GST Portal Data Alone Sufficient to Justify Reopening of Assessment in Bogus Purchase Cases: ITAT Delhi Restores Matter to CIT(A)
Case Overview
Case Name: Harsh Jindal Pranshu Goel Vs ITO (ITAT Delhi)
Relevant Assessment Year: 2018-19
Court: Income Tax Appellate Tribunal, Delhi
Background and Facts of the Case
The assessee, an individual, filed his return of income for Assessment Year 2018-19 declaring a gross total income of Rs. 14,35,204/-. This comprised business income, short-term capital gains of Rs. 3,92,880/-, and income from other sources of Rs. 74,823/-. After claiming deductions under Chapter VI-A amounting to Rs. 1,65,235/-, the net taxable income declared stood at Rs. 12,69,970/-, which was duly processed under Section 143(1) of the Income Tax Act, 1961 on 05.12.2018.
Subsequently, the case came under scrutiny when the Department received intelligence through the Insight Portal under the High Risk CRIU/VRU framework. The information flagged that the assessee had allegedly availed bogus purchase entries aggregating to Rs. 77,71,894/- from entities linked to one Shri Deepak Sharma. On this basis, proceedings under Section 148A of the Act were initiated by issuing a notice to the assessee.
The Deepak Sharma Connection
A search operation was conducted under Section 132 of the Income Tax Act, 1961 in the case of the Shri Deepak Sharma Group based at Mandi Gobindgarh. The investigation revealed the following critical facts:
Two GST registrations were found linked to the PAN of Shri Deepak Sharma on the official GST portal
services.gst.gov.in:- GST No. 03BGPPS4292E2Z4 — registered in the name of Shri Salasar Balaji Industries
- GST No. 03BGPPS4292E1Z5 — registered in the name of GS Industries
The GST registration of GS Industries was cancelled suo motu by the GST Authorities with effect from 10.10.2017.
During the search, Shri Deepak Sharma claimed to maintain books of accounts at 431, Sector-10A, Mandi Gobindgarh. However, no books of accounts were found at the stated address.
The Form 3CD mentioned that Shri Deepak Sharma was engaged in wholesale trading of metal and metal ores. Yet, no goods or stock pertaining to such a business were discovered at the premises during the search.
While recording his statement under
Section 131(1A)of the Act on 14.07.2022, Shri Deepak Sharma was specifically confronted about the two GST-registered entities linked to his PAN. He admitted that no genuine business activity was carried out through these entities and that they were used solely to provide accommodation entries.
Based on these findings, proceedings under Section 148 of the Act were initiated against the assessee.
Assessment Proceedings and Additions Made
Despite being served with multiple notices, the assessee chose not to comply with the departmental communications. Eventually, upon receipt of a show cause notice, a partial written submission dated 02.02.2023 was filed along with some documents — though this was only a partial response to the notice issued under Section 142(1) of the Act. No specific explanation was offered concerning the issues raised in the show cause notice, and multiple adjournment requests were made.
Since no meaningful response was forthcoming, the Assessing Officer proceeded to reject the books of accounts under Section 145(3) of the Act, citing the following discrepancies: