ITAT Findings on Bogus Transactions cannot be Re-examined Without Substantial Question of Law: Jharkhand HC [Read Order]
Burden of proof shifted upon the appellant-assessee who provided unsatisfactory explanations.
![ITAT Findings on Bogus Transactions cannot be Re-examined Without Substantial Question of Law: Jharkhand HC [Read Order]](https://images.taxscan.in/h-upload/2026/03/17/2129458-itat-ranchi-jharkhand-high-court-bogus-transactions-substantial-question-taxscan.webp "ITAT Findings on Bogus Transactions cannot be Re-examined Without Substantial Question of Law: Jharkhand HC [Read Order]")
The High Court of Jharkhand at Ranchi held that Section 260-A does not re-examine evidence like bogus transactions, only entertains substantial questions of law. The matter has been appealed from the Income Tax Appellate Tribunal (ITAT). In Assessment Year 2004-05, two of the customers M/s. S.M. Enterprises, Dhanbad and M/s. Shyam Agro (P) Ltd., Hazipur, stated in writing that...
The High Court of Jharkhand at Ranchi held that Section 260-A does not re-examine evidence like bogus transactions, only entertains substantial questions of law. The matter has been appealed from the Income Tax Appellate Tribunal (ITAT).
In Assessment Year 2004-05, two of the customers M/s. S.M. Enterprises, Dhanbad and M/s. Shyam Agro (P) Ltd., Hazipur, stated in writing that they had no transaction with the assessee for the Assessment Year 2004-05. Similarly, for the Assessment Year 2005-06, notices were issued to M/s. Kundan Enterprises, Jharia and M/s. Udai Poultry Feed, Sultanganj. These notices were returned unserved with remarks “not known” and “no trace”.
Due to non-service and non-traceability of the customers of the assessee, show cause notice was issued to the appellant to explain the same. The appellant’s response was that some of the customers are not being genuine in their statements and some are now untraceable.
Although the burden of proof was initially on the Revenue department, the same was substantially discharged and the onus then shifted upon the appellant-assessee.
The counsel for the appellant submitted that the Tribunal only relied on the responses of the customers and they cannot be recorded as gospel truth without even affording the appellant any opportunity of cross-examining.
The opposing counsel from the Revenue submitted that the proposed questions were exclusively related to the appreciation of evidence.
The tribunal observed that the appellant’s case is nothing but an invitation to re-appreciate the evidence on record which is not an exercise undertaken in an appeal under Section 260-A of the Income Tax Act, 1961.
The High Court dismissed the appeal as they did not find any substantial questions of law presented by the appellant who furnished unsatisfactory explanations.
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