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Facts
The assessee, a private limited company engaged in manufacturing and services, filed its return for AY 2009-10. The assessment was reopened based on information that purchases were made from parties involved in accommodation entries. The Assessing Officer (AO) disallowed purchases of Rs. 80,68,124 from M/s. Vikash Enterprises as bogus.
Held
The Tribunal noted that the assessee had furnished documentary evidence that was not considered by the lower authorities. It held that the addition made solely on information from DGIT(Inv.) without considering evidence was incorrect. The Tribunal remitted the matter back to the AO for re-examination of the documentary evidence.
Key Issues
Whether the disallowance of purchases as bogus is justified without considering the documentary evidence submitted by the assessee and whether the transactions were back-to-back contracts.
Sections Cited
250, 69C, 80IC, 143(3), 148
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY&
(Assessment Year: 2009-10) GMP Technical Solutions Private Assistant Commissioner of Limited Income Tax circle 7(2), Mumbai 3rd 309-316, Floor, SwastikDisha Aayakar Bhavan, Mumbai 400002 Business Park, Behind WadhwaniInd Vs. Estate, L.B.S. Marg, Ghatkopar, Mumbai 400086. PAN: AAACQ1042P Appellant) : Respondent) Assessee by : Ms. Afrin Shaikh & Rahul Charkha Revenue by : Shri. SwapnilChoudhary Sr. AR Date of Hearing : 30.10.2025 Date of Pronouncement : 11.11.2025 O R D E R
Per Padmavathy S, AM:
This appealby the assessee is against the order of the Commissioner of Income Tax Appeals/National Faceless Appeal Centre (NFAC), Delhi passed u/s. 250 of the Income Tax Act, 1961 (the 'Act') dated 20.06.2024 for AY 2009-10. The grounds raised by the assessee are as under – “Ground 1-The Learned Assessing Officer has erred in initiating reassessment proceedings merely based on suspicion due to sales tax hawala list.
2 ITA N0. 4114/Mum/2024 GMP Technical Solutions Pvt. Ltd. Ground 2-On facts and circumstances of the case, the Learned Commissioner of Income Tax-Appeals ["Ld. CIT(A)"] has erred in upholding the disallowance of INR 80,68,124 under Section 69C of the ITA. Ground 3 Without prejudice to the above and on facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the disallowance of entire purchases as bogus. Ground 4-Without prejudice to the above and on facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the treatment of the purchases as bogus without disputing corresponding sales. The Appellant submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforementioned grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Ld. Bench to decide the application in accordance with the law.”
2. The assessee is a private limited company engaged in the business of manufacturing clean room partitions and providing of erection, installation and commissioning services of heating ventilation air conditioning systems. The assessee also undertakes construction and the civil work in relation to turnkey projects. Assesses manufacturing facility is situated at Baddi, Himachal Pradesh and is entitled to benefit of deduction u/s. 80IC of the Act. The assessee filed the return of income for AY 2009-10 on 30.09.2009 declaring total income of Rs.19,40,87,351/- after claiming deduction u/s. 80IC to the tune of Rs.14,99,91,209/-. The case was selected for scrutiny and the assessment u/s. 143(3) was completed determining the assessee income at Rs.34,88,89,011/- disallowing the deduction u/s. 80IC. Subsequently, the assessment was reopened by issue of notice u/s. 148 of the Act. Based on information received from DGIT (Inv.) that the assessee has made purchases from certain parties who according to the sales tax department have admitted that they are engaged in providing 3 ITA N0. 4114/Mum/2024 GMP Technical Solutions Pvt. Ltd. accommodation entries. The AO called on the assessee to furnish details of purchases made from one such party M/s. Vikash Enterprises amounting to Rs. 80,68,124/-. The AO held that in spite of repeated opportunities the assessee has failed to produces the parties along with relevant evidences to substantiate the genuineness of the transaction even though, the burden of proof lies with the assessee. Accordingly, the AO treated the entire purchases made from M/s. Vikash Enterprises as bogus and made addition accordingly.
Aggrieved the appeal filed before the ld. CIT(A). The assessee submitted before the ld. CIT(A) that M/s. Vikash Enterprises was involved in providing the services of interior decorations, repairs and renovations in relation to civil works and a job was carried out in respect of the customer M/s. Givaudan Flavors (India) Private Limited, Andheri (Eas). The assessee further submitted that the payments were made towards the services rendered through, banking channel and also submitted supporting evidences towards, completion of work and bills raised on the client. Accordingly, the assessee submitted that the order was back to back contract and, therefore, the same cannot be held as bogus. The assessee also brought to the notices of the ld. CIT(A) that M/s. Vikash Enterprises failed to pay VAT liability due to financial constrains and therefore was black listed by the sales tax department. The assessee also brought of the attention that the VAT liability was subsequently, paid by M/s. Vikash Enterprises. The assessee submitted various documentary evidences such as copies of purchase invoices, corresponding sale invoices, ledged account of parties, copies of bank statement etc., The ld. CIT(A) upheld addition made by the AO by holding that- Regarding the 2nd ground of appeal
I find that the appellant was unable to furnish all the supporting documents including purchase invoices/ bills income Tax return's copy of the alleged seller M/s Vikash Enterprise Bank
4. ITA N0. 4114/Mum/2024 GMP Technical Solutions Pvt. Ltd. statement's copy before the AO during the course of reassessment proceedings despite availing multiple opportunity of hearing. The appellant miserably failed to produce the party M/s Vikash Enterprise for verification and unable to give satisfactory explanation before the AO regarding the genuineness of purchase made from M/s Vikash Enterprise amounting to Rs. 80,68,124/- despite getting multiple opportunity of hearing. In course of appellant proceedings as per the submission of the appellant once it is stated vide sl. No. 1 above that M/s Vikas enterprises was involved in providing the services of interior decorations, repairs and renovation in relation to civil work at client's site i.e. service providers, at the same time the appellant claimed vide sl. No. 14 & 16 to have purchased the goods from said dealer and sold the contract purchased from the said dealer after processing to its customers. Therefore the appellant is totally confused in its submission which clearly establish the fact that genuineness of purchase from M/s Vikash Enterprise remain unproved and unestablished by the appellant. In view of above discussion, considering the entire conspectus, I am of opinion that disallowance of Rs. 80,68,124/- on account of bogus purchase is justified. Therefore I find no infirmity in the order of the AO in as much as the same is made in accordance with law. Accordingly above disallowance/ addition of Rs. 80,68,124/- stand confirmed. And the grounds are dismissed.
3. We heard the parties and perused the material on record. During the course of hearing the ld. AR submitted a paper book of 238 pages containing the various submissions and documentary evidences submitted before the lower authorities. On the impugned additions we notice that the assessee has submitted details such as purchase order and quotation from M/s. Vikash Enterprises, invoices with details of purchases along with supporting document, project layout, architect certificate along with photos, bank statements reflecting payments made to M/s. Vikash Enterprises, copies of corresponding sale invoice. The assessee also submitted an affidavit from the proprietor of M/s. Vikash Enterprises mentioning the work carried out for the assessee and mentioning the fact that he has paid the 5 ITA N0. 4114/Mum/2024 GMP Technical Solutions Pvt. Ltd. VAT amount on the work carried out of the assessee. From the perusal of the order of the AO and the findings of the ld. CIT(A) as extracted above we notice that the basis for making the addition/sustaining is that the assessee fail to produce any documentary evidences. However, we notice that the assessee has furnished various documentary evidences as mentioned here in above before the lower authorities which have not been considered. Therefore, in our considered view, the addition made merely based on the information received from DGIT (Inv.) without considering the documentary evidences is not correct. Having held so, we are of the view that the claim of the assessee that the transactions with M/s. Vikash Enterprises are genuine and is a back to back contract with a client needs factual verification. Accordingly, the interest of natural justice we are remitting the appeal back to the AO with a direction to examine the various documentary evidences as submitted by the assessee in support of the claim that the transactions entered into with M/s. Vikash Enterprises are genuine. The AO is further directed to pass a speaking order after verifying the documents and allow the claim of the assessee in accordance with law after giving reasonable opportunity of being heard to the assessee. It is ordered accordingly.
4. The assessee made an alternate plea that the addition could be sustained to the extent of 12.5% of the purchases towards the profit element contained therein. Since we have restored the impugned issue back to AO for fresh consideration based on the documentary evidences with regard to the genuine of the transaction the said plea of the assessee has become academic not warranting any adjudication.
6 ITA N0. 4114/Mum/2024 GMP Technical Solutions Pvt. Ltd. 5. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 11-11-2025.