DWIJS OVERSEAS LLP,MUMBAI vs. ITO, WARD 19(1)(1), MUMBAI., MUMBAI

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ITA 2791/MUM/2026Status: DisposedITAT Mumbai24 August 2026AY 2022-236 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee failed to substantiate its transactions and provide supporting evidence for the sales treated as bogus. The AO's estimation of profit and addition for accommodation sales were upheld due to the lack of verifiable documentation from the assessee.

What were the facts?

The assessee, an LLP trading in diamonds, filed its return of income. The Assessing Officer (AO) selected the case for scrutiny due to various issues including quantitative details and substantial creditors. The assessee failed to furnish requisite details, leading to an assessment under section 143(3) read with 144B.

What were the issues?

Whether the AO erred in rejecting the books of accounts and treating sales as bogus accommodation entries. Whether the assessee provided sufficient evidence to substantiate its transactions.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 144,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE

For Appellant: Shri Sandeep Lakra CIT DR
Hearing: 07/08/2026

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 18.06.2025 passed by the learned National Faceless Appeal Centre, Delhi (hereinafter shall be referred as 'learned CIT(A)') for Assessment Year 2022-23, raising following grounds:

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1.

The Ld. AO has erred in rejecting the book of accounts as the assessee has not 1. The Ld. AO has erred in rejecting the book of accounts as the assessee has not 1. The Ld. AO has erred in rejecting the book of accounts as the assessee has not maintained the books of accounts, whereas he himself has mentioned that the maintained the books of accounts, whereas he himself has mentioned that the maintained the books of accounts, whereas he himself has mentioned that the assessee has filed the tax audit report. assessee has filed the tax audit report. 2. The Ld. AO has erred in treating the s 2. The Ld. AO has erred in treating the sales as bogus. 3. The Ld. AO has grossly erred in making an addition of 176,25,85,812/- as 3. The Ld. AO has grossly erred in making an addition of 176,25,85,812/ 3. The Ld. AO has grossly erred in making an addition of 176,25,85,812/ bogus accommodation sales to M/s Sharnam Jewels LLP u/s 69A and the Ld. bogus accommodation sales to M/s Sharnam Jewels LLP u/s 69A and the Ld. bogus accommodation sales to M/s Sharnam Jewels LLP u/s 69A and the Ld. CIT(A) has an error in confirming the same. CIT(A) has an error in confirming the same. 4. The appellant reserves the right to add, 4. The appellant reserves the right to add, alter, amend, or withdraw any alter, amend, or withdraw any grounds of appeal. 2. Briefly stated, the assessee, an LLP engaged in the business of Briefly stated, the assessee, an LLP engaged in the business of Briefly stated, the assessee, an LLP engaged in the business of trading in rough and polished diamonds under the name and style trading in rough and polished diamonds under the name and style trading in rough and polished diamonds under the name and style , filed its return of income on 31.12.2022 of DWIJS Overseas LLP DWIJS Overseas LLP, filed its return of income on declaring total income of Rs.5,98,140/-. The return case was declaring total income of . The return case was selected for scrutiny and notice u/s 143(2) of the Income-tax Act, selected for scrutiny and notice u/s 143(2) of the Income selected for scrutiny and notice u/s 143(2) of the Income 1961 ( in short the Act) was issued on 01.06.2023. The reasons for 1961 ( in short the Act) was issued on 01.06.2023. The reasons for 1961 ( in short the Act) was issued on 01.06.2023. The reasons for selection includes inter inter-alia, issues relating to quantitat issues relating to quantitative details of of goods goods traded, traded, substantial substantial creditors creditors vis-à-vis vis vis purchases, purchases, purchases from non purchases from non-filers/lower-return filers, high liabilities return filers, high liabilities compared with income and compliance with ICDS. The Assessing compared with income and compliance with ICDS. The Assessing compared with income and compliance with ICDS. The Assessing Officer issued several statutory notices and communications. The Officer issued several statutory notices and communications Officer issued several statutory notices and communications assessee, however, did not furnish the requisite details in response assessee, however, did not furnish the requisite details in response assessee, however, did not furnish the requisite details in response to most of the notices. In response to the show to most of the notices. In response to the show-cause notice under cause notice under section 144, only partial details were furnished. section 144, only partial details were furnished.

2.1 The assessment was accordingly completed under section The assessment was accordingly completed under section The assessment was accordingly completed under section 143(3) read with section 144B of the Act. The Assessing Officer ) read with section 144B of the Act. The Assessing Officer ) read with section 144B of the Act. The Assessing Officer (i) made, made, inter inter alia, alia, two two additions: additions: an an addition addition of of Rs.10,74,83,565/- by estimating net profit at 2% of the turnover of by estimating net profit at 2% of the turnover of by estimating net profit at 2% of the turnover of

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Rs.540,40,88,078/-, as against the profit disclosed by the , as against the profit disclosed by the , as against the profit disclosed by the assessee; and (ii) an addition of an addition of Rs.1,76,25,85,811.65/ Rs.1,76,25,85,811.65/- under section 69A, treating the corresponding sales to , treating the corresponding sales to M/s Sharnam , treating the corresponding sales to Jewels LLP as accommodation entries. as accommodation entries.

3.

The learned CIT(A) dismissed the appeal, observing, inter alia, The learned CIT(A) dismissed the appeal, observing, inter alia, The learned CIT(A) dismissed the appeal, observing, inter alia, that the assessee had not effectively controverted the findings that the assessee had not effectively controverted the findings that the assessee had not effectively controverted the findings recorded by the Assessing Officer and had failed to substantiate the recorded by the Assessing Officer and had failed to substantiate the recorded by the Assessing Officer and had failed to substantiate the entries reflected in its books by producing supporting evidence. The entries reflected in its books by producing supporting evid entries reflected in its books by producing supporting evid learned CIT(A) accordingly found no reason to interfere with the learned CIT(A) accordingly found no reason to interfere with the learned CIT(A) accordingly found no reason to interfere with the assessment. After discussion, the learned CIT(A) dismissed the After discussion, the learned CIT(A) dismissed the After discussion, the learned CIT(A) dismissed the appeal of the assessee observing as under: appeal of the assessee observing as under:

To this order, there is no counter argument/evidence by the appellant. This case To this order, there is no counter argument/evidence by the appellant. This To this order, there is no counter argument/evidence by the appellant. This where the AO made all possible efforts to arrive at fact finding does not reek of a where the AO made all possible efforts to arrive at fact finding does not reek of a where the AO made all possible efforts to arrive at fact finding does not reek of a case where there is rush to judgement based on flimsy evidence. Therefore, all case where there is rush to judgement based on flimsy evidence. Therefore, all case where there is rush to judgement based on flimsy evidence. Therefore, all the grounds of appeal raised by the appellant stand dismissed. the grounds of appeal raised by the appellant stand dismissed. the grounds of appeal raised by the appellant stand dismissed. 4. At the outset, we not At the outset, we note that despite notifying, neither anyone e that despite notifying, neither anyone attended on behalf of the assessee, nor was any adjournment attended on behalf of the assessee, nor was any adjournment attended on behalf of the assessee, nor was any adjournment sought, and therefore, we sought, and therefore, we were of the opinion that assessee was not of the opinion that assessee was not interested in prosecuting the appeal. Accordingly, same was heard interested in prosecuting the appeal. Accordingly, same was heard interested in prosecuting the appeal. Accordingly, same was heard ex-parte qua the asse the assessee after hearing the arguments of the ssee after hearing the arguments of the learned Departmental Representative learned Departmental Representative (DR) .

5.

We have heard the learned Departmental Representative and We have heard the learned Departmental Representative and We have heard the learned Departmental Representative and perused the material available on record. The assessment records perused the material available on record. The assessment records perused the material available on record. The assessment records show that the assessee was afforded repeated opportunities to show that the assessee was afforded repeated op show that the assessee was afforded repeated op substantiate the nature of its purchases, sales, creditors and other substantiate the nature of its purchases, sales, creditors and other substantiate the nature of its purchases, sales, creditors and other

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relevant trading particulars, but the requisite primary evidence was relevant trading particulars, but the requisite primary evidence was relevant trading particulars, but the requisite primary evidence was not furnished. Although a sales register was produced, the assessee not furnished. Although a sales register was produced, the assessee not furnished. Although a sales register was produced, the assessee did did not not substantiate substantiate the the correspond corresponding ing transactions transactions with with supporting documentary material when called upon to do so. The supporting documentary material when called upon to do so. The supporting documentary material when called upon to do so. The failure was not confined to a single notice but continued through failure was not confined to a single notice but continued through failure was not confined to a single notice but continued through several stages of the assessment proceedings. several stages of the assessment proceedings.

6.

As regards the estimation of profit, the Assessing Officer found As regards the estimation of profit, the Assessing Officer found As regards the estimation of profit, the Assessing Officer found the material furnished by the assessee inadequate for reliable the material furnished by the assessee inadequate for reliable the material furnished by the assessee inadequate for reliable determination of its trading results and, having regard to the determination of its trading results and, having regard to the determination of its trading results and, having regard to the turnover and the deficiencies noticed in the accounts and turnover and the deficiencies noticed in the accounts and turnover and the deficiencies noticed in the accounts and ing records, estimated the net profit at 2% 2%. The assessee supporting records, estimated the net profit at has not placed before us any material to demonstrate that the has not placed before us any material to demonstrate that the has not placed before us any material to demonstrate that the estimated result is contrary to the facts or that the profit disclosed estimated result is contrary to the facts or that the profit disclosed estimated result is contrary to the facts or that the profit disclosed by it is supported by complete and verifiable books and underlying by it is supported by complete and verifiable books and underlyin by it is supported by complete and verifiable books and underlyin records. We, therefore, find no basis to interfere with the estimation records. We, therefore, find no basis to interfere with the estimation records. We, therefore, find no basis to interfere with the estimation sustained by the learned CIT(A). sustained by the learned CIT(A).

7.

As regards the addition of As regards the addition of Rs.1,76,25,85,811.65/ Rs.1,76,25,85,811.65/- under section 69A, the Assessing Officer treated the alleged sales to , the Assessing Officer treated the alleged sales to , the Assessing Officer treated the alleged sales to M/s Sharnam Jewels LLP as accommodation transactions on the basis ccommodation transactions on the basis Sharnam Jewels LLP of the material available in the assessment proceedings. The of the material available in the assessment proceedings. The of the material available in the assessment proceedings. The assessee was required to establish the genuineness and substance assessee was required to establish the genuineness and substance assessee was required to establish the genuineness and substance of the transactions by producing the relevant underlying evidence. of the transactions by producing the relevant underlying evidence. of the transactions by producing the relevant underlying evidence. However, apart from the However, apart from the entries reflected in the sales register, no entries reflected in the sales register, no adequate transaction adequate transaction-wise material has been brought on record to wise material has been brought on record to

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controvert the findings of the Assessing Officer. Even before the controvert the findings of the Assessing Officer. Even before the controvert the findings of the Assessing Officer. Even before the learned CIT(A), the assessee did not effectively rebut the adverse learned CIT(A), the assessee did not effectively rebut the adverse learned CIT(A), the assessee did not effectively rebut the adverse findings or furnish supporting evidence sufficient to establish the rnish supporting evidence sufficient to establish the rnish supporting evidence sufficient to establish the genuineness of the impugned transactions. genuineness of the impugned transactions.

8.

In the absence of primary and corroborative evidence In the absence of primary and corroborative evidence In the absence of primary and corroborative evidence supporting the disputed transactions, mere entries in the books or supporting the disputed transactions, mere entries in the books or supporting the disputed transactions, mere entries in the books or sales register cannot, by themselves sales register cannot, by themselves, establish their genuineness. , establish their genuineness. We also find no material before us which would justify disturbing We also find no material before us which would justify disturbing We also find no material before us which would justify disturbing the factual findings recorded by the Assessing Officer and affirmed the factual findings recorded by the Assessing Officer and affirmed the factual findings recorded by the Assessing Officer and affirmed by the learned CIT(A). by the learned CIT(A).

9.

We accordingly find no infirmity in the order of the learned We accordingly find no infirmity in the order of the learned We accordingly find no infirmity in the order of the learned CIT(A) in sustaining the additions made by the Assessing Officer. (A) in sustaining the additions made by the Assessing Officer. (A) in sustaining the additions made by the Assessing Officer. The grounds raised by the assessee are accordingly The grounds raised by the assessee are accordingly dismissed dismissed.

In the result, the appeal of the assessee is dismissed dismissed. 10. In the result, the appeal of the assessee is

Order pronounced in the open Court on ounced in the open Court on 24/ /08/2026.

Sd/- Sd/- (ANIKESH BANERJEE BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/08/2026 /2026 Kunal Kr. P.S.

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

BY ORDER, ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai

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