WORSTED OVERSEAS TRADING LLP,MUMBAI vs. ACIT, CENTRAL CIRCLE 8(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 8528/MUM/2025 (AY: 2016-17) ITA No. 8652/MUM/2025 (AY: 2017-18) ITA No. 8737/MUM/2025 (AY: 2018-19) ITA No. 8898/MUM/2025 (AY: 2019-20) ITA No. 9050/MUM/2025 (AY: 2020-21) (Physical Hearing) Worsted Overseas Trading LLP ACIT, Central Circle – 8(2), 8th Floor, Ceejay Plaza, Apsara Cinema vs Mumbai Building, Lamington Road, Grand Road Room No. 658, 6th Floor, (East), Mumbai – 400007. Aayakar Bhavan, M.K. Road, [PAN: AAACW0462F] Mumbai – 400020. Appellant / Assessee Respondent / Revenue Assessee by None Revenue by Shri Basavaraj Hiremath, CIT-DR a/w Shri Rajgopal Parthasarathi, Sr. DR Date of Institution 11.12.2025 Date of hearing 15.07.2026 Date of pronouncement 10.09.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH JUDICIAL MEMBER; 1. This group of five appeals, all filed by the assessee, are directed against the separate orders of the learned CIT(A)-48, Mumbai for assessment years (AYs) 2016-17 to 2020-21. The facts in all the appeals are almost common; thus, all the appeals were clubbed for hearing. In all appeals the assessee has raised certain common grounds of appeal, hence all appeals were listed together 2. None, appeared on behalf of the assessee despite service of notice on more than 3/4 occasions. Shri Umesh Sonawane appeared on 07-05-2026 and Shri Krunal Shah appeared on 12-05-2026. Thereafter, none appeared on 09-06- 2026 and again on 15-07-2026. Perusal of record shows that the assessee has already filed their written submissions on record. Thus, we are left with no option except to decide the appeals on the basis of the material available on record and the submissions of the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. 3. The learned Senior DR for the Revenue supported the order of the Assessing Officer (AO) and learned CIT(A). The learned Sr DR for the revenue submits that the assessments in all years were completed under section 144 despite allowing sufficient opportunity to the assessee. The assessee did not cooperate during the assessment proceedings and did not furnish the requisite details. The Assessing Officer made additions of business income by estimating income the basis of turnover on a reasonable basis. In A.Ys. 2017- 18 and 2018-19, the AO also made an addition under section 68 on account of unsecured loans and an addition of capital investment under section 68 on a protective basis. The learned CIT(A) confirmed the addition on account of business income as well as both the addition under section 68. The ld Sr DR for the revenue prayed for dismissal of all the appeals. 4. On the other hand, on perusal of the record, we find that the assessee has filed written submissions running into 11 pages. In the written submissions, the assessee has stated that the assessee is a partnership firm registered with the Registrar of Companies under the Limited Liability Partnership Act. The assessee is a part of Oneworld Group of Companies. Oneworld Group of Companies has eight more group companies, out of which four group companies are under liquidation before the National Company Law Tribunal (NCLT). The assessee is engaged in the business of wholesale trading of fabric and cloth. A search action by the Goods and Service Tax (GST) Department was carried out on the One World Group on 10th and 11th October 2018. During the search action, the GST team took away the entire electronic data, hard disk and books of account of the Oneworld Group and individual family members maintained at Sun Mill Compound, Parel, Mumbai. The entire record and books are still with the GST Department. The GST officials also recorded statements of staff members, copies of which were not provided. The assessee and the staff members have retracted their statements. The designated partner of the assessee was also arrested on 09-12-2018. However, he was released after 60 days, as the GST Department filed a charge-sheet. Search action on assessee group was also carried out in the same period at various business premises of assessee group. Consequent upon the search action, notice under Section 153A for AY 2016-17 to 2019-20 was issued to the assessee for filing the return of income. Notice under Section 142(1) was also served. The assessee could not comply with such notices as the designated partner was facing COVID-19 infections and other family problems arising out of the GST search and GST and income-tax proceedings. The AO made addition of business income @ 5% of total turnover. Similar additions are made in all years. Such addition was made on the sale and purchase transactions by treating the same as undisclosed transactions, based on assumptions, presumptions and conjectures and false belief. Such addition is based on the statements of third parties, which have been retracted, and affidavits have also been filed. The books of assessee were rejected without giving opportunity to the assessee. The assessment was completed under section 144 rws 153A. In similar matters, in the case of group companies, the Co-ordinate Bench has restored and set aside the matter to the file of the assessing officer for verification of various documentary evidences. Copy of one of such orders, in the case of Oneworld Retail Private Limited vs ACIT, ITA No. 8740/Mum/2025, and in Oneworld Design Studio vs ACIT, ITA No. 8736/Mum/2025, dated 25-03-2026, is placed on record. In without prejudice, it is contended that 5.00% of profit is on the higher side and that the gross margin in the wholesale textile industry is around 1.00%, depending on market conditions. The average GP of the assessee ranges between 1.00% and less than 3.00% during the relevant period. 5. In AY 2017-18 and in 2018-19, the AO also made case of addition under Section 68. The assessee in its written submissions, submitted that addition was made on a protective basis in the hands of the assessee and substantive addition was made in the hands of the designated partners under Section 69, resulting in double addition by treating the investment by the designated partners as capital introduced in the firm as unexplained cash credit and treating it as non-genuine. The addition of unexplained cash credit was made on account of loans received by the assessee from the designated partners and their friends. The loans were treated as non-genuine. The Assessing Officer erred in making protective addition under Section 69 and addition under Section 68 in respect of unsecured loans, merely on the basis of the statement of a third party, which is in cross-appeals, in violation of the principles of natural justice. In the assessee's group case, a similar addition has been restored back to the file of the AO. The assessee also prayed in its written submissions that no fair and proper opportunity was given to them hence, all the appeals may be restored to the file of AO 6. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. On careful perusal of the orders of the lower authorities and the various grounds of appeal, in all the assessment years, we find that the Assessing Officer made additions on estimation basis of business income @ of 5.00% on sales as well as purchases. The ld CIT(A) confirmed such additions. Such an approach is not correct and is against the business norms. Profit is always earned on sales. When the purchases are not disputed and the sales are recorded, then both purchases as well as sales cannot be treated as separate and independent for the purpose of taxing income. Moreover, when the case was reopened on the basis of search action, the addition is to be made on the basis of incriminating evidences/ material found during the search action. 7. We further find that the Assessing Officer also made additions in AYs 2017-18 and 2018-19 on account of unsecured loans under Section 68, as well as unexplained investment in the hands of the designated partners. Such additions are also to be supported by incriminating material found during the course of search action, if no assessment was pending at the time of search action. We find that, on a similar set of facts, the appeal of the group case in Oneworld Retail Private Limited, in ITA No. 9146/Mum/2025, has been restored back to the file of the Assessing Officer vide order dated 25-03-2026. There is no substantial variation in the facts of the appeal in our hand. Thus, maintaining the principle of consistency vis-à-vis the case of the group company, Oneworld Retail Private Limited, all the appeals for AYs 2016-17 to 2020-21 are restored back to the file of the Assessing Officer to pass the assessment orders afresh as per the directions of the Coordinate Bench in the case of Oneworld Retail Private Limited in ITA No. 9146/Mum/2025. Needless to direct that before passing the order afresh, the AO shall allow reasonable opportunity to the assessee. The assessee is also directed to be more vigilant in making timely compliance. 8. In the final result, all the appeals of assessee are allowed for statistical purpose. Order was pronounced in open court on 10/09/2026.

Sd/- Sd/- OM PRAKASH KANT PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, Dated: 10/09/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai