API READYMIX,MUMBAI vs. WARD 42(1)(1), MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: A BEFORE HON’BLE SHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 2598/MUM/2026 िनधा�रणवष�/Assmt. Year: 2019-20) Permanent Account Number: AAXFA4319H API READYMIX ITO WARD 42(1)(1) ROOM NO. 17 146 RURUSHOTTAM MULJI KAUTILYA BHAVAN BKC BUILDING DR GM MARG BANDRA EAST MUMBAI, Vs. NORTH BROOK STREET, MAHARASHTRA 400051 MUMBAI MAHARASHTRA, 400004 (��थ� Respondent) (अपीलाथ� Appellant)

िनधा�रती�ारा/Assessee represented Shri Dharmvir Yadav, by: Advocate राज� व�ारा/Revenue represented by: Shri Surendra Mohan, Sr. DR

सुनवाईकीतारीख/Date of conclusion of hearing: 21.05.2026 घोषणाकीतारीख/Date of pronouncement: 04.08.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of ld. CIT(A)/National Faceless Appeal Centre (NFAC), Delhi vide DIN: ITBA/NFAC/S/250/2025-26/1086535098(1) dated 25.02.2026 passed against the assessment order by the Assessment Unit of the Income-tax Department u/s 147 read with section 144B of the Income- tax Act, 1961 (hereinafter referred to as the “Act”), dated 20.01.2025, for the Assessment Year 2019-20.

i. Audited books of accounts for FY 2018-19 (AY 2019-20)

ii. Bank account statements for all accounts covering the period 01.04.2018 to 31.03.2019 (demonstrating fact of no payment made to M/s. Arya Enterprises) iii. Party-wise purchase register iv. Copy of ITR acknowledgement and computation of income v. Copies of GSTR-1, 3B and GSTR-9 for the relevant year vi. A sworn affidavit affirming that no purchases were made from M/s. Arya Enterprises and no payments were made to the said party

5.1. Ld. AO ignored the above and relying solely on the information on the Insight Portal, made an addition of Rs. 21,24,679/- by treating the amount as unexplained expenditure u/s 69C r.w.s 115BBE. It is important to take note of the fact about no independent verification or enquiry having been conducted by the ld. AO before drawing the said adverse conclusion.

5.2. Assessee preferred an appeal before the ld. CIT(A) who dismissed it confirming the addition without appreciating the evidence produced and without directing any further verification of the supplier's records or the CGST investigation. Aggrieved, assessee is in appeal before the Tribunal.

6.1. It is a well-settled principle of tax jurisprudence that Assessing Officer cannot make additions solely on the basis of information received from a third party without conducting any inquiry or giving the assessee a meaningful opportunity to rebut verified facts. It is consistently held that information from third parties cannot be treated as evidence by itself unless corroborated. In this regard, reference is made to the decision of Hon'ble Supreme Court in the case of CIT vs. Odeon Builders Private Limited [2019] 418 ITR 315 (SC) wherein it held that addition or disallowance cannot be made solely on third- party information without independently subjecting it to further verification by the Assessing Officer. The relevant para is as under:

"Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO who has not provided the copy of such statements to the assessee, thus denying opportunity of cross examination to the assessee, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the assessee from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs.19,39,60,866/-, is directed to be deleted."

7.1. This is precisely the argument assessee raised before the authorities below that the supplier may have wrongly or fraudulently shown assessee's GSTIN in its GSTR-1 return, which is a real possibility when the very allegation is that the supplier was engaged in generating accommodation entries. GSTR-1 entry reflecting the assessee as a recipient of supplies from M/s. Arya Enterprises is a one-sided entry made by the supplier.

7.2. In the GST framework, GSTR-1 is a statement of outward supplies filed by the supplier. The recipient's GSTR-2A is auto- populated from the supplier's GSTR-1 but a recipient's actually availed credit (GSTR-3B) may differ. The department has not produced any GSTR-2A or GSTR-3B of the assessee to show that assessee actually availed input tax credit (ITC) on the basis of these invoices. Assessee's GSTR returns for the relevant year have been produced and they do not reflect any ITC availed from M/s. Arya Enterprises. This is the most decisive piece of evidence. If assessee had actually received and availed fake invoices, its own GST returns would have reflected the corresponding ITC claim. The absence of any such claim in assessee's GSTR filings conclusively demonstrates that no transaction was entered into.

8.1. In the present case before us, assessee is made to prove negative that it has not made purchases from the alleged concerned M/s. Arya Enterprise. It is worth referring to the decision of Hon’ble Supreme Court in the case of K P Varghese v. ITO [1981] 131 ITR 597 (SC) who observed in para 4 that it is a well settled rule of law that the onus of establishing the conditions of taxability is fulfilled, is always on the revenue. To throw the burden of showing that there is no understatement of consideration on the assessee would be to cast an almost impossible burden upon him to establish the negative, namely that he did not receive any consideration beyond that declared by him. Thus, Hon’ble Supreme Court laid the burden on the revenue to establish the conditions for bringing to charge any income in the hands of the assessee.

8.2. Further, in the present case before us, ld. AO has not made any further enquiry with the GST authorities as envisaged by the Hon’ble jurisdictional High Court of Bombay in the case of PCIT v. SVD Resins and Plastic Private Limited [2024] 166 taxmann.com 242 (Bom) wherein an important observation has been made by the Hon'ble Court in para-13 of this judgment whereby it opined that “wherever relevant, any confusion in regard to the transaction being bogus, needs to be aligned only after the Assessing Officer consults the sales tax department and a thorough enquiry in regard to such specific transactions being bogus, is also conclusion of the sales tax department.” Thus, the Hon'ble Court held that in absence of such a cohesive and coordinated approach of the Assessing Officer with the sales tax authorities, it would be difficult to come to a concrete conclusion with regard to such purchases/sales transaction being bogus, merely on the basis of general information, so as to discard such expenditure and make the addition thereof.

8.3. This above stated judgment was subsequently followed by the same Court in the case of Ashok Kumar Rungta vs. ITO [2024] 167 taxmann.com 429 (Bom) and also in the case of PCIT vs. Ramelex Pvt. Ltd. [2025] 179 taxmann.com 374 (Bom).

8.4. Taking into account the factual matrix, detailed submissions and documentary evidences placed on record as well as jurisprudence discussed in the above paragraphs, we find that the addition made by the ld. AO is not justifiable. The addition so made is deleted. Grounds raised by the assessee in this regard are allowed.

Order pronounced in the open court on 04 August, 2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member ANKIT, PS Mumbai Dated: 04.08.2026 Copy to:

API READYMIX ROOM NO. 17 146 RURUSHOTTAM 1 MULJI BUILDING DR GM MARG NORTH BROOK STREET, MUMBAI MAHARASHTRA, 400004 ITO WARD 42(1)(1) KAUTILYA BHAVAN BKC BANDRA 2 EAST MUMBAI, MAHARASHTRA 400051 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE