What did the Tribunal hold?

The Tribunal held that the AO did not provide reasonable time for the assessee to respond to the final show-cause notice. The CIT(A) also erred in not admitting additional evidence, violating principles of natural justice.

The assessee's purchases were questioned due to suppliers filing non-business ITRs or reflecting lower turnovers. The AO added 25% of unexplained purchases and unsecured loans to the income. The CIT(A) upheld the AO's order.

What were the issues?

Whether the assessee was provided with sufficient opportunity to present its case and whether the denial of additional evidence by the CIT(A) was justified.

Rakesh Jagdish Mehta, Thane vs Ward 41(2)(4) | ITAT Mumbai 2026

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SMT. BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM

Hearing: 29.07.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM I.T.A. No.3046/Mum/2026 (Assessment Year: 2022-23) Ms. Rakesh Jagdish Mehta Ward 41(2)(4), Mumbai 1401, Giriraj Oscar Plot Aayakar Bhawan, Mumbai-400020 No.68/69/69A/71, Sector 20, Vs. KoparKhairne S.O, Koper Khairne, Thane-400709 PAN: AUKPM8479K Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Vijay H. Shah : Shri Amit Kumar Singh, Sr. DR Revenueby : 22.07.2026 Date of Hearing : 29.07.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This appeal is preferred by the assessee, directed against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 17.02.2026 for the Assessment Year (AY) 2022-23, arising out of the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 24.03.2024, passed by Assessment Unit, Income Tax Department [in short, “the Ld. AO”]. The grounds of appeal raised by the assessee are as under:

ITA No. 3046/Mum/2026 Rakesh Jagdish Mehta “1. On the facts and circumstances of the case the Ld.CIT Appeals and Ld. AO erred in law and fact in confirming total purchase of Rs.9,82,89,890/-(inclusive of GST amount) instead of purchase of Rs.9,53,75,622/- (net of GST) which we claimed in Trading & Profit and Loss account. There is no difference in purchase register provided and purchase claimed in trading account. 2. On the facts and circumstances of the case the Ld.CIT Appeals and Ld. AO erred in law and fact in not considering already submitted purchase register and bank statement to the assessing officer but he has not considered the same. 3. On the facts and circumstances of the case the Ld. Assessing Officer and Ld. CIT(A) had erred in law and fact that the appellant is wholesale dealer/ trader in Gold Bar and ornaments, whereas net margin of the Industry considered as 0.10% to 0.25% In gold bar and 1% to 2% in gold ornaments. But assessing officer declared our all purchase (except whose confirmation not received from suppliers) as non-genuine purchase and added 25% of remaining purchase in the income for the FY 2021-22, which is not correct and not acceptable in general practice of the industry. 4. On the facts and circumstances of the case the Ld. Assessing Officer and Ld. CIT(A) had erred in law and fact in not considering confirmation not received by the supplier, considered as non-genuine, which is not correct to us. There may be chance that supplier has not received his mail due to change of mail id or may be some other reason he has not respond to assessing officer. 5. On the facts and circumstances of the case the Ld.CIT Appeals and Ld. AO erred in law and fact in addition added creditors/ unsecured loans value of Rs 95,30,926/- to our income for FY 2021-22. which was not in purchase list, without knowing the status of transaction. The above figure includes sundry creditors as well as loan taken from outside parties. Our accountant has wrongly merged both the transaction in same group. 6. On the facts and circumstances of the case the Ld.CIT Appeals and Ld. AO erred in law and fact in rejecting declared true and correct statement in our financial for FY 2021-22 and not hide any information or transaction. Merely non response/confirmation by our supplier / creditors cannot be considered as non- genuineness of the transaction.”

Brief facts of the case are that the ITR was filed by the assessee on 06.10.2022 declaring total income at Rs.5,84,840/-. The case was selected for scrutiny under CASS. The issue for selection of assessee’s case was that the assessee has made substantial purchases from suppliers, who have filed non- business ITR or reflected substantially lower turnover in their ITRs. The Ld. AO has given the assessee several opportunities to represent by way of issuance of 2

ITA No. 3046/Mum/2026 Rakesh Jagdish Mehta notice u/s 143(2) as well as u/s 142(1). In response to which, the assessee has submitted the reply in part on 28.07.2023 and 07.11.2023 by furnishing the copy of ledgers, GSTR-01, bank statements, reconciliation of turnover, month-wise and party-wise purchase register, month-wise and party-wise sales register, list of sundry creditors and ICICI housing loan statement.

The Ld. AO further issued a notice to the assessee to submit certain information qua the creditors such as the reason for difference in ITR, balance sheet and details submitted in response to notice u/s 142(1) to substantiate identity of the parties along with their ITRs for last three years, bank statements of the parties reflecting the subjected transactions, to furnish documentary evidence of factual delivery of goods etc. The assessee remained non-responsive towards aforesaid queries raised by the Ld. AO. Accordingly, the Ld. AO has proposed 25% addition of the purchases made from such alleged parties amounting to Rs.9,82,89,890/-. Ld. AO further noted about the creditors, whose genuineness and creditworthiness are not proved by the assessee aggregating to Rs.95,30,926/-, therefore has proposed a variation.

Further, regarding the alleged purchases of Rs.9,82,89,890/-, certain creditors aggregating to Rs.1,39,18,554/-, who had responded towards the notice u/s 133(6) are considered by the Ld. AO, being parties succeeded in explaining the nature of transactions thus cannot be treated as bogus. Therefore, such amount was reduced from the total amount and finally the unexplained purchases

ITA No. 3046/Mum/2026 ITA No. Rakesh Jagdish Mehta Rakesh Jagdish Mehta are taken at Rs.8,43,71,336/ 8,43,71,336/- (9,82,89,890- 1,39,18,554) and 25% of the said and 25% of the said amount which is arrived at Rs.2,10,92,834/ amount which is arrived at Rs.2,10,92,834/- (25% of Rs.8,43,71,336/ 8,43,71,336/-) is added to the income of assessee on account of unexplained purchases. The Ld. AO to the income of assessee on account of unexplained purchases. The Ld. AO to the income of assessee on account of unexplained purchases. The Ld. AO thereafter has recomputed the income of assessee by making the aforesaid two thereafter has recomputed the income of assessee by making the aforesaid two thereafter has recomputed the income of assessee by making the aforesaid two additions. The same is extracted as under: ions. The same is extracted as under:

Being aggrieved with the aforesaid, assessee preferred an appeal before the Being aggrieved with the aforesaid, assessee preferred an appeal before the Being aggrieved with the aforesaid, assessee preferred an appeal before the Ld. CIT(A).

At the outset, Ld. Counsel of the assessee has submitted that the assessee At the outset, Ld. Counsel of the assessee has submitted that the assessee At the outset, Ld. Counsel of the assessee has submitted that the assessee has furnished various additional evidences has furnished various additional evidences before the Ld. CIT(A), however such before the Ld. CIT(A), however such additional evidences were not considered by the Ld. CIT(A) additional evidences were not considered by the Ld. CIT(A), while adjudicating while adjudicating the appeal.

As per ground no.7 of assessee’s appeal, it is submitted that the Ld. As per ground no.7 of assessee’s appeal, it is submitted that the Ld. As per ground no.7 of assessee’s appeal, it is submitted that the Ld. CIT(A) has rejected the additional evidences furnished CIT(A) has rejected the additional evidences furnished by the assessee by the assessee, which are clarificatory in nature and submits in support of the case of assessee. Further, Ld. clarificatory in nature and submits in support of the case of assessee. Further, Ld. clarificatory in nature and submits in support of the case of assessee. Further, Ld. 4

ITA No. 3046/Mum/2026 Rakesh Jagdish Mehta AR referred to assessment order, wherein the final show-cause notice which was issued on 18th March, 2024. The assessee was provided only 3 days’ time to respond on 21st March, 2024, which is apparent on the face of assessment order at para 2 under the “details of opportunities given”. It is therefore submitted that the assessee was not provided with sufficient opportunity to represent its case by the Revenue Authorities.Now the assessee admits to furnish all the necessary information requisite to clarify the issue or to explain the alleged bogus transactions by the Ld. AO, if the matter is restored back to the file of Ld. AO for fresh adjudication with opportunity to furnish all the necessary evidence which could not be furnished or are furnished but not considered by the authorities.

Per contra, Ld. DR vehemently supported the orders of Revenue Authorities.

We have considered the rival submissions and perused the materials available on record. As per settled principles as held by various Hon’ble Courts, reasonable time has to be provided to the assessee to represent its matter, whereas in the present case, the final show-cause notice issued by the Ld. AO was only for 3 days, with an opportunity to file submissions by the assessee, the same cannot be considered to be a reasonable time. Further, denial of admitting additional evidence by the Ld. CIT(A), without any adverse finding to do so, found to be violative of principle of natural justice.

ITA No. 3046/Mum/2026 Rakesh Jagdish Mehta 10. We, accordingly, find it appropriate to restore this matter back to the file of Ld. AO for reconsideration and deciding the same afresh on merits after hearing and examiningthe supporting evidences furnished by the assessee.

11.

Needless to say, the assessee shall be provided with reasonable opportunities of being heard in the setaside proceedings. The assessee is also directed to co-operate and pro-actively assist in the set aside proceedings, failing which the authority would be at liberty to decide the issue in accordance with the mandate of law.

12.

In result, the appeal of assessee stands allowed for statistical purposes, in terms of our aforesaid observations.

Order pronounced in the open court on 29-07-2026.

Sd/- Sd/- (ARUN KHODPIA) (BEENA PILLAI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 29-07-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

ITA No. 3046/Mum/2026 Rakesh Jagdish Mehta

BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai

RAKESH JAGDISH MEHTA,THANE vs. WARD 41(2)(4), MUMBAI, MUMBAI

What did the Tribunal hold?

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