WALMARK GARMENT COMPAMY PVT LTD,MUMBAI vs. ITO WARD 14(3)(1), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “G” BENCH,
MUMBAI

BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER
&
SMT.RENU JAUHRI, ACCOUNTANT MEMBER
Walmark Garment Company
Pvt. Ltd.
CH. No. 9 , Shop No. 18,
Porbandarwala Chawl,
Chiragnagar, L.B.S Marg,
Ghatkopar West,
Mumbai-400086. Vs.
Income Tax Officer
Ward 14(3)(1),
Aayakar Bhavan,
Mumbai-400020.
थायी लेखा सं./जीआइआर सं./PAN/GIR No:AAACW9438P
Appellant
..
Respondent

Appellant by :
Shri Sharwan Kumar Jha
Respondent by :
Shri Swapnil Choudhary- Sr. AR

Date of Hearing
22.09.2024
Date of Pronouncement
14.10.2025

आदेश / O R D E R

PER RENU JAUHRI [A.M.] :-

This appeal is filed by the assessee against the order of the Learned
Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal
Centre, Delhi [hereinafter referred to as “PCIT”] dated 02.05.2025 passed u/s.
250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2016-17. 2. The grounds of appeal are as follows:

P a g e | 2
“The appellant company prefers an appeal against an order passed by Ld.
CIT(A), National Faceless Appeal Centre, Delhi dated 05/11/2024 on following amongst other grounds each of which are without prejudice to any other:-

P a g e | 3
Trade Links Pvt. Ltd. These transactions came to light during enquiries conducted by the Investigation wing against M/s. ABN Trade Links Pvt.
Ltd. during the course of which, from the statements of the directors recorded on oath and other documents, it was found that the company was an accommodation entry provider and was providing both sales as well as purchase entries.
Accordingly, a notice u/s. 148 was issued by the ld. AO on 22.04.2021 for A.Y. 2014-15 with the prior approval of the competent authority to the assessee.
3.2 Subsequently, as per the directions of the Hon’ble Apex Court in the case of Ashish Agarwal, all such notices were deemed to be notices issued u/s. 148A of the Act and construed as show cause notices u/s.
148A(b) of the Act. In compliance with the directions of the Hon’ble
Supreme Court, the underlying material and documents were provided to the assessee by the ld. AO vide letters dated 20.05.2022
and 13.07.2022. 3.3
The assessee filed his reply on 13.06.2022 stating his inability to make requisite compliance due to COVID related problems and finally on 18.07.2022 submitted another request for adjournment.
It was noted by the Ld. AO that even after a lapse of 60 days from the date of issue of initial notice, the assessee had not furnished even a single document to prove the genuineness of the impugned transaction. He, therefore, passed an order u/s. 148A(d) on 28.07.2022 holding that the assessee’s income to the extent of Rs.

P a g e | 4
5,67,82,322 had escaped assessment and, therefore, it was a fit case for reopening and hence issue of notice u/s. 148 of the Act also issued.
3.4 Subsequently, assessment was completed after making the impugned addition u/s. 69C of the Act, as the assessee could not prove the genuineness of the purchases amounting to Rs.
5,67,82,322/- shown for M/s. ABN Trade Links Pvt. Ltd.
Aggrieved, the assessee preferred an appeal before ld. CIT(A).
As no compliance was made by the assessee to the multiple notices issued by ld. CIT(A), therefore, vide order dated 02.05.2025, ld.
CIT(A) dismissed the appeal.
Aggrieved, the assessee has now filed an appeal before the Tribunal.
4. Before us, ld. AR has filed a compilation containing some of the details/documents relating to the impugned transaction and has requested for admission of the additional evidences. An affidavit of the director has also been filed explaining the reasons of non-compliance before ld. CIT(A).
As these documents pertain to the transactions in question, we, therefore, admit these documents under Rule 29 of the ITAT Rules.
5. We have heard the rival submissions and perused the material available on record. So far as the legal grounds no. 2 to 5 are concerned, we note

P a g e | 5
that these have also been dealt in the order of ld. CIT(A). The assessee’s objections relating to the reopening of assessment are disposed off as under:
5.1 Absence of Tangible material for reopening:
Ld. AR has submitted that the reopening was based on generic data without any specific or credible material to justify the notice issued to the assessee.
In this regard, it is seen that the reopening was done under the new provisions which came into effect from 01.04.2021 and there have been major changes in the reassessment procedure AE present section 148A reads as under:
148A: Procedure before issuance of notice under section 148
(1) Where the Assessing Officer has information which suggests that income chargeable to tax has escaped assessment in the case of an assessee for the relevant assessment year, he shall, before issuing any notice under section. 148 provide an opportunity of being heard to such assessee by serving upon him a notice to show cause as to why a notice under section. 148 should not be issued in his case and such notice to show cause shall be accompanied by the information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year.
(2) On receipt of the notice under sub-section (1), the assessee may furnish his reply within such period, as may be specified in the notice.
(3) The Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section. 148. (4) The provisions of this section shall not apply to income chargeable to tax escaping assessment for any assessment year

P a g e | 6
in the case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A.
Explanation. For the purposes of this section and section 148,
“specified authority” means the specified authority referred to in section 151. 5.2 Thus, ld. AO had information in his possession which suggested that income had escaped assessment. Accordingly, the assessee was provided the information alongwith requisite material/documents by the ld. AO vide letters dated 20.05.2022 & 13.07.2022 wherein the assessee was specifically required to furnish the following details alongwith documentary evidence regarding the transactions entered into with M/s. ABN Trade Links Pvt. Ltd:-
“1. For each time the supply of the goods were made, please provide the source of these goods and establish that they were procured actually and these were genuine transactions
2. Please provide the copies of the insurance of the goods transported for each time of transportation
3. Copy of the agreement of purchase with the said party Also provide the supporting documents of loading, unloading, labelling, garment testing etc.
for each transaction.
4. For the total purchases made in the year under consideration, please establish the usage of these goods along with supporting documents and reconcile these with opening stock in trade, closing stock in trade, purchases of raw material and sales.
5. Please provide the copies of the invoices for each purchase
6. copy of bank statement reflecting payments made/received to/from Mis.
ABN Trade Link Pvt. Ltd.
7. copy of MVAT retums for the period from April 2014 to March 2015
8. copy of Form 704-VAT audit report for the FY 2014-15. 9. Ledger information of party”

P a g e | 7
could not file even a single document to substantiate the impugned transaction.
5.4 Notice issued beyond prescribed limit
With regard to applicable time limit, we observe that the notice was issued on 28.07.2022 and since the amount involved was more than Rs. 50 lakh, the notice was issued within the prescribed time limit of 10 years. Further the ld. AO had requisite evidence in the form of enquiry report, statements of directors and other information which was duly provided to the assessee. As the assessee failed to submit the requisite documentary evidences in support of the impugned transaction, the ld. AO correctly issued the notice u/s. 148 in pursuance of order u/s. 148A(d) dated
28.07.2022. Thus, in view of the above facts and circumstances, the assessee’s legal grounds relating to issue of notice u/s. 148 of the Act are hereby rejected.
6. Ground no. 6 & 7 are on the merits of the addition of Rs. 5,67,82,322/- u/s. 69C of the Act. It is claimed that the impugned addition is made by the ld. AO without considering that the sales of the same items has been shown by the assessee on which profit of Rs. 27,38,493/- has been declared. Hence the addition made by the AO is not justified. Alternately, it has been stated in ground no. 7, that the addition should be limited to 1% of the total purchases which is a reasonable estimate considering the past precedents in similar cases of doubtful purchases.

P a g e | 8
6.2 In this regard, the ld. AR has relied upon the additional evidences filed before us, to argue that the corresponding sales have been made as is evident from the documentary evidences and, therefore, the addition made on account of bogus purchases without disputing the sales and rejecting the books of accounts is not tenable. At best, an addition of 1%
of total alleged bogus purchases could have been made by the ld. AO keeping in view the practice followed in this regard in other cases.
6.3 Ld. AR has placed reliance on several decisions of the Hon’ble Supreme
Court & High Courts in support of above proposition, some of which are as under:
P a g e | 9
7.2 Even now, while filing the additional evidence, the assessee has not been able to give requisite documentary evidences specifically sought repeatedly by the ld. AO, viz.,
• Copies of insurance in respect of the goods transported.
• Copy of agreement of purchase with M/s. ABN Trade Links Pvt.
Ltd. and supporting documents of loading, unloading, labelling etc.
• Copy of MVAT return for April 2014-March 2015. • Copy of Form 704-VAT audit report for F.Y. 2014-15. In the absence of requisite documentary evidence, Ld. DR has argued that the ld. AO was justified in treating the entire purchases from M/s. ABN Trade Links Pvt. Ltd. as bogus and making the addition of the entire amount 69C of the Act.
7.3
Further, reliance has been placed by ld. DR on the recent decisions of the Hon’ble juri ictional High Court in the following cases:
i.
PCIT V. Kanak Impex (India ) Ltd. (2025) 474 ITR 175
wherein it has been held that when purchases were not proved, the entire amount had to be added u/s. 69C and the estimation was not permissible.
ii.
PCIT V. Drisha Impex (P) Ltd. (2025) 173 taxmann.com
571 (Bom) wherein Hon’ble juri ictional High Court held that the assessee failed to discharge the primary ones of P a g e | 10
proving the purchases and therefore disallowance of entire amount should have been made instead of estimated @3%.
8. We have heard the rival submissions and considered the material on record in the light of judicial pronouncements relied upon by both the parties. Following facts are deduced from the foregoing discussion:
i.
Admittedly, the ld. AO received credible information regarding alleged bogus purchases shown by the assessee through the Project Insight of the department, which was, in turn made available by the Investigation wing after conducting investigation in the case M/s. ABN Trade Links Pvt. Ltd. and other group concerns. Further, it is pertinent to note that M/s. ABN Trade
Links Pvt. Ltd. had shown its business as production, processing and preservation of meat, fish, fruits, vegetables, oils and fats whereas the assessee is in the textile trading.
ii.
During enquiries conducted by the Investigation wing, the directors of M/s. ABN Trade Links Pvt. Ltd. had admitted on oath that the company was an accommodation entry provider.
Therefore, in this background, the assessee was required to furnish specific details to establish the genuineness of the purchases, as listed out in the letter of the ld. AO and which have been reproduced in para 7.2. iii.
As no such information/documentary evidence was submitted by the assessee before ld. AO during the course of 148A proceedings,

P a g e | 11
therefore, he rightly passed the order u/s. 148A(d) and issued notice u/s. 148. iv.
During the course of reassessment proceeding also, none of the documentary evidences sought by the ld.AO was furnished and hence assessment was completed after making addition of the entire purchases amounting to Rs. 5,67,82,322/- shown from M/s. ABN Trade Links Pvt. Ltd. which were treated as bogus and added u/s. 69C of the Act.
v.
During the appellate proceedings, as no compliance was made before ld. CIT(A), the assessee’s appeal was dismissed by the impugned order. Before us, ld. AR submitted additional evidences which have been allowed. However, these evidences consist of the following:
•
Purchase Invoices - ABN Trade Link Private Limited
•
Bank Statement reflecting Payment made to ABN Trade Link
Private Limited
•
Affidavit of the Director (Purchases with ABN Trade Link Private
Limited were the Genuine Purchases)
•
Annual Report of Impugned Year (A.Y. 2014-15)
•
Corresponding Sales Details

Thus even at this stage, the specific and relevant information sought by the AO regarding transportation of purchased goods, insurance cover of the goods transported, documentary evidence regarding loading, unloading etc/ and copies of MVAT return and Form 704-VAT audit report have not been filed.

P a g e | 12
vi.
The assessee’s argument is that since sales have been made which are not doubted, the entire purchases could not be held as bogus and at most 1% of the impugned purchases could be added to the assessee’s income, in case ld. AO was not satisfied regarding the genuineness and sufficiency of documentary evidence. In support of this proposition, the ld. AR has relied upon various decisions.
However, we note that despite repeated opportunities in the proceedings before lower authorities and even in the additional evidence filed before us, the assessee has failed to furnish requisite evidences to demonstrate actual receipt and delivery of goods and other documents to establish the genuineness of the purchases made from M/s. ABN Trade Links Pvt. Ltd.
vii.
We further note that the juri ictional High Court has held in the case of PCIT V. Drisha Impex Pvt. Ltd. that once purchases are found to the bogus, the entire amount must be disallowed. In PCIT Vs. Kanak Impex (supra) also, the Hon’ble juri ictional
High Court has held that entire bogus purchases have to be disallowed u/s. 69C as the assessee has failed to discharge the primary onus to establish the genuineness of purchases by producing basic evidence such as delivery challan, transport records etc.
9. In view of above factual matrix, we are of the considered view that the impugned purchases have rightly been held as bogus. Since the facts in the present case are similar to the cases of Drisha Impex Pvt. Ltd. and P a g e | 13
M/s. Kanak Impex decided by the Hon’ble juri ictional High Court
(supra), respectfully following these decisions, we hereby hold that the purchases of Rs. 5,67,82,322/- shown from M/s. ABN Trade Links Pvt.
Ltd. are bogus and hence the addition of the entire amount u/s. 69C deserve to be confirmed.
10. In the result, the assessee’s appeal is hereby dismissed.
Order Pronounced in Open Court on 14.10.2025 (PAWAN SINGH)
(RENU JAUHRI)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)

Place: Mumbai
Date 14.10.2025
Anandi.Nambi/STENO
आदेश की ितिलिप अेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. आयकर आयु / CIT
4. िवभागीय
ितिनिध, आयकर अपीलीय अिधकरण DR, ITAT,
Mumbai
5. गाड फाईल / Guard file.

स ािपत
ित ////
आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.