned CIT (A) were upheld by the co-ordinate Bench.” (Para 11)

As per the brief facts of the case, the assessee is a partnership firm that filed a return of income declaring the total income that AO assessed. Subsequently, notice u/s 148 was issued. After that, the decision was rendered by the Supreme Court in the case of Union Bank of India Vs. Ashish Agarwal. Notice u/s 148 was issued in the assessee's case, which was deemed to be a show cause notice u/s 148A(b). Accordingly, a notice under that section was issued. The reopening was made based on information received from Dy. Director of Income tax investigation, Mumbai through insight portal, wherein the assessee was found to be engaged in trading of penny stocks. The assessee filed its return u/s 148 for which notice was issued.

Later, a search was carried out u/s 132, wherein it was revealed that the assessee and their group companies have been involved in systematic over-invoicing of bogus bills and accommodation entry for unsecured loans from various entities. The AO found that the asset had bogus purchases and unsecured loans. The show cause notice was issued and after that, an assessment order after enquiry was passed where it was found that unexplained expenditure on account of bogus purchases, unexplained cash credit under Section 68 of the Act on account of an unsecured loan, and bogus interest expenditure disallowed resulted in the assessment order. The Assessee challenged the same before the Commissioner of Income tax, who deleted the addition made with respect to the bogus purchase on the basis of identical order in case of the assessee for A.Y. 2013-14.

The Coram noted that there is no dissimilarity in the case of the assessee and other decisions of the coordinate benches, wherein orders were passed u/s 153A and the co-ordinate Bench has deleted the addition and quashed the assessment order.

The Bench also found that on merits of the case, the CIT (A) has relied on the remand report of the AO and granted the relief.

The Bench observed that the co-ordinate bench has categorically held that the order of the CIT(A) deleting the addition is a reasoned and a conclusive order.

Then Coram found that Co-ordinate Bench in the decision of the assessment order passed u/s 143 read with section 147, after considering the remand report upheld the order of the CIT (A) with respect to bogus purchase and addition u/s 68.

The Bench found that the Co-ordinate Bench upheld the decision of CIT(A) of deleting the addition made u/s 143 read with section 147, and therefore, while relying on the decisions of Co-ordinate Bench, the ITAT dismissed Revenue's appeal.

Counsel for Appellant/ Department: Ram Krishna Kedia

Counsel for Respondent/ Taxpayer: Jaiprakash Bairagra

Case Title: The Dy. Commissioner of Income Tax verses Ms Speco Infrastructure

Case Number: ITA No. 2324/Mum/2023

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