ITO 22 2 1, PAREL vs. LAKSHACHANDI COLUMBIA DEVELOPERS, SANTACRUZ

The brief facts of the case are that the assessee filed its return of income declaring nil income. The case was selected for scrutiny assessment. During the course of the assessment proceedings, the Ld. AO observed that the assessee had made purchases from certain parties who were allegedly identified as bogus suppliers. Accordingly, the Ld. AO treated the purchases aggregating to Rs.69,88,462/- as non-genuine and made the corresponding addition. The entire addition was based on the list of alleged hawala/bogus bill providers published by the Maharashtra Government VAT Department ("VAT Department"). Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) called for a remand report from the Ld. AO and, after considering the remand report dated 14.10.2025, deleted the impugned addition. Aggrieved by the relief granted by the Ld. CIT(A), the revenue is in appeal before us.

The Ld. DR relied upon the assessment order and supported the findings recorded by the Ld. AO.

The Ld. AR filed a paper book comprising pages 1 to 213, which has been taken on record. The Ld. AR submitted that the entire issue had been thoroughly examined by the Ld. AO during the remand proceedings. It was contended that the Ld. CIT(A), vide letter dated 13.02.2018, had called for a remand report, and the Ld. AO furnished the same after examining the relevant material. The findings recorded in the remand report have been duly extracted and considered by the Ld. CIT(A) in the impugned appellate order. The relevant observations of the Ld. CIT(A) are reproduced below: “6.2 As the appellant has filed additional grounds of appeal, remand report was called from the AO vide letter dated 13.02.2018. 6.3 The AO vide letter bearing DIN no. ITBA/NFAC/F/24/2025-26/1081750843(1) dated 14.10.2025 has submitted as under: "5.10 After careful examination of the additional evidences filed by the assessee during the remand proceeding, the factual finding emerging out is that the assessee has substantiated the purchases with contemporaneous records (invoices, payments, stock entries). There is no direct evidence that these purchases were sham. To as certain the genuineness of the purchases disallowed as "bogus" in the assessment, the following steps were undertaken during remand proceedings: i) Document Verification: The purchase invoices, delivery challans, bank statement and corresponding ledger accounts for all disputed purchases were analyzed. No discrepancies were noted in this reconciliation. ii) Bank Payment: The assessee furnished bank statements highlighting payments made to the concerned suppliers. These statements were verified and it was noted that payments for the alleged bogus purchases were made through account-payee cheques /RTGS (banking channels) and not in cash. iii) Stock and Consumption Analysis: The quantitative details of stocks and consumption chart was given and same was examined with ledgers and purchase invoices details provided by the assessee and same is appeared correct. Books of accounts of the assessee were audited. No discrepancies in the audited books were also noted by the AO during assessment proceeding. iv) Sales were not offered as the assessee followed Project completion method and all the expenses etc. were added to the WIP. 6. In view of the above findings, report is submitting for your good self perusal. The issue may be decided on merits of the case." 6.4. The AO has verified the alleged bogus purchases and no discrepancy has been noticed in purchases, mode of payment being through banking channel and books of account were audited which were accepted. There fore, addition cannot be made against the assessee when the books of account have been accepted and there is no evidence that the alleged purchases were not genuine. Accordingly, the addition of Rs. 69,88,462/- deserves to be deleted.”

We have heard the rival submissions and perused the material available on record. The assessee filed its return of income, and the assessment was completed under section 143(3) of the Act. Based on information received from the Maharashtra Government VAT Department, the Ld. AO alleged that the assessee was a beneficiary of bogus purchase bills amounting to Rs.69,88,462/- and the said amount was added to the total income of the assessee. The matter was carried in appeal before the Ld. CIT(A), who called for a remand report from the Ld. AO. During the remand proceedings, the Ld. AO examined the submissions and supporting evidence furnished by the assessee and accepted the assessee's explanation. Consequently, the very foundation of the addition, namely the allegation that the assessee was a beneficiary of bogus purchases, did not survive in the remand proceedings. The Ld. CIT(A), after considering the remand report and the material placed on record, rightly deleted the addition. Before us, the Revenue has not brought on record any material to controvert the findings recorded in the remand report or to demonstrate that the order of the Ld. CIT(A) suffers from any factual or legal infirmity. In these circumstances, we find no reason to interfere with the well- reasoned order of the Ld. CIT(A). Accordingly, the grounds raised by the revenue are dismissed.

In the result, the appeal of the revenue bearing ITA No.797/Mum/2026 is dismissed. Order pronounced in the open court on 28th day of July 2026. Sd/- Sd/- (BIJAYANANDA PRUSETH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 28/07/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI