IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.2731/Mum./2023 (Assessment Year : 2021–22)

DCIT, CC-3(2)

Room No. 1913, 19^th Floor ……………. Appellant Air India Building, Nariman Point Mumbai-400021 v/s Arun Jain

11, Vikash Park, Jalpankhi Co-op, HSG, Society Ltd, ……………. Respondent Juhu Tara Road, Juhu, Mumbai-400049 PAN – AAFPJ0335G Assessee by : Shri Jay Bhansali Revenue by : Shri Sunny Kachhwaha Date of Hearing – 30/05/2024 Date of Order –07/06/2024

O R D E R

PER SANDEEP SINGH KARHAIL, J.M.

The present appeal has been filed by the Revenue challenging the impugned order dated 09/05/2023, passed u/s 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)-51, Mumbai, [“learned CIT(A)”], for the assessment year 2021-22.

2. In its appeal, the Revenue has raised the following grounds:–

“1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition made u/s 69A amounting to Rs.3,95,15,327/- on account of sales made to M/s. Gulathi Enterprises reflected against the PAN of the assessee.

2. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.91,07,200/- proved to be bogus purchases, without considering the statement recorded from key persons who have confirmed that the purchases in question are in the nature of accommodation entry.”

3. The issue arising ground no. 1, raised by Revenue, pertains to deletion of addition made u/s 69A of the Act on account of sales of M/s. Gulathi Enterprises.

4. The brief facts of the case pertaining to this issue, as emanating from the records, are: The assessee is an individual and is carrying on the business of trading in scrap, pipes, hot/cold rolled steel coils, steel plates and related products through his proprietary concern, i.e. GSP International. For the year under consideration, the assessee filed its return of income on 02/03/2022 declaring a total income of Rs.18,17,080/-. The return filed by the assessee was selected for complete scrutiny through CASS and statutory notices u/s 143(2) as well as section 142(1) of the Act were issued and served upon the assessee. During the assessment proceedings, it was observed that an amount of Rs.3,95,15,327/- has been shown as sales in the GST return of the assessee. Accordingly, the assessee was asked to show cause as to why the sales of Rs.3.95 crore should not be treated as part of the assessee’s sales. In response thereto, the assessee submitted that M/s. Gulathi Enterprises had fraudulently applied the GST number under the PAN of the assessee. It was further submitted that the assessee has filed complaint with Police and Department of GST. Thus, it was submitted that the sales of Rs.3.95 crore pertaining to M/s. Gulathi Enterprises have wrongly been included in the GST return of the assessee. The assessee also furnished copy of cancelled GST number of M/s. Gulathi Enterprises during the assessment proceedings. In order to ascertain the genuineness of the assessee’s claim, the Assessing Officer (“AO”) issued letter to the Commissioner of CGST and Central Excise seeking information in respect of transaction done through GST No.07AAFPJ0335G1Z5. Since no reply was received from the Commissioner of CGST and Central Excise, the AO vide order dated 28/12/2022 passed u/s 143(3) of the Act treated the transaction as assessee’s transaction and made an addition of Rs. 3,95,15,327/- to the total income of the assessee on the basis that the assessee has failed to furnish any corroborative evidence regarding the said transaction and the treatment of the transaction, subsequent, to the cancellation of the GST number.

5. The learned CIT(A), vide impugned order, after taking into consideration the submission of the assessee and various documents filed in its support held that the transaction in the GST return of the assessee has not been confirmed/ver