GORDHANBHAI GOVINDBHAI KALATHIYA,THANE, MAHARASHTRA vs. ITO- (2) (1), THANE, THANE, MAHARASHTRA

The Assessee, being aggrieved, challenged the said addition by filing 1st appeal before the Ld. Commissioner, with a delay of 206 days. The Ld. Commissioner not only dismissed the appeal being time barred as non-maintainable but also dismissed the same on merit.

Thus, the assessee being aggrieved challenged the impugned order and at the outset has demonstrated the fact that the assessee was earlier living at Flat No.102, Poonam Vihar Building, A/8, DP Road, Shanti Vihar, Mira Road East, Thane – 401107, where the notice was sent by the AO, whereas the assessee had already changed such address and intimated the change of address by filing application for address change in PAN data record on 30.03.2012 being acknowledgment No.033870100040593. The assessee also filed the acknowledgment of address change application in PAN. The assessee further claimed, even otherwise, on receiving a call from the office of AO, the assessee submitted an application dated 01.08.2015 to the office of the ITO, ward 2(3) Thane {successor of the AO} intimating the change of address for serving assessment order dated 24.02.2015. The assessee also enclosed a copy of the same. And therefore the assessee has claimed that he had reasonable cause for non- compliance before the AO. Further, the assessee has also claimed that he Mr. Gordhanbhai G. Kalathiya

The Ld. Counsel further submitted that the assessee also furnished an application dated 31.01.2020 on the same day in the office of aforesaid CIT(Appeal) justifying delay in presenting the appeal for sufficient reasons of change in address leading to non-service of the assessment order, with a humble request to condone the same and decide the appeal on merit. The assessee further claimed that thereafter Covid-2019 pandemic outbreak started in the month of March 2020, which led to periodical nationwide lockdown, which lasted up to almost 2 years and meanwhile, faceless appeal mechanism in the income tax was launched by the Government of India and thus appeal filed in physical form by the Assessee was migrated to National Faceless Appeal Centre (NFAC), Delhi alongwith the submissions and documentary evidences furnished before Mr. Gordhanbhai G. Kalathiya

Coming to the merits of the case, the Ld. Counsel has submitted that the non-prosecution of the proceedings, was due to bonafide reason as mentioned above, as in spite of intimating change of address, the AO issued notice to the assessee at the previous/old address, which resulted into non-attending the proceedings. Further despite submitting the relevant submissions and documents in physical form, the Ld. Commissioner also failed to consider the same and therefore no fault can be attributed to the assessee. As the assessee by filing the relevant documents duly discharged its prima-facie onus cast u/s 68 and there is no rebuttal of the documents by the Ld. Commissioner, therefore the addition made by the AO and sustained by the Ld. Commissioner, is liable to be deleted.

1 The Assessee at last claimed that even if the Hon’ble Court is inclined not to delete the entire alleged disallowance, then the disallowance being difference between the non-genuine and genuine purchases, considering the alleged non-genuine purchase of Rs.12,77,650/- may be made.

On the contrary, the Ld. D.R. refuted the claim of the assessee and submitted that the addition was made because the assessee failed to prove genuineness of the purchases made. Further, both the orders Mr. Gordhanbhai G. Kalathiya

Having heard the parties and perusing the material available on record and giving thoughtful consideration to the rival claims of the parties it is observed that that the assessee has duly informed the Department for change of address by filing application dated 30.03.2012 with TIN-FC managed by N L and also provided new address i.e. B-702, Rashmi Crystal CHS Ltd., CIR Complex, Opposite Shanti Vihar, Mira Road East, Thane, Maharashtra – 401107 and the same is verifiable from the impugned order, as well, however still the AO issued the notice at the previous address, which resulted in non-attending the assessment proceedings. The assessee by demonstrating the aforesaid facts thus, has established genuineness about his non-appearance/compliance before the AO.

1 Further admittedly the Assessee challenged such Assessment Order dated 24.02.2025 u/s 144 r.w.s. 147 of the Act, whereby addition of Rs.12,77,650/- on account of disallowance has been made and added the same to the income of the Assessee u/s 69C of the Act, by filing 1st appeal before the Ld. Commissioner on dated 17-11-2015 in ‘PHYSICAL FORM’, which was subsequently transferred/ transmitted to NFAC after introduction of National Faceless Appeal Mechanism. The Assesse has further claimed that in support of sale and purchase of goods involved and Mr. Gordhanbhai G. Kalathiya

2 The Hon’ble Bombay High Court in the case of PCIT-5, Mumbai Vs. Kanak Impex (I) Ltd. (ITA No.791 of 2021 decided on 03.03.2025) as relied on by the Ld. DR dealt with as case, wherein the assessee neither appeared before the AO and Ld. CIT(A) nor filed any document, whereas in this case, as observed above that the Assessee as demonstrated had duly filed the relevant documents in physical form before the Ld. then CIT(A) in physical hearing but somehow the same remains to be considered by the NFAC/Ld. Commissioner.

3 The Hon’ble Bombay High Court in the case of PCIT, Mumbai Vs. M/s. Drisha Impex Pvt. Ltd. (ITA No.1240 and 2087 of 2018 decided on 07.04.2025) as relied on by the Ld. DR, has dealt with a situation, wherein the Assessee failed to produce the suppliers and also failed to file the relevant documents in order to prove genuineness of the transactions, however in this case though the assessee in order to prove the genuineness purchase and sale filed the relevant documents in physical Mr. Gordhanbhai G. Kalathiya

4 (2022) 145 taxmann.com 230 (Bom.) as relied on by the Assessee has also considered an identical case, where the assessment was reopened on the basis of information received from Sales Tax Department to the effect that the purchases made seems to be accommodation entries but the Hon’ble High Court ultimately held that entire purchases made by Assessee could not be added back as income but only profit element therein was to be treated as income of the Assessee.

5 (2023) 154 taxmann.com 197 (Bom.) the Hon’ble High Court as relied on by the Assessee, has held that where AO treated purchases made by the Assessee as bogus and made addition in respect of same, since Assessee had maintained inventory of stock and payments for such purchases which were made by account payee cheques and tax invoices were obtained, such purchases could not be rejected and addition to be restricted for profit element.

6 The Hon’ble Bombay High Court in the case of PCIT Vs. Vishwashakti Construction (2023) 151 taxmann.com 93 (Bom.) has also held that where Assessee firm was engaged in business of road repairs had shown purchases from various entities, even if the Assessee failed to produce said parties for verification, the AO should not have treated entire purchases as bogus purchases but only profit element embedded in such purchases to be considered for addition.

7 Recently the Hon’ble Juri ictional High Court in the case of PCIT- 3, Pune Vs. Ramelex Pvt. Ltd. (ITA No.14 of 2022 decided on 13.10.2025) has also dealt with an identical case as of the present Assessee, wherein the information was received from the DGIT Sales Tax Mr. Gordhanbhai G. Kalathiya

8 Coming to the instant case again, this court further observes that the Assessee during the A.Ys. 2009-10 and 2010-11 has made the sales of Rs.97,77,697/- and Rs.73,89,927/- and shown the GP rate as 6.11% and 8.13% and net profit at 2.58% and 4.81% respectively that shows increase of GP and NP in 2010-11. The Assessee further demonstrated that gross profit declared by the Assessee matches with the ratio, as the purchase made from the alleged parties, was duly backed by corresponding sales, which was accepted as genuine and it is a fact that the AO has not doubted the sales made by the Assessee. Thus, it is logical Mr. Gordhanbhai G. Kalathiya

9 This Court is also of the considered opinion that simply on the basis of general information or statement received from Sales Tax Department without any substantive material, the addition is un-sustainable specifically in a case, where the assessee duly filed the relevant documents. As noted above, in this case the Assessee by filing relevant documents in physical form before the then Ld. CIT(A) has discharged prima-facie onus cast under the relevant provisions of law, as applicable hereto and therefore the addition made by the AO and sustained by the Ld. Commissioner, is liable to be deleted but subject to verification of such documents by the AO. However, considering the peculiar facts and circumstances in totality, specific to the effect that the instant case pertains to AY 2010-11, which is more than 15 years old and 1st appeal was filed in physical form prior to introduction of e-filling appeal and National Faceless Appeal Mechanism, the Ld. Commissioner carried out appellate proceedings during the Covid-19 mainly and ultimately decided the appeal on merit, the Assessee has prima facie discharged the onus cast u/s 69C of the Act by demonstrating the relevant documents and the addition is not based on any substantive evidence and therefore at this stage remanding the case to the file of AO for verification purpose would not serve the substantial purpose and justice and therefore prima facie examining the documents at this level and to protect the leakage of revenue if any, this Court is of the considered opinion that respectfully following the latest judgment of juri ictional High Court in the case of PCIT-3, Pune Vs. Ramelex Pvt. Ltd., for just and proper decision of the case and to sub-serve the substantial justice, it would be appropriate to restrict the addition being GP @ 15% of alleged bogus purchases, however subject to deduction of the GP already shown on the alleged purchases and thus the JAO is directed to restrict the addition @ 15 % of the alleged bogus purchases of Rs.12,77,650/- and by subtracting the GP @ 8.13% already shown by the Assessee from such addition @15% as determined, recompute the tax liability, accordingly. Mr. Gordhanbhai G. Kalathiya

Thus, the assessee’s appeal is partly allowed in the aforesaid terms.