SUN TEX MILLS,TIRUPUR vs. ACIT, CENTRAL CIRCLE-3, COIMBATORE

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ITA 692/CHNY/2026Status: DisposedITAT Chennai07 August 2026AY 2021-226 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the addition of 5% of the bogus sale transactions as income from other sources. The assessee failed to provide satisfactory explanations or documentary evidence to counter the findings.

What were the facts?

The assessee, a textile manufacturer, was involved in sales transactions with M/s. Anitha Texcot India Pvt Ltd. A search at M/s. Anitha Texcot revealed bogus purchase bills, and their director and accounts manager stated that these were accommodation bills for cash sales.

What were the issues?

Whether the addition of 5% of bogus sales as income is justified based on statements from a searched entity and lack of assessee's evidence.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Before: SHRI SS VISWANETHRA RAVI & SHRI GAGAN GOYAL

Hearing: 04.08.2026

आयकरअपीलीयअिधकरण, ’ए’ �ायपीठ,चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ीयसयसिव�ने�रिव, �ाियकसद�एवं�ी गगन गोयल, लेखा सद�के सम� BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.692/Chny/2026 िनधा�रणवष�/Assessment Year: 2021-22 Sun Tex Mills, Vs. Assistant Commissioner, No: 2/167, SPK Nagar, Central Circle -3, Pongupalayam, Coimbatore – 641 018. Perumanallur – 641 666. [PAN: ACBFS-5341-M] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ�कीओरसे/ Appellant by : Mr. R.C. Sachin, CA ��थ�कीओरसे/Respondentby Ms. R. Anita, CIT : सुनवाईकीतारीख/Date of hearing : 04.08.2026 घोषणाकीतारीख /Date ofPronouncement 07.08.2026 : आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appealfiled by the assesseeis directed against the order dated 31.10.2025 passed by the ld. Commissioner of Income Tax (Appeals), Chennai-20, for the assessment year 2021-22.

2.

We find that this appeal was filed with a delay of 22 days. The assessee filed an affidavit explaining the reasons to condone the said

2 ITA No.692/Chny/2026 delay. On perusal of the same and upon hearing both the parties, we find the reasons stated by the assessee are bonafide which really prevented the assessee in filing the appeal in time. Thus, delay of 22 days condoned.

3.

At the outset, the factsas emanating from the assessment record that the assessee is a firm engaged in the business of manufacturing of textiles. The assessee filed return of income declaring a total income of Rs.30,16,320/- which was processed u/s. 143(1) of the Income-tax Act, 1961 (hereinafter “the Act”). According to the AO, a search was conducted in the case of M/s. AnithaTexcot India Pvt Ltd on 17.03.2021 u/s. 132 of the Act, wherein the details of bogus purchased bills entered by the group were retrieved from the ERP software and further according to him the assessee entered into sales transactions with M/s. Anitha Texcot India Pvt Ltd for an amount of Rs.62,98,320/-. Basing on the statement of Shri. Kanagaraj, Accounts Manager and Shri. Elangovan, Director of M/s. Anitha Texcot India Pvt Ltd recorded u/s. 132(4) of the Act held that the payments were made through RTGS against the bogus invoices received and the parties had repaid the amount back in cash after deducting the GST amount. We

3 ITA No.692/Chny/2026 find the said statement of Accounts Manager and Director were reproduced by the AO from page no.51 to 57 of the Appeal memo. Considering the facts and circumstances of the case and for not having satisfied to the explanation from the assessee, the AO adopted 5% of bogus sale transactions at Rs.3,14,916/- (5% of 62,98,320/-) as income from other source and added to the total income of the assessee and determined the same at Rs.33,31,236/- vide his order dated 27.12.2022 passed u/s. 143(3) of the Act. On perusal of the impugned order that the ld.CIT(A) clearly recorded that the searched party accepted that they have generated unaccounted cash by using bogus purchase bills from 15 parties out of which assessee is one of the party and held the view of the AO in estimating at 5% on total bogus purchases is justified.

3.

While referring to AO’s reasons in para no.7.3 of the assessment order, the ld.AR Mr. R.C. Sachin, CA, vehemently argued that estimation of commission at 5% is arbitrary and the entire sales turnover was credited to assessee’s profit and loss account and offered the profit to tax. He argued vehemently that the addition made by the

4 ITA No.692/Chny/2026 AO which was confirmed by the ld.CIT(A) amounts to double taxation and prayed to delete the same. 4. The ld.DR, Ms. R. Anita, CIT, relied on the order of the ld.CIT(A).

5.

Having heard both the parties and on perusal of the record, we note that primarily the AO relied on the statement of Mr. Kanagaraj, Accounts Manager of M/s. Anitha Texcot India Pvt Ltd who deposed u/s. 132(4) of the Act clearly stated that the purchase transactions are bogus, which was confirmed by Mr. Elangovan, Director of M/s. Anitha Texcot India Pvt Ltd. The AO reproduced the relevant part of the statement of Accounts Manager and Director of M/s. Anitha Texcot India Pvt Ltd in assessment order, wherein it is noted that the Accounts Manager clearly replied that the seized material in the form of purchase bills are obtained without any products and are not supported by purchase orders, delivery challans and E-way bills. Further, the said entries are made under the Purchase Journal on the instruction of Director i.e. Shri. A. Elangovan, which is clear from page no.53 of Appeal Memo. Further, we find the statement of Shri Elangovan, at page no.55 of the appeal memo, wherein he clearly stated the bills are nothing but accommodation bills (Sales) which are given to third party

5 ITA No.692/Chny/2026 and will be given in accordance with unaccounted cash sales vide answer to question no.22 which is at page no.57 of the appeal memo. We find no satisfactory explanation offered by the assessee. It is clear from page no.61 of the appeal memo, wherein the AO clearly held the assessee could not produce any satisfactory explanation along with proper documents. Further, the ld.CIT(A) also vide para no.7.2 clearly held there is no documentary evidences showing the order of AO is incorrect. Therefore, having no evidence to that effect before both the authorities below, we find no infirmity in the order of ld.CIT(A) in confirming the order of the AO in estimating the profit at 5% on bogus purchases and it is justified. Thus, grounds raised by the assessee are dismissed.

6.

In the result, appeal filed by the assessee is dismissed. Order pronounced on 07thAugust, 2026 at Chennai. Sd/- Sd/- (गगन गोयल) (यसयसिव�ने�रिव) (GAGAN GOYAL) (SS VISWANETHRA RAVI) लेखा सद�य/Accountant Member �याियकसद�य/ Judicial Member Chennai, Dated: 07.08.2026 JPV आदेशकी�ितिलिपअ�ेिषत/Copy to: 1. अपीलाथ�/Appellant,

6 ITA No.692/Chny/2026 2.��थ�/ Respondent, 3. आयकरआयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय�ितिनिध/DR & 5. गाड�फाईल/GF

PRASAN Digitally signed by PRASANNA NA VANI VANI JETTY Date: 2026.08.10 JETTY 15:55:04 +05'30'

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