IN THE INCOME TAX APPELLATE TRIBUNAL “A’’BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI,VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1680/Bang/2024 Assessment Year : 2018-19 Gauge 16 Kitchen Equipments No.10, Ground Floor, 2^nd Main, 3^rd Cross Padarayanapura ITO Vs.

Bangalore 560 026 Ward-5(2)(4)

Bangalore PAN NO : AALFG1306N APPELLANT RESPONDENT Appellant by : Sri Balram R Rao, A.R. Respondent by : Sri Balusamy N., D.R.

Date of Hearing : 12.06.2025 Date of Pronouncement : 08.09.2025

O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 31.07.2024 vide DIN & Order No. ITBA/NFAC/S/25/2024-25/1067171327(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.

2. The assessee has raised the following grounds of appeal:

3. Brief facts of the case are that the assessee is a Registered Partnership firm engaged in the business of manufacturing & selling stainless steel Kitchen Equipment for hotels and other industrial purposes. The assessee firm filed its return of income for the A.Y. 2018-19 on 30.03.2019 declaring total income of Rs.12,64,010/-. Thereafter, the case of the assessee firm was selected under compulsory scrutiny with the issue “specific information pointing tax evasion has been received from other agency”. Accordingly, the notices u/s. 143(2) as well as 142(1) of the Act was issued calling for various details along with the questionnaire. The assessee firm submitted its reply through e-filing portal.

3.1 Background of the case is that information was received through Regional Economic Intelligence Committee (REIC) forum from one of the member agency of REIC i.e. Commercial Tax Department, Karnataka that the assessee is one of the beneficiaries of bogus GST billing. The assessee had received Bogus purchase entries of Rs.50,35,980/- thereby reducing its tax liability. The modus operandi adopted was that the fictitious bills/invoices were generated along with E-way bills and vehicle details without actual movement of goods or services. The purchase proceeds were routed through the bank channels. The payment of sale proceeds were routed through layering and after deducting commission the amounts were paid back in cash. As per the commercial taxes department, the parties claim bogus purchases in their books of accounts and inflated expenses. The assessee is one of the beneficiary of bogus GST billing and received bogus purchase entries of Rs.50,35,980/-. The trade entries which constituted this amount were Rs.13,54,500/- from A to Z Traders, Rs.10,12,480/- from Manjunatha Marketing and Rs.16,69,000/- from Silicon Traders.

3.2 After going through the reply filed by the assessee firm as well as bank statement, the AO noticed that the alleged purchases amounting to Rs.50,35,980/- were credit purchases and no payment of the same has been made till the date of the passing of order by the AO. The assessee has also not given any reasons for such a long delay in making payments. Further the AO observe that the assessee could neither explain nor filed any supporting evidences in respect of addition proposed of Rs.50,35,980/- on account of business income. Further, with regard to the purchases made from Manjunatha Marketing, the assessee firm could neither file any confirmation of accounts nor provide e-mail address of the party. Accordingly, the AO was of the opinion that as the assessee has not made any payments, the purchases were bogus purchases made with the purpose to reduce the tax liability of the assessee firm. The AO treated the purchases of Rs.50,35,980/- made from the three parties as bogus purchases and added the same to the business income of the assessee. The assessment was completed u/s 143(3) of the Act on a total income of Rs.62,99,990/-.

4. Aggrieved by the order of AO dated 11.05.2021, the assessee firm preferred an appeal before the Ld.CIT(A)/NFAC.

5. The Ld.CIT(A)/NFAC d