ACIT-4(3)(1), MUMBAI, MUMBAI vs. AMPVOLTS LIMITED, MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: A BEFORE HON’BLESHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 994/MUM/2026 निर्धारणवर्ा/Assmt. Year:2012-13) Permanent Account Number: AAACQ0517D AMPVOLTS LIMITED ACIT-4(3)(1), MUMBAI CABIN 11, 7TH FLOOR, TIMES SQUARE, ANDHERI, R. NO. 649, 6TH FLOOR, WORKFLO, NEXT TO SAI AAYAKAR BHAVAN, M.K. Vs. ROAD, MUMBAI, SERVICE, ANDHEIR EAST, MAHARASHTRA, 400020 MUMBAI MAHARASHTRA 400069 (अपीलार्थीAppellant) (प्रत्यर्थीRespondent)

निर्धाऩितीद्वधिध/Assessee represented by: Shri Vipul Shah, Adv. िधजस्विद्वधिध/Revenue represented by: Shri Surendra Mohan, Sr. DR

सुिवधईकीतधिीख/Date of conclusion of hearing: 13.05.2026 घोषणधकीतधिीख/Date of pronouncement: 03.08.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the revenueagainst the order of ld. CIT(A)/National Faceless Appeal Centre (NFAC), Delhi vide DIN: ITBA/NFAC/S/250/2025-26/1082348322(1) dated 06.11.2025 passed against the assessment order byld. DCIT-4(3)(1), Mumbai u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 24.12.2018for the Assessment Year 2012-13. 1

On facts and in law, the ld.CIT(A) has erred in restricting the i. addition on account of bogus purchases to 12% of the disputed amount, instead of sustaining the addition of the entire purchases as made by the Assessing Officer, despite the fact that the supplier was proved to be engaged in providing accommodation entries and the assessee was identified as a beneficiary. Whether on the facts and in the circumstances of the case and in ii. law, the Ld. CIT(A) has erred in restricting the addition to 12% of the bogus purchase without considering the position of law established by the Hon’ble Bombay High Court in the case of PCIT-5 vs Kanak Impex (India) Ltd, ITA No.791 of 2021 dated 03.03.2025, that 100% disallowance on bogus purchase is to be upheld. 3. In the present case, revenue is in appeal since ld. CIT(A) restricted the addition made on account of bogus purchases to 12% as against 100% made by the ld. AO.For this, revenue placed on reliance on the decision of Hon’ble High Court of Bombay in the case of PCIT v. Kanak Impax (India) Ltd. (2025) 172 taxmann.com 283 (Bom).

Private Limited. However, ld. AO did not agree with the same and made the addition, treating it as bogus entry.

5.1. Ld. CIT(A) after considering the submissions observed that ld. AO has relied upon the survey findings, non-production of the supplier and inability of the assessee to substantiate delivery of goods. He observed that it has furnished all the relevant documentary evidences. Book of accounts have not been rejected nor the sales distributed. Also, there is no finding about quantitative discrepancy. He took note of the gross profit rate reported by the assessee which is around 6.43% for placing reliance on the decision of Hon’ble High Court of Bombay in the case of CIT v. Mohammad Haji Adam and Company (2019) 103 taxmann.com 459 (Bom). He found it justifiable to sustain the addition to the extent of 12% of the alleged bogus purchases as against 100% made by the ld. AO. Thus, the addition was restricted to Rs. 12,30,457/- and the balance was deleted.

“30. We fail to understand that the respondent-assessee having consciously and intentionally decided not to join the investigation, cannot now contend that the appellant-revenue should have given them all the details before making the addition. In our view, such a conduct of the respondent-assessee cannot be accepted. It was incumbent upon the respondent-assessee to have joined the reassessment proceedings, discharge the initial onus of proving the purchases and seek details, if any.” 6.1. Hon’ble Court while referring to the decision of Mohammad Haji Adam & Co. (supra) noted that in this case, assessee had participated in the assessment proceedings, ld. CIT(A) compared the purchases and sales statement and there was afinding that purchases cannot be rejected since there was correlation between the purchases and sales.

6.2. Based on the above observations and conclusion drawn by the Hon’ble Court in Kanak Impex (supra), the present facts of the case do not warrant its application as it is evidently demonstrated that assessee has diligently participated in the assessment proceedings as well as at the first appellate stage.

“It is an admitted position that during the assessment proceedings, the E assessee filed all necessary documents in support of the returns on which the ledger accounts were prepared, including confirmation of the supplies by the suppliers, purchase bills, delivery bank statements etc, to justify the genuineness of the purchases, however, such documents were doubted by the AO on the basis of general information received by the AO from the Sales Tax Department. In our opinion, to wholly reject these documents merely on a general information received from the Sales Tax Department, would not be a proper approach on the part of the AO, in the absence of strong documentary evidence, including a statement of the Sales Tax Department that qua the actual purchases as undertaken by the assessee from such suppliers the transactions are bogus. Such information, if available, was required to be supplied to the assessee to invite the response on the same and thereafter take an appropriate decision. Unless such specific information was available on record, it is difficult to accept that the AO was correct in his approach to question such purchases, on such general information as may be available from the Sales Tax Department, in making the impugned additions. This for the reason that the same supplier could have acted differently so as to generate bogus purchases qua some parties, whereas this may not be the position qua the others. Thus, unless there is a case to case verification, it would be difficult to paint all transactions of such supplier to all the parties as bogus transactions.”

7.1. From the above, it is worth noting that similar factual position exists in the present case before us. Ld. Assessing Officer has proceeded on the basis of general information received by him from the sales tax department against which assessee has filed all the necessary documents wherein no defect or deficiency has been pointed out. Assessee has furnished delivery challans to demonstrate the actual movement of goods.

7.2. On the above stated observations, Hon'ble Court thus, opined that full addition could be made only on the basis of proper proof of bogus purchases available before the ld. Assessing Officer, as the law would recognize the same and would unequivocally indicate the transactions are wholly bogus. According to the Hon'ble Court, by no stretch of imagination, it cannot be concluded that the entire expenditure claimed by the assessee is to be taxed.

7.3. 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.

7.4. 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).

Order pronounced in the open court on 03 August, 2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member ANKIT, PS Mumbai Dated: 03.08.2026 Copy to:

ACIT-4(3)(1), MUMBAI R. NO. 649, 6TH FLOOR, AAYAKAR 1 BHAVAN, M.K. ROAD, MUMBAI, MAHARASHTRA, 400020

AMPVOLTS LIMITED CABIN 11, 7TH FLOOR, TIMES SQUARE, ANDHERI, WORKFLO, 2 NEXT TO SAI SERVICE, ANDHEIR EAST, MUMBAI MAHARASHTRA 400069 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE