ITO 19.3.1, , MUMBAI vs. MEHTA SURESH UKHCHAND HUF, MUMBAI

6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the element of reasons for procuring of bogus invoices, when it is observed that the GP on these bogus invoices are almost matching with the GP as per genuine invoices and therefore such estimation of income out of bogus purchases with the GP as per regular books of accounts is not justified?"

7. Whether on the facts and circumstances of the case and in law, the Ld. CITYA) has erred in appreciating the fact that though there was no dispute that the bogus purchases were made and so act of infraction of law was committed in violation of section 74(1A) of the Maharashtra Value Added Tax Act, 2022 and therefore such expenses is not allowed as per express provisions u/s. 37 of the Act?"

9. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is perverse in not considering that the order of Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, SLP (CC) of 963/2017, Dated. 16.01.2017, which is on the similar issue of bogus purchases has been confirmed, thus failed to appreciate that is was already the law of the land, when the Ld. CIT(A) has pronounced it's order on 17.12.2024?"

A copy of the CIT(A)'s order was received on 17.12.2024 in this office of PCIT- 19, Mumbai. The last date of filling an appeal is 28.02.2025. The appeal should be filed IMMEDIATELY”

Sr. No. Name of the Party Amount 1 Jinkushal Metal Corporation 2799960 2 Shree Manibhadra Metal Corporation 1801705 3 Navkar Impex 200626 4 Prerna Steel 4514 5 Gururaj Enterprises 1118933 6 Daksha Enterprises 330222 Total 62,55,960

(Bombay)

8. Per contra the authorised representative of the assessee (in short “Ld.AR”) submitted that the assessee during the assessment stage had furnished its submissions before the A.O but he had not taken them on record and passed an ex-parte order u/s.144, making the addition of entire alleged purchases. The details were, thus, furnished before the Ld. CIT(A) under Rule 46A of the Act for admission as additional evidences, which were filed before the Ld. AO also but not taken on record. Further, it is submitted by the Ld.AR that the Ld. CIT(A) has rightly adjudicated the issue following the decision of ITAT Mumbai, in and 1408/Mum/2019 for the assessment year 2010- 11 and 2011-12 in assessee’s own case on identical facts, wherein the coordinate bench of ITAT Mumbai has restricted the disallowance only for 5% of alleged purchases. The Ld. CIT(A) appreciated the facts and the decision of ITAT Mumbai, accordingly following the said decisions in assessee’s own case has restricted the addition at 5% of the bogus purchases. The Ld. CIT(A) has passed a reasonable and justified order, supported with decision of ITAT in assessee’s own case, the same accordingly deserves to be upheld.

5.1 I have examined the facts of the case, the assessment order, and carefully considered the appellant’s submission. The Assessing Officer (hereinafter referred to as the AO) passed the assessment order u/s 147 r. w. s. 144 of the Income Tax Act, 1961(referred to as the Act). The AO in his order added Rs. 62,55,960/- being Bogus purchases. In order to contest the additions made by the AO, the appellant has filed this appeal. The facts of the case and the appellant’s submission have been outlined in this order, so there’s no need to reiterate them to avoid duplication.

5.2 The appellant has taken the main issue of appeal through ground No.3 is regarding addition of Rs. 62,55,960/- by treating the genuine purchases as nongenuine purchases u/s. 69C of the IT Act. It is observed from the assessment order that information received from Sales tax Department through DGIT(In), Mumbai that the assessee has shown purchases of Rs.62,55,960/- from some parties whose name are reproduced in the assessment order in para-2, during the financial year relevant to assessment year 2009-10. During the course of investigation, the sales tax department has found that the said concern were not doing genuine business of purchases and sales and merely indulge in providing accommodation bills. Accordingly, after recording reasons for reopening the case and getting prior approval of the competent authority, notice u/s 148 of the Act was issued on 30.03.2019requiring the assessee to e-file his return of income within 30 days. However, the assessee did not filed return against the said notice u/s 148 of the Act. Thereafter, notice u/s 142(1) was issued number of times which remained uncompiled, are matter of record. Thus, the ld AO had issued a show cause notice before passing the assessment order which was also not complied with. Thus, the ld AO had no option than to assess the income of the appellant as per information available on record. It is observed from the assessment order that the Sales Tax department conducted investigation and found that the said concern were not doing genuine business of purchases and sales and merely indulge in providing accommodation bills. Since, It not one of case but thousand of assessees were involved with such activities to therefore, the ld AO based on the investigation of another department concluded that the amount of purchases made from the alleged

5.3 During the appellate proceeding the appellant has submitted before me that he had furnished all the details called for by the ld AO but he had not taken them on record and passed an ex-parte order u/s 144 of the Act making an addition of entire purchase. Before me the appellant has filed an application under Rule 46A of the I.T. Rule 1962 for admission of additional evidence that was filed before the ld AO who has not taken them on record.

5.4 Since the impugned assessment order were passed ex-parte u/s 144 of the Act for non-compliance from assessee’s side and required details as the same was not available with the ld AO as evident from the impugned assessment order. Therefore, in the interest of fairness and justice, it was necessary to set aside the assessment order made under section 144 of the Act, given the totality of facts. However, the appellant has submitted inter alia that –

“it is pertinent to bring to Your Honour's attention that in appellant's own case for AY 2010-11 & 2011-12 in on identical facts the Hon'ble ITAT has restricted the addition only to the extent of 5% of the alleged purchases. Therefore, if Your Honour has to make addition, then following the order of the Hon'ble ITAT in assessee's own case, it is submitted that only 5% of purchases could be upheld by Your Honour.”

5.5 I have considered the above submission and also perused the hon’ble ITAT’s order in the appellant own case for AY 2010-11 & 2011-12 in dated 1.6.2020. Since, the fact and circumstance of the present case are same, therefore, relying upon said judgment, I restricted the addition to 5% of such bogus purchase of Rs.62,55,960/- which comes to Rs.3,12,798/-. Thus, the appellant gets a relief of Rs.59,43,162/-. The ground of appeal is, thus, partly allowed.”

10. So far as the reliance of revenue is concern on the decisions of Hon’ble Mumbai High Court in the case of PCIT vs. Drisha Impex (P.) Ltd.(supra) and PCIT vs. Kanak Impex (India) Ltd. (supra.), we find that the facts of present case are different than the facts of the cases referred to. In present case assessee claims to furnished submissions and evidence before the AO, but Ld. AO had not taken on record, such submissions and evidence are thereafter furnished before the Ld. CIT(A), who examined the same and concluded that the facts are identical to the facts of assessee’s own case for AY 2010-11 & 2011-12 in and 1408/Mum/2019, whereas in the case of PCIT vs. Drisha Impex (P.) Ltd.(supra) and PCIT vs. Kanak Impex (India) Ltd. (supra.) the assessee therein was failed to prove the genuineness of purchases and express inability to furnish purchase confirmations. In present case on the contrary assessee submitted primary evidence to discharge the burden on it, further under similar facts the cases are decided by ITAT Mumbai in assessee’s own case as well as in other cases, which in absence of any deviating fact brought to our notice can not be decided differently. We thus concur with the decision of Ld. CIT(A) in restricting the addition for 5% of the alleged bogus purchases. The decision of Ld. CIT(A) is thus sustained and need not be interfered with.

Order pronounced in the open court on 29-12-2025.