AKASHKUMAR SHAH,PUNE vs. ITO WARD 13(4), PUNE, PUNE

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 („the Act‟) for AY 2020-21 on 20.03.2025, emanating from the Assessment Order u/s 143(3) r.w.s. 144B of the Act, dated 13.09.2022.

ITA No.1283/PUN/2025 AY 2020-21 refunds and duty or tax if any). The AO issued noticeto the assessee calling for details of the purchases. In the assessment order at para 3.1.5, the AO noted that the assessee failed to furnish any supporting documents for purchases. The AO has observed that the assessee has made purchases from following parties which were either non-filers of the return of income or shown substantially lower turnover in ITR.

2.1 The AO issued notice u/s 133(6) to the above referred persons. There was no reply to the notices issuedu/s 133(6) of the Act. The AO after giving opportunity to the assessee arrived at a conclusion that the purchases of Rs.25,00,93,128/- were not genuine. Therefore, the AO following the decision of the Hon‟ble Gujarat High Court in the case of Vijay Proteins Ltd., held that entire purchases cannot be added but deeming hidden

ITA No.1283/PUN/2025 AY 2020-21 profit of 25% needs to be added. Accordingly, the AO made addition of Rs.6,25,23,282/-.

2.2 Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed additional evidence. The Ld. CIT(A) called for a report from the AO which was filed by the AO. After considering the submissionthe Ld. CIT(A) upheld the addition. Aggrieved by the order the Ld. CIT(A), the assessee filed an appeal before the ITAT.

Submission of Ld. AR :

3.1 In reply to the submission filed by the Ld. Departmental Representative (DR), the Ld.AR submitted that non-filing of the income tax return by the supplier is beyond the assessee‟s control. The Ld. DR had in his submission stated that in the case of four suppliers, Chartered Accountant Contact Numbers and email id are same. The Ld. AR has merely noted these facts. Ld.AR submitted that the email id is secondary email id. The Ld. AR invited our attention to confirmation filed by these persons which are at pages 649-658 of the paper book. The Ld. AR also invited our attention to sample invoices and lorry

ITA No.1283/PUN/2025 AY 2020-21 receipts which are in the paper book. Ld. AR submitted that all the purchases were paid through banking channels. The Ld. AR therefore submitted that purchases are genuine and no addition should be made.

Submission of Ld. DR :

4.1 The Ld. DR filed Annexure E containing GST details of the suppliers. The Ld. DR submitted that in most of these cases the GST registration has been cancelled.The chart filed by the Ld. DR is reproduced as under:

ITA No.1283/PUN/2025 AY 2020-21

Sr. Name GST No. Registration Remarks No. Date 1 Hitesh Kumar 27HYOPK8095J1ZD 09.07.2019 Hitesh Kumar has 04 (1.SHREE GANESH GST No., the same has TRADELINK) been cancelled also. He is also not registered on CPC portal and is a non-filer. 2 Hitesh Kumar (2. 27HYOPK8095J2ZC 27.03.2020 Hitesh Kumar has 04 Durga Enterprises) GST No., the same has been cancelled also. He is also not registered on CPC portal and is a non 3 Hitesh Kumar (3. 27HYOPK8095J3ZB 27.03.2020 Hitesh Kumar has 04 Radhika GST No., the same has Enterprises) been cancelled also. He is also not registered on CPC portal and is a non 4 Hitesh Kumar (4. 06HYOPK8095J1ZH 26.03.2020 Hitesh Kumar has 04 Varmala Industries) GST No., the same has been cancelled also. He is also not registered on CPC portal and is a non 5 GURPREET SINGH 08CVOPS3653N1ZM 07.09.2019 (Place of business and (Preet Enterprises) Place of Bank are different) 6 GURPREET SINGH 02CVOPS3653N1ZY 22.11.2019 (Place of business and (Preet Enterprises) Place of Bank are different) 7 MadanLal (Saini 05AYNPL6928K1ZU 21.11.2019 (Place of business and Enterprises) Place of Bank are different) 8 Manish (Shree 27FJNPM6651Q1Z4 23.07.2019 He is not registered on Ganesh Trading CPC 2.0 Portal. He is a Company) non-filer. He mentioned place of work at Maharashtra, but account mentioned in the GST details is not a valid account number. 9 Parkash Kumar (KP 08DYVPK0803H1Z7 22.04.2019 (Place of business and Steels) Place of Bank are different) 10 Suresh Kumar 06AVGPK5239E1ZP 13.09.2018 As per GST details, the (Shree Ganesh assessee has never Trans. Comp) done transaction in the said bank account. 11 Suresh Kumar (SK 27AVGPK5239E1ZL 17.05.2019 As per GST details, the Enterprises) assessee has never done transaction in the said bank account. 12 TEJPAL (JK Steels) 27EMCPP0515B1ZJ 16.05.2019 13 TEJPAL (Krishna 06EMCPP0515B1ZN 27.09.2019 Industries)

4.2 The Ld. DR submitted that the purchases made by the assessee were not genuine and therefore the AO has rightly disallowed 25% of the total purchases. The Ld. DR submitted

ITA No.1283/PUN/2025 AY 2020-21 that the AO had actually disallowed the profit imbibed in the said purchases. The Ld. DR submitted that the AO has relied on the decision of the Hon‟ble Gujarat High Court. The Ld. DR also invited our attention to Annexure F which are the Vehicle Number alleged to be used by the assessee for transportation wherein the Ld. DR submitted some of the vehicles are not found on the RTO website. One of the vehicles was small tempo. Thus, the Ld. DR requested to confirm the addition.

Findings and Analysis :

ITA No.1283/PUN/2025 AY 2020-21

5.1 Duringthe proceedings the Ld.Departmental Representative Mr.Amol Khairnar filed an elaborate submission, copy of the same was provided to the Assessee and Ld.AR filed his rebuttal.

5.2 On perusal of the submission of Ld.DR it is observed that GST Registration of the persons from whom Assessee has claimed to have made purchases was cancelled. The details are as under : Name Date of GST Date of GST Registration Cancellation Gurpreet Singh 07/09/2018 23/03/2020 Rajasthan Preet Enterprises Gurpreet Singh 22/11/2019 01/03/2020 Himachal Preet Enterprises Pradesh Prakash Kumar 22/04/2019 29/02/2020 Rajasthan K P Steels Suresh Kumar 13/09/2018 30/10/2019 Haryana Hitesh Kumar 27/03/2020 27/03/2020 Maharashtra Radhika Enterprises Hitesh Kumar 26/03/2020 14/09/2020 Haryana Varmala Enterprises Hitesh Kumar 09/07/2019 09/07/2019 Maharashtra Shree Ganesh Trade Link Pune Hitesh Kumar 27/03/2020 27/03/2020 Maharashtra Durga Enterprises Pune Tejpal 16/05/2019 30/11/2019 Maharashtra J K Steels Pune Tejpal 27/09/2018 21/08/2019 Haryana Krishna Industries Panchkula SISRSA Manish 23/07/2019 31/10/2020 Maharashtra Shree Ganesh trading Pune Company Madan Lal 21/11/2019 31/03/2020 Uttarakhand Saini Enterprises Meerut Dehradun

5.3 Thus it can be observed that the above supplier‟s GST Registration was cancelled within a short period.

ITA No.1283/PUN/2025 AY 2020-21 5.4 Mr.Madan Lal Prop of Saini Enterprises during his own assessment submitted that he had never done any business and his identity may have been used by someone. Copy of the said Assessment Order for AY 2020-21 of Mr.Madan Lal (AYNPL6928K) was filed by the Ld.DR in his submission . In the assessment order, submission of Mr.Madan Lal has been reproduced. The Ld.AR has not specifically commented on the Assessment Order of Mr.Madan Lal(copy was provided to Ld.AR).The Assessee has claimed Purchases of Rs.4,20,75,444/- from Mr.Madan Lal.

5.5 Transportation: Ld.AR has filed copies of E-Way bills in the paper book to claim that Purchases were Genuine. But one needs to understand the procedure of E-Way Bills. The E-Way Bills are generated electronically before the Goods are actually transported. Therefore, the E-way bills are not proof for actual transportation of goods.Ld.AR submitted that Assessee has paid the transporters of goods. Ld.AR filed copies of some Lorry receipt. Ld.AR also filed copies of Ledger Extracts. In this context we specifically asked Ld.AR regarding “Reverse Charge” under GST.Ld.AR in the written submission dated 21/05/2026 submitted that No “Reverse Charge” paid by the assessee.Relevant Provisions of GST are reproduced here under: Section 9. Levy and collection.- (1) ….. (2)…………… (3) ……….. (4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the

ITA No.1283/PUN/2025 AY 2020-21 person liable for paying the tax in relation to such supply of goods or services or both. Supply of Services by a goods transport agency (GTA) in respect of transportation of goods by road is covered under Reverse Charge.

5.6 We have perused the Lorry receipts filed by the assessee in the paper book, however, no where details of GST paid under Reverse Chargehas beenprovided .

5.7 Similarly, the assessee filed copies of some invoices. The invoices are self generated documents hence invoices only cannot be the sole proof for genuineness of purchases. We need to analyze these documents in totality of facts of the case discussed in various paragraphs.GST Registration of suppliers mentioned in the chart above has been cancelled, many of them have not filed the Return of Income as mentioned in the chart. Ld.AR in his written submission dated 19/03/2025 submitted that Assessee cannot ensure filling of Return of Income by suppliers. However, it is also a fact that Suppliers mentioned above have not filed any reply to notices u/s 133(6) issued by the AO. The onus was on the assessee to prove the genuineness of the purchases claimed by him.

5.8 It is important to mention here that there was No Closing Stock of goods for the year as per Assessee‟s submission.In the Audit report the Assessee‟s Auditor has not provided the Quantitative Details of traded Goods. Relevant part is scanned and reproduced as under :

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5.9 The Audit report has been duly signed by Assessee Akashkumar Shah and his CA Mr. Surendra V. Waikar having Membership number 040590 on 12/01/2021.

5.10 It can be observed that Assessee has consciously not provided Quantitative Details of Traded Goods in the Audit Report and the CA has not given any qualifying Remark. Rather the Audit Report proves that there was no Traded Goods during the year, it means the Assessee has not made any purchases.

5.11 The capital Account filed by the Assessee before AO/CIT(A) has been filed in the Paper Book, the same is scanned and reproduced as under :

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The Capital Account filed by the assessee have some other name and ironically it contains stamp of a CA.

5.12 Details of bank Accounts shown by the Assessee in the Return of Income are scanned and reproduced as under :

ITA No.1283/PUN/2025 AY 2020-21 5.12.1 Thus, Assessee in the Return of Income has shown only one Bank Account whereas the Column specifically asked for ALL BANK Accounts , the Assessee has not disclosed his Bank Account in Kotak Mahindra Bank NIBM Road Kondwa Branch Pune. The payments to alleged suppliers were said to have been made from Kotak Mahindra Bank account which was not disclosed in the Return of Income.

5.13 In the written submission dated 21/05/2026 filed by Ld.AR in response to specific query from the Bench, the Ld.AR submitted that the assessee has closed his business in January 2020 and started working as Employee in Jenisha Steel. Ld.AR filed copies of subsequent returns of Income to prove the same. Thus, admittedly assessee closed the business in January 2020. As per the Balance Sheet of the Assessee for AY 2020-21 there were sundry creditors and debtors. No details regarding Outstanding Sundry Creditorsas on 31/03/2020 available in the subsequent returns of Income.

5.14 For all the reasons discussed in earlier paragraphs, we agree with the Ld.AO and Ld.CIT(A) that assessee failed to prove genuineness of the purchases made from the persons mentioned in the list.We have already reproduced the List and the Total Purchases as per the said List are Rs.16,53,88,121/-. The Total Purchases by the Assessee during the year were Rs.25,00,93,128/-. Out of the Total Purchases of Rs.25,00,93,128/- the AO has verified purchases amounting to only Rs. 16,53,88,121/-. Therefore, genuineness of Purchase of Rs. 16,53,88,121/- has not been proved by the Assessee. In the case of the Assessee in the Assessment Order the AO has disallowed 25% of Total Purchases as hidden profit earned from

ITA No.1283/PUN/2025 AY 2020-21

the non-genuine purchases. Therefore, we are of the considered opinion that addition of 25% of 16,53,88,121/- shall be sustained as Genuineness of Purchases of Rs. 16,53,88,121/- has not been proved. Once the AO has made addition of 25% of the impugned purchases, it obviously means that the AO has added only the Profit likely to be earned from the impugned purchases.

5.15 In this context we find support from the decision of Hon‟ble Bombay High Court in the case of Principal Commissioner of Income-tax-17 v. Mohommad Haji Adam &Co., [2019] 103 taxmann.com 459 (Bombay)[11-02-2019].The Ld.AR has also relied on the above decision.

Order pronounced in the open Court on 14th August, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 14-08-2026 Ravi Kumar Digitally signed by Ravi Kumar Date: 2026.08.14 15:18:47 Ravi Kumar +05'30' आदेशकीप्रतितितिअग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „A‟ Bench, Pune 5. ग र्डफ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकरअपीलीयअदिकरण, पुणे / ITAT, Pune