PINKAL DILIP BHANSALI ,MUMBAI vs. INCOME TAX OFFICER 19(2)(4), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated
19.09.2024 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2011-12, raising following grounds:
1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax

(Appeals), NF assessing off notice u/s 14
2. On the fac on the subje
(Appeals), NA assessing off under section 3. It is the assessing off tax (Appeals)
2. At the outset, the attention to the dela noted by the Registry
CIT(A) was not co registered primary o assessee remained u and came to know
Income-tax Portal to considerable lapse o was neither deliberat occurred for bona fid
2.1 We have consid condonation of delay placed on record constituting sufficien delay being unint
ITA

NFAC has erred in confirming the a fficer in reopening the assessment by 8 of the I.T. Act.
cts and circumstances of the case as wel ect, the learned Commissioner of Inco
NAFC has erred in confirming the a fficer in making addition of Rs. 2,24, n 69C of the | T Act as unexplained expen refore prayed that above addition m ficer and confirmed by Commissioner of may please be deleted.
e learned counsel for the asses ay of 101 days in filing the pre y. It was submitted that the orde ommunicated to the assessee or secondary e-mail address. A unaware of the passing of the of it only upon subsequently o verify the status of the proc of time. It was thus contended te nor attributable to any lack o e and unavoidable reasons.
dered the rival submissions o ay. In our considered view, th a reasonable and satisfacto nt cause for the delay in filing tentional and supported b
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A No. 1701/MUM/2025
action of y issuing ll as law ome Tax action of 75,072/- nditure.
made by f Income- ssee invited our esent appeal, as er of the learned e through the As a result, the appellate order y accessing the ceedings after a d that the delay of diligence, but on the issue of he assessee has ory explanation the appeal. The by bona fide circumstances, the s admitted for adjudica
2.2 Briefly stated, t its return of income f declaring a total inco was received from (Investigation), Mum accommodation purc
M/s Nazar Impex Pv operated by the Rajen
Jain group. The sai operations on 03.10
concerns under th accommodation entr business activity.
2.3 On the basis recorded reasons to escaped assessment
148 of the Income-t
Despite issuance o respond. Ultimately, issued, to which the ITA same is condoned. Consequentl ation on merits.
the facts of the case are that th for the relevant assessment year ome of ₹1,83,630/-. Subsequen m the Director
General mbai, that the assessee had all chase bills amounting to ₹2,24
vt. Ltd., a concern stated to be ndra Jain / Sanjay Choudhary d group was subjected to sea
.2013, wherein it was unearth heir control were engaged ies through paper entities with of this information, the As o believe that income chargea and accordingly issued notice tax Act, 1961 and served upon of statutory notices, the asse a show cause notice dated 0
assessee replied on 18.12.2018
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ly, the appeal is he assessee filed r on 27.09.2011
ntly, information of Income-tax legedly obtained
4,75,072/- from e controlled and / Dharmichand arch and survey hed that several in providing hout any actual ssessing Officer able to tax had e under section n the assessee.
essee failed to 01.12.2018 was 8, asserting that the purchases were bank statements.
2.4 Thereafter, the copies of statement
Director of M/s Naz proceedings on 0
categorically admitte providing accommod trading in diamonds the assessee to the Officer completed t purchases as unexp added the entire a income.
2.5 The Assessing O action conducted by established that the group were mere p proprietors were fou business operations.
these entities neither diamonds and were commission.
ITA genuine and furnishing copies
Assessing Officer supplied t ts of Shri Sanjay Kailashcha zar Impex Pvt. Ltd., recorded
03.10.2013
and 10.01.2014, ed that his concerns were en dation entries and did not car
. No rebuttal or explanation wa ese statements. Consequently, he reassessment by treating plained expenditure under se amount of ₹2,24,75,072/- to Officer noted that during the sea y the Investigation Wing, it w e concerns controlled by the J paper entities. The so-called und to be name-lenders with n
Statements recorded under oa r maintained nor dealt in any p only issuing accommodation
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of invoices and to the assessee and Choudhary, d during survey
, wherein he ngaged only in rry on any real as furnished by the Assessing the impugned ection 69C and the assessee’s arch and survey was conclusively
Jain/Choudhary directors and no control over ath revealed that physical stock of bills in lieu of 2.6 In particular, S
Impex Pvt. Ltd., adm shopping” and that n it. The detailed mo demonstrated that th books of accounts wi
2.7 The Assessing opportunity, the asse delivery of diamon documents, stock reg invoices and bank establish the genuin face of overwhelming and survey proceedin
2.8 The Assessing circumstances and h transactions were s suppress taxable inc apparent transactio surrounding facts an 2.9 It was emphasiz expenditure claimed suppliers themselves
ITA

Shri Sanjay Choudhary, Directo mitted that the company was e no physical stock of diamonds w odus operandi explained in he entire business was confined thout any corresponding movem g
Officer further observed essee failed to produce any evi nds such as delivery chall gisters, or inward registers. Mer statements was held to be neness of the transactions, par g incriminating material gathere ngs.
Officer also held that th human probabilities clearly ind ham and designed to inflate ome. Reliance was placed on th ns must be tested against nd conduct of parties.
zed that the burden to prove the squarely lies upon the asses s admit on oath that they are m
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or of M/s Nazar engaged in “bill was ever held by his statements d to maintaining ment of goods.
that, despite idence of actual lans, transport re production of insufficient to rticularly in the d during search he surrounding dicated that the purchases and he principle that the reality of e genuineness of ssee. Where the merely providing accommodation entr assessee cannot disc documents such as in 2.10 The Assessing O relevant, are not c surrounding facts est of movement of good failure of the asse demolish the claim of 2.11 The principle l
McDowell & Co. Ltd.
colourable devices c that transactions stru
2.12 Reliance was a Gujarat High Court
Hon’ble Supreme Co are found to be bogu and there is no just percentage thereof.
2.13 On a cumulativ
Assessing Officer held
ITA ries and no actual goods a harge its onus merely by produc nvoices and bank statements.
Officer observed that banking ch conclusive proof of genuinen tablish a façade. The absence o s, categorical admissions by the essee to rebut such evidenc f genuine purchases.
laid down by the Hon’ble Sup v. CIT (154 ITR 148) was invok annot be part of legitimate tax uctured only to evade tax must also placed on the decision in N.K. Proteins Ltd. v. DCIT, ourt, wherein it was held that us, the entire amount is liable t tification for restricting the dis ve consideration of the materia d that:
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are traded, the cing self-serving hannels, though ness when the f stock, absence e suppliers, and ce cumulatively preme Court in ked to hold that ax planning and be disregarded.
of the Hon’ble affirmed by the once purchases to be disallowed sallowance to a l on record, the 1. M/s Nazar Imp exclusively in pr
2. There was no ac
3. The assessee f genuineness of 4. The claim of pu and surroundin
2.14 Accordingly, the treated as unexplain
The books of accou addition was made i
271(1)(c) were initiate
3. On further ap challenging the validi
“7.1 The ap assessment u income on 27
Rs.1,83,630. wing that the group ShriRaj and this was act on 03.10.2
that the grou accommodatio beneficiaries.
assessment
30.03.2018 fo
Assessing Of information appellant had M/s Nararimp
ITA pex Pvt. Ltd. was a paper co roviding accommodation entries ctual delivery or movement of di failed to discharge its burden the purchases.
urchases was contrary to hum ng circumstances.
e purchases amounting to ₹2,24
ned expenditure under section unt were rejected under secti in full, and penalty proceeding ed separately.
ppeal, the Ld. CIT(A) rejecte ity of the reassessment observin ppellant has challenged the reopeni u/s 148 of the act. The appellant filed th
7.09.2011 for the AY 2011-12 declaring
The AO received information from the In e appellant availed accommodation entr ajendra Jain/ Sanjay Chudary/ Dharmic unearthed during the search action u/s 2013. In his statement, ShriRajendra Ja up controlled by him was indulging in on entry and the appellant was o
The AO based on this information reo and issued notice u/s 148 of the or which the appellant did not file any res
Officer reopened the assessment base received from the Investigation Wing d made bogus purchases from one of the p pex P Ltd. There is the clear information
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oncern engaged s.
iamonds.
of proving the man probabilities
4,75,072/- were 69C of the Act.
ion 145(3). The s under section ed the ground ng as under:
ing of the he return of g income of nvestigation ry from the chand Jain s 132 of the in admitted n providing one of the opened the act dated sponse. The ed on the g and the parties viz., and factual finding that c this was abs the Investigat
Sanjay Chou submissions genuine. The per the act an response to objection for r reopening lack
3.1 As far as merit rejected the contentio
“7.2 A perusa engaged in t accounts wer income on the Officer has c with regard to Ltd. in A.Y. 2
audited balan report, the com copy of the sales and clo bills issued b
The assessee banking chan
VAT, TIN an assessee to assessment detailed enqu
Ltd. was prov of diamonds.
premises, the also accepted stock of diam for purchases providing acco no actual sale
In this regard recorded und admitted the bogus bills a ITA ertain information was received by the L olutely authentic based on statements r tion Wing during search and seizure oper udhury Group, Mumbai. The appellant on 18.12.2018 stating that the transa above facts shows that the case was re nd the appellant did not file the return of the notice u/s 148 of the act and did reopening before the AO. The ground chal ks merit and it is dismissed.”
t of the addition is concerned, on of the assessee observing as u al of the record would suggest that the a the business of trading of diamond jew re duly audited. The assessee has filed i e strength of those accounts. When the Id confronted the assessee for explaining o certain purchases made from M/s. Naz
2011-12, the assessee has submitted c nce-sheet, Profit & Loss A/c. along wit mplete stock tally of the ornaments. It ha stock register exhibiting opening stock, osing stock. The assessee thereafter file by M/s. NazarImpex (P) Ltd. in the respe e has made the payments to its supplie nnel. The seller of the diamonds was h d CST no. Those details were submit the Id. Assessing Officer during the proceedings. The Investigation Wing uiry and held that the company M/s Na viding accommodation entries in respect o
It was also proved that at the time of se ere was no evidence of stock of diamond d by Sanjay Choudary that there was n monds and it was engaged in providing s and they were earning commission ommodation entries to the assessees and e.
d, it is pertinent to mention that in the der Sec.132(4), the director of the com rate of commission received by him and he had also stated that the benefic
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d. A.O. and recorded by ration of the t only filed action was eopened as of income in d not raise llenging the , the Ld. CIT(A) under:
assessee is wellery. The its return of d. Assessing its position zarImpex (P) copy of the th auditor's as also filed
, purchase, d purchase ective year.
ers through having PAN, tted by the course of conducted azarImpex P of purchase earch in the and it was no physical bogus bills income for d there was e statement mpany had for raising ciaries were already ident the company diamonds we
The financial
Firstly, the sto appeal papers
Opening s
Purchases
Sales
Closing S
Appellant has sales at Rs.6
Rs.9,49,612 a Further, it cou commission a there is no ot loss account a totaling Rs. 1
turnover of purchases is shown at Rs.41,05,621
the capital ac
Thus, there a it is also sta
Accountant. W profit is not e loan of Rs.8
appellant was Rs.24 lakhs w the sales dur
Rs.12 lakhs
Further the Rs.3305 per
Whereas on 0
Satyarth Exp difference be Rs.10,000 pe rate per carat gem to the ext made in the month of Ju appellant's ca business man credit period
ITA tified and only commission income was y and the corresponding sales for ere bogus sales.
l statement of the appellant has been tock details as per the audit report annex s have been carefully verified which show stock
NIL s
3009.10 carats
2783.59 carats tock
225.51 carats s admitted the purchases at Rs.6,45,32,1
6,06,45,589 and the gross profit was a and the closing stock was admitted at uld be seen from the administrative expen and brokerage were stated to be Rs.5,0
ther significant expenditure found in the as all other expenses were regular sundr
,53,671. Thus, it could be seen from the Rs.6 crores, the expenditure incurred abysmal. In the balance sheet, sundry
Rs.1,04,90,112
whereas sundry d
. The net profit of Rs.2,95,070 is not add ccount and the opening capital account is are omission and the accounts are not ac ted that the accounts are audited by a When the capital introduced is Rs,96,90
even Rs.2,95,070, how appellant was a 8,49,501. The point for consideration i s able to purchase diamond in the month without any underlying security to pay th ring the month was stated to be Rs.12 la stood as sundry credit in the month o rate per carat in respect of Shubhi carat and the appellant purchased 2
06.04.2010, appellant purchased 36 CT ports and the rate per carat is Rs.13
tween the rate on 02.04.2010 and 06. er carat approximately. It is to be seen w t would vary according to the standard/p tent of 300%. Further the payment for the month of April and May 2010 starts on ne 2010. Thus, the transactions invol ase gives rise to the suspicion whether a n would sell the valuable item like diam of more than 3 months to the appellan
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earned by supplying examined.
xed with the ws:
192 and the admitted at 48,36,215. nditure, the 00,870 and e profit and ry expenses e total sales d excluding creditors is debtors at ded back in Rs.96,909. ccurate and a Chartered
00 and the able to lend is how the h of April for he sum and akhs. Thus, of April 10. Gems was 259.90CTS.
TS from one
3,311. The 04.2010 is whether the purity of the e purchases nly from the lved in the any prudent mond with a nt, that too when the app amount of Rs stock registe
NazarImpex L
Nazarlmpex a is 1010 cara purchase from quantity purc
2011, there w after 1st Feb stock registe payment of R
2011. The su creditor would this line of bu
It is seen fro
10.06.2010 a the extent of from Indian O in this month for IOB Ahme operated by h of these depo provided. Sinc does not proj such a busin which is nea whether there above items w as the appell carats ofdiam after compar furnished by statement is, alleged seller has claimed t is very unlik unknown buy tenets of com one month for Further the m only commiss in the case o carried out b search broug
ITA pellant just started its business with a s.96,000 as capital. In the month of May, er, appellant has purchased diamo
Ltd.and the total cost during the month o alone is Rs.1,82,95,012 and the quantity ats and in the month of July 2010, th m NazarImpex which is Rs.42.00 lakh chased is 247.10 carats. In the month were no purchases and there were only bruary there were no purchases accord r and there were only sales. Furthe
Rs.2.20 crores was paid from July 201
undry creditor shows a sum of Rs.1.02
d allow such a waiting period to settle t usiness.
om the bank account of SBI, the entries and there is a deposit transfer from Bank
Rs.6,00,000 and on 06.07.2010 there is Overseas Bank for a sum of Rs.79,69,63
and even in other months also there wer edabad. Appellant stated that the curren him as SBI and Indus Ind Bank. Hence, osit transfers from other bank accounts ce the financial statement provided by th ject the source for making initial invest ness and considering the volume of tr arly Rs.6 crores, this gives rise to the e were actual movement of stock in res which were purchased from M/s NazarIm lant made maximum purchases of near mond and the transactions really took p ring the stock register and the bank y the appellant, the fact that emerges the impugned payment was made in fa r several days after the date on which th to have made the purchase. Thus, such a kely because no seller would sell go yer on credit, and therefore it militates ag mmercial transactions and the seller(s) m r payment from an unknown buyer.
major expenditure in the profit and loss sion which is Rs.5,00,870. The Investiga of M/s Nazarimpex P Ltd. is vital as th y the Wing and statement recorded at ght on record, the company was not Pinkal Dilip Bhansali
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A No. 1701/MUM/2025
an abysmal
, as per the onds from of May from y purchased here was a hs and the h of March y sales and ding to the er the said
0 to March crores. No the dues in s start from k of India to s a transfer
39. Not only re transfers nt accounts the details ts were not he appellant tment to do ransactions e suspicion spect of the mpex P Ltd.
rly 1256.18
place. Thus, statement s from the avour of the he appellant a happening oods to an gainst basic may wait for account is ation Report he enquiries the time of doing real business and modus operan
Considering t examining the Assessing Off
NazarImpex purchases is "Dismissed".”
4. Before us, the l
Book comprising pa purchase bills, conf and bank statements payee cheques.
4.1The learned coun in making a 100%
purchases as bogus, documentary eviden furnished purchase reflecting opening sto as bank statements
It was further subm
Ltd., was duly regist numbers.
4.2 It was submitte audit report for the y argued that once the as genuine, the corre
ITA d it is an accommodation entry provid ndi was clearly explained in the assessm the transactions in the books of account e availability of funds to incur such expen fficer's action in treating the transaction
Ltd.
amounting to Rs.2,24,75,072
s upheld. The grounds raised on this ”
learned counsel for the assesse ages 1 to 42, containing, inter firmation letters, stock register s evidencing payments made th nsel submitted that the Assessi addition of ₹2,24,75,072/- b despite the assessee having pro nce. It was contended that bills, confirmations, quantitativ ock, purchases, sales and closin showing payments through ban mitted that the supplier, M/s N tered and possessed PAN, VAT ed that complete quantitative de year under consideration. The e sales effected by the assessee esponding purchases could not b
Pinkal Dilip Bhansali
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A No. 1701/MUM/2025
er and the ment order.
ts and after nditure, the n with M/s
2as bogus issue are ee filed a Paper r alia, copies of rs, audit report hrough account- ng Officer erred by treating the oduced complete t the assessee ve stock details ng stock, as well nking channels.
azar Impex Pvt.
T, TIN and CST etails was given learned counsel e were accepted be disallowed in entirety, as this wou trading account unw had purchased 1,256
were treated as bog which was neither
Officer.
4.3 It was further exclusively on third- survey proceedings w cross-examination, justice. It was also a that the assessee pa was routed back to distinguish the deci
Kanak Impex Pvt. Ltd facts of the present c said decision was not 4.4 Per contra, supported the order certain deficiencies o of M/s Nazar Impex recorded on 05.10.20
of the assessee in th
ITA uld lead to an illogical result workable. It was submitted tha
6.18 carats of diamonds and, if gus, the stock position would alleged nor demonstrated by contended that the Assessin
-party statements recorded dur without granting the assessee an thereby violating the princip argued that there was no mate aid any commission or that un the assessee. The learned cou ision of the Hon’ble Bombay d. (172 taxmann.com 283), sub ase were materially different an t applicable.
the learned
Departmental rs of the lower authorities an or contradiction in the signature x Ltd. on the sales bills as we
013 vis-a-vis confirmation of the he books of M/s Nazar Impex
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and render the at the assessee such purchases d turn negative, y the Assessing g Officer relied ring search and n opportunity of ples of natural rial to establish naccounted cash unsel sought to High Court in mitting that the d, therefore, the Representative nd pointed out e of the Director ell as statement e ledger account
Pvt. Ltd. It was submitted that on assessment records,
(i) The signature
Nazar Impex Pvt
05.10.2013, ma the sales bills (P
(ii) The signature o assessee in the also differs fro
Further, the sai
(iii)
The Asses under section 1
findings regardi and advances, remained unexp
(iv)
No cogent evidence, were f
4.5 In view of the ab of the Hon’ble Bomba the learned Depart addition made by the deserves to be upheld
ITA verification of the Paper the following discrepancies were of Shri Sanjay Choudhary, D t. Ltd., appearing on the statem aterially differs from the signatu
PB: 10-12) produced by the asse on the confirmation of the ledger e books of M/s Nazar Impex Pv om the signature on the sw id confirmation is undated.
ssing Officer rejected the boo
145(3), and the learned CIT(A) r ing discrepancies in the capital sundry creditors and sundry plained by the assessee.
details of corresponding sales, furnished before the Assessing O bove infirmities and relying upo ay High Court in Kanak Impex P tmental Representative subm e Assessing Officer and sustaine d.
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Book and the e noticed:
Director of M/s ment recorded on ure appearing on essee.
r account of the vt. Ltd. ( PB: 9) worn statement.
oks of account recorded specific l account, loans debtors, which with supporting
Officer.
on the judgment
Pvt. Ltd. (supra), mitted that the ed by the CIT(A)

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

ITA nt material, which is clearly objections raised by the asses assessment proceedings are reje e ground No. 1 of the appeal of he appeal of the assessee is dism ced in the open Court on 23/
-
S
ANERJEE)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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present in the ssee challenging cted.
f the assessee is missed.
12/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai