Vinayak Traders vs. ITO, Sriganganagar

Parties Involved

Facts Summary

Vinayak Traders, a partnership firm engaged in wholesale and retail trade of Macro Max Mobiles, filed its Return of Income for A.Y. 2018-19 on 18.09.2018, reporting a total income of Rs.4,80,260/-. The firm's return was not picked up for scrutiny. However, the return was reopened based on information from the Central Board of Indirect Taxes and Customs (CBIC) indicating that M/s. Sonu Monu Telecom Centre Pvt. Ltd. was involved in issuing bogus sales/purchase bills. The assessee had availed bogus sales purchase bills of Rs.76,47,675/- from this firm. Upon examination, it was found that the return was not in consonance with these sales and purchase bills. The Assessing Officer issued a show cause notice under Section 148 of the Income Tax Act, 1961, and an order under Section 148A(d) stating that income of Rs.76,47,675/- had escaped assessment. The assessee filed an objection, stating that it had sold goods to Sonu Monu Telecom Centre Pvt. Ltd. and not purchased from them. The Assessing Officer found that the sale consideration received by the assessee was from a non-existing entity and made an addition of Rs.85,69,197/- under Section 68 of the Act. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), who upheld the reassessment order. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the reopening of the assessment was valid?
• 2. Whether the addition made by the Assessing Officer was justified?

Judgment Outcome

Decided in favour of Assessee.

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