Alleged Bogus Sales and Commission Addition u/s 68 & 69C: ITAT Upholds CIT(A) Deletion after Assessing Evidence [Read Order]

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) upheld the deletion of alleged bogus sales and commission additions under section 68 and 69C of Income Tax Act,1961 by the Commissioner of Income Tax (Appeals)[CIT(A)] after assessing evidence submitted by the assessee.

The Revenue-appellant appealed against the CIT(A) order dated 15.01.2025. In this case,MAA Vaishno Fuels Pvt. Ltd.,respondent-assessee, filed its return of income on 21.09.2016, declaring a total income of ₹2,15,330/-. The assessee traded in coal and coal-related products. Its case was selected for scrutiny by the Department’s Risk Management System, which flagged alleged bogus sales and purchases of ₹15,99,000/-.

The case was reopened under section 147 through a notice issued under section 148 on 29.06.2021. Following the Apex Court’s decision in Union of India vs. Ashish Agarwal and subsequent CBDT instructions, the assessee was given an opportunity under section 148A(b) on 23.05.2022, filed a reply, and an order under section 148A(d) was passed.

Another notice under section 148 was issued on 08.07.2022, and the assessee filed its return of income on 11.11.2022, declaring the same income. The Assessing Officer (AO) examined the documents and concluded that the respondent-assessee had bogus sales of ₹1,59,13,085/- and conducted paper trading without actual business, adding ₹4,73,393/- as estimated commission.

On appeal, the CIT(A) deleted the additions after reviewing evidence submitted by the respondent-assessee, including ledger extracts, sales registers, invoices, bank statements, e-way bills, transport details, and VAT returns. The CIT(A) noted that post-search investigation in a related case had wrongly implicated Shri Rohit Sharma and that the assessee had substantiated the genuineness of its sales.

The CIT(A) observed that the AO relied solely on statements from Shri Rohit Sharma, whereas the respondent-assessee provided concrete documentation confirming actual sales. The CIT(A) therefore allowed the appeal.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) noted that a search was conducted on M/s Maharaja Shree Agrasen Jee Aapno Ghar Pvt. Ltd. group of cases on 16.11.2017, which included Shri Rohit Sharma.

The investigation found that some coke manufacturers in Dhanbad, who obtained linkage coal at a cheaper rate from BCCL, sold part of it clandestinely at higher cash prices in the open market, with Shri Rohit Sharma alleged to be a beneficiary. This prompted the reopening of the assessee’s case under section 147 of the Act.

The appellate tribunal observed that the respondent-assessee submitted detailed evidence, including ledger extracts, sales registers, invoices, bank statements, e-way bills, transport details, and VAT returns, all recorded in its books.

The AO made additions solely based on Shri Rohit Sharma’s statement, without any corroborative evidence, and did not dispute the documents submitted by the assessee. The AO relied only on the investigation wing’s finding that Shri Rohit Sharma was a bogus purchaser.

The tribunal found no infirmity in the CIT(A)’s order and dismissed the Revenue’s appeal, upholding the CIT(A)’s decision.

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