ACIT-32(1), MUMBAI, MUMBAI vs. SHREYAS KANTILAL PATEL, MUMBAI

Brief facts relevant for adjudication of the instant case that the Assessing Officer (in short, the ‘AO’), vide assessment order dated 28.03.2024 passed u/s 147 r.w.s. 144 of the Act, ultimately made an addition of Rs. 23,95,088/-, comprising Rs. 20,60,889/- u/s 69C of the Act, being unexplained expenditure and/or purchase amount; Rs. 41,217/- u/s 69C of the Act, being commission allegedly paid for obtaining alleged fake invoices; and Rs. 2,92,982/- under the head “PGBP”, being 1% of the gross profit on the amount of Rs. 2,95,98,239/-, more or less, on the basis of investigation carried out/information received from the DDIT (Inv.), Unit-3, Nagpur.

We further observe from the assessment order that the AO has categorically recorded in para 3.6 thereof that, in response to the notice u/s 142(1) of the Act, as well as other statutory notices, the Assessee responded to the same and filed, inter alia, the following documents:

Thus, the Revenue, being aggrieved, has preferred the instant appeal, more or less, on the basis of the judgment of the jurisdictional High Court in the case of PCIT v. Drisha Impex Pvt. Ltd. (2025) 479 ITR 315 (Bom.)/173 taxmann.com 571 (Bom.), which, as stated, has also been upheld by the Hon’ble Apex Court by dismissing SLP in Drisha Impex (P.) Ltd. v. PCIT (2025) 481 ITR 456 (SC) : 306 Taxman 337 (SC).

In our considered view, the judgment relied upon by the Revenue is not applicable to the facts of the instant case. As in that particular case, the Hon’ble High Court, considering the peculiar facts and circumstances thereof, noticed that the Assessee therein was not represented and, even otherwise, had not filed any details and documents before the AO or the Ld. Commissioner. In such circumstances, the Hon’ble High Court took cognizance of the aforesaid facts and ultimately restored the action of the AO in making 100% addition. However, the facts of the instant case are distinguishable, as in this case the Assessee has duly discharged the prima facie onus cast upon it, under the relevant provisions of law by furnishing the documents referred to above and the Ld. Commissioner, after considering the same, has taken an appropriate view by restricting the addition to the gross profit element.

We further observe that the AO has not doubted documents filed by the Assessee and the corresponding sales and has accepted the same as genuine. Once the sales have been accepted then the corresponding purchases can be side-lined, without any substantive material. The action of the AO in making the impugned addition, rests upon a presumption that the Assessee had procured the corresponding goods, though possibly from the grey market, while obtaining invoices from the aforesaid party. The AO further draws the presumption without any substantive material brought on record to justify the addition to the extent made by him.

Thus, considering the peculiar facts and circumstances of the case and the material available on record, we do not find any infirmity, impropriety or illegality in the order passed by the Ld. Commissioner. Consequently, the appeal preferred by the Revenue is devoid of merit.

In the result, the Revenue’s appeal is dismissed.