ARBAZ MOHD SALIM NAGARIA,MUMBAI vs. ITO WARD 17(1)(1), MUMBAI

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ITA 7689/MUM/2025Status: DisposedITAT Mumbai07 August 2026AY 2019-205 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter to the Assessing Officer for fresh adjudication, allowing the assessee to furnish fresh evidence. This decision was made considering the relevance of the new evidence and the assessee's failure to produce it earlier.

What were the facts?

The assessee's appeal concerns additions made by the Assessing Officer (AO) for alleged bogus purchases and estimated income, which were confirmed by the CIT(A). The assessee claimed to have made genuine purchases but failed to provide sufficient evidence before the lower authorities.

What were the issues?

Whether the additions made by the AO for bogus purchases and estimated income are justified, and whether fresh evidence should be admitted for reconsideration.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 144B,Section 69A

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL“A” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 7689/MUM/2025 (AY: 2019-20) (Hybridhearing) Arbaz Mohd Salim Nagaria ITO, Ward – 17(1)(1), Mumbai Room No. 54, AQSA Mansion, vs Kautilya Bhawan, 16/20 Pala Gali Dongri, Mumbai – 400051. Mumbai – 400009. [PAN: BIVPN4556J] Appellant / Assessee Respondent / Revenue Assessee by Shri Vijay Shah, CA (virtually appear) Revenue by Shri Surendra Mohan,Sr. DR. Date of hearing 12.05.2026 Date of pronouncement 07.08.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. CIT(A)/ NFAC dated 15.09.2025 for Assessment Year (AY) 2019-20. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case the L.d CIT Appeal has erred in law and fact in confirming and rejecting that assessing officer has erred in law and fact in issuing the notice under section 148 for reopening of the case as the jurisdictional assessing officer has no power to issue the notice for the reopening of the case after introducing the faceless assessment scheme the assessing officer has no power to make the assessment. 2. On the facts and circumstances of the case the Ld CIT Appeal has erred in law and fact in confirming and rejecting the application that assessing officer has made sham reopening of the case as the assessing officer has mentioned that appellant has purchased from M/s Alpha Trading. (Prop. Ketan Sultan Sheikh) (CGSTIN No. 27BLUPS6294Q1ZK) (PAN: BLUPS6294Q) on page no. 4 and 25 of the assessment order and the assessing officer is also showing that same transection has been entered by the appellant with SURESH PREMJI PARMAR party PAN BDBPP4284J as the sale made by the appellant therefore, the reopening has been done only on the basis of the reason to doubt and totally relying on the insight portal therefore the reopening proceedings should be quashed.

ITA No.7689/Mum/2025 (AY: 2019-20) Arbaz Mohd Salim Nagaria 3. On the facts and circumstances of the case the Ld CIT Appeal has erred in law and fact in confirming and rejecting the application that Pr. CIT SUNIL KUMAR PCIT, Thane-1 has given the approval without application of mind whether the reopening is approved on the basis of the bogus purchase by the appellant or bogus sale made by the appellant from the M/s. Alfa Trading Co. and Suresh Premji Parmar respectively.

4.

On the facts and circumstances of the case the Ld CIT Appeal has erred in law and fact in confirming and rejecting the application the addition of Rs.5,97,19,269/- for bogus purchase even though appellant has made the genuine purchase from the seller M/s. SIDDHI TRADERS and purchase bills GRN are submitted for verification and transections have been entered into through banking channel thus the appellant has proved the identity of the person. The appellant states that all the transactions are genuine and creditworthiness of the creditor is proved.

5.

On the facts and circumstances of the case the Ld CIT Appeal has erred in law and fact in confirming and determining the gross profit at 8 percent and making an addition of Rs.2,03,98,457/- without any cogent material on the record and rejecting the books of account.

6.

The Appellant craves leave to add, alter or amend the grounds of appeal at or before the hearing of the appeal.” 2. The assessee vide application dated 27.01.2026 has raised following additional ground of appeal: “1. On the facts and circumstances of the case the Ld. Assessing Officer has erred in law and fact in making addition of Rs.8,01,17,726/- without rejecting the books of accounts. 2. On the facts and circumstances of the case the Ld. Assessing Officer has erred in law and fact in making addition of Rs.5,97,19,269/- without allowing the cross examination with M/s Alpha Trading, (Prop. Ketan Sultan Sheikh) (CGSTIN No. 27BLUPS6294Q1ZK) (PAN: BLUPS6294Q). 3. On the facts and circumstances of the case the Ld. Assessing Officer has erred in law and fact in making addition of Rs.2,03,98,457/- estimating the profit at 8% in the absence of comparable cases and supporting documents, therefore, appellant states that it is not possible to substantiate the estimation of income at 8%, hence, the Assessing Officer is directed to accept the profit shown by the appellant in the return of income.

4.

The Appellant craves leave to add, alter or amend the grounds of appeal at or before the hearing of the appeal.”

ITA No.7689/Mum/2025 (AY: 2019-20) Arbaz Mohd Salim Nagaria

3.

Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee fairly submits that assessment was completed under section 144. The assessee could not make sufficient compliance before the AO as it was post Covid period. The AO made addition on account of disallowance of certain purchases. Before ld. CIT(A), the assessee filed various invoices to substantiate the purchases being genuine. However, application for admission of additional evidence was not filed. The ld. CIT(A) has not accepted / admitted additional evidence and resultantly confirmed the action of AO. The ld. AR of the assessee submits that assessee has good case on merit and would suffer prejudice if additional evidence is not considered. The ld. AR of the assessee submits that either the additional evidence may be admitted and the matter may be adjudicated here or in alternative, after admitting the additional evidence matter may be remanded to the file of ld. CIT(A) or AO for fresh adjudication. 4. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submits that assessee failed to substantiate the genuineness of purchases either before AO or ld. CIT(A). The assessee is beneficiary of fake invoices received from Alpha Trading during relevant financial period. Hence, the addition made by lower authorities may be confirmed. In alternative submission, the ld. Sr. DR for the Revenue submitted that in case the bench is of the view that alleged additional evidence required consideration, matter may be restored to ld. CIT(A) to consider such evidence.

ITA No.7689/Mum/2025 (AY: 2019-20) Arbaz Mohd Salim Nagaria 5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessment was completed under section 144 r.w.s. 147 and 144B on 04.03.2025. The AO while passing the assessment order made addition under section 69A of Rs. 5.97 crore in treating certain invoice as fake. The AO further held that total turnover of assessee is of Rs. 31.46 Crore, out of which addition of Rs. 5.97 Crore and on remaining of Rs. 25.49 Crore (31.46 Crore minus 5.97 Crore), the AO estimated income @ 8% thereby made further addition of Rs. 2.03 crore by rejecting books of account. We find that disallowance under section 69A was made for the want of documentary evidence. The ld. CIT(A) also confirmed the action of AO. Before us, the ld. AR of the assessee vehemently argued that additions in the assessment order were made for the want of evidence, therefore, he may be allowed to file evidence before the lower authorities. Considering the fact that AO has made 100% disallowance of certain purchases and also estimated income on remaining turnover @ 8% (after excluding addition of fake invoices). Considering the facts that the assessee has now filed certain fresh evidences in the form of tax invoices to substantiate purchases, which were not filed before lower authorities. Therefore, keeping in view relevancy of such evidence matter is restored back to the file of jurisdictional AO to reconsider the matter afresh but subject to payment of cost of Rs. 10,000/- payable to the income tax department in ‘miscellaneous head’. The AO is directed to pass order in accordance with law. Needless to direct that before passing the order afresh, the AO shall allow fair and reasonable opportunity to the assessee. The assessee is

ITA No.7689/Mum/2025 (AY: 2019-20) Arbaz Mohd Salim Nagaria given liberty to furnish all the evidences in support of his claim. In the result, grounds of appeal of assessee are allowed for statistical purposes. 6. In the result, appeal filed by assessee is allowed for statistical purposes. Order was pronounced in open court on 07/08/2026 Sd/- Sd/- GIRISH AGRAWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated: 07/08/2026 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

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