SOLAR PACKAGING PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER-8(2)(1), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & SHRI ARUN KHODPIA, AM I.T.A. No.4680/Mum/2025 (Assessment Year: 2018-19) Solar Packaging Private Income Tax Officer-8(2)(1) Limited Aayakar Bhawan, Mumbai-400020 202 Ashford Chambers, Lady Vs. Jamshedji Road, Mumbai, Mahim H.O, Mumbai-400016 PAN: AAACS7342G Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

I.T.A. No. 5185/Mum/2025 (Assessment Year: 2018-19) Income Tax Officer Solar Packaging Private Limited Room No.209, Aayakar Bhavan, 202 Ashford Chambers, Lady Vs. M.K. Road, Churchgate, Jamshedji Road, Mumbai, Mahim H.O, Mumbai-400020 Mumbai-400016 PAN: AAACS7342G Revenue- अपीलाथ� / Appellant Assessee-��थ�/ Respondent :

Assessee by : Shri Mani Jain, CA Revenue by : Shri Arun Kanti Datta – CIT DR Date of Hearing : 08.05.2026 Date of Pronouncement : 23.07.2026 O R D E R Per Bench: The captioned appealsare preferred by the Assessee and the Revenue, against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 18.06.2025 for

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. the Assessment Year (AY) 2018-19, arises from the assessment order under section 147 r.w.s 144B of the Income Tax Act, 1961 [in short,“the Act”] dated 20.03.2023, passed byAssessment Unit, Income Tax Department [in short, “the Ld. AO”]. The grounds of appeal raised by the assessee as well as Revenue, are as under: “Grounds raised by Assessee in ITA No.4680/Mum/2025 1. On the facts and circumstances of the Appellant's case and in law, the Ld. CIT(A) erred in confirming the action of the Id. A.O in reopening the case of the appellant which is bad in law, without jurisdiction and deserves to be quashed. 2. On the facts and circumstances of the Appellant's case and in law, the Ld. CIT(A) erred in confirming the action of the Id. A.O. in holding the purchase transaction as non-genuine, merely on the basis of search conducted at third party premises, for reasons stated in the impugned order or otherwise. 3. On the facts and circumstances of the Appellant's case and in law, the Ld. CIT(A) erred in confirming the action of the Id. A.O. in alleging that the appellant had availed accommodation entries in the form of bogus purchases from M/s. One World Creations Pvt. Ltd, for the reasons mentioned in the impugned order or otherwise 4. On the facts and circumstances of the Appellant's case and in law, the Ld. CIT(A) erred in restricting the addition on account of alleged bogus purchases to the extent of 12.5% amounting to Rs. 1,97,39,690/-, by invoking the provisions of section 69C of the Act, for reasons stated in the impugned order or otherwise. 5. The Appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing. Grounds raised by Revenue in ITA No.5185/Mum/2025 (i) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 15,79,17,518/-made u/s 69C of the I.T Act towards bogus purchases ignoring that in consequence to the evidences gathered during the investigation conducted by the Investigation Wing, Mumbai, the non-genuine nature of these transactions is clearly emerged." (ii) "On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the disallowance to profit margin on unproven purchases without considering the position of law established that 100% disallowances on bogus purchases is upheld?"

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. 2. Briefly stated, the case has been re-opened as per the information/high risk CRIU/VRU on Insight Portal/ITBA 360degree Portal flagged in accordance with risk management strategy. It is found that the assessee had the transactions of purchases through accommodation entries/bogus entries from One World group of Companies. It is observed that the total bogus transactions during the year are for Rs.15,79,17,518/-. The Ld. AO, after deliberations had made an addition of aforesaid amount treating the same as unexplained cash credit u/s 69 of the Act and chargeable to tax u/s 115BBE of the Act. 3. Aggrieved with the aforesaid additions, assessee preferred an appeal before the Ld. CIT(A), who had adjudicated the issue observing as under: “Held: The AO's reasoning is substantially based on assumptions and the inability of a liquidated party to confirm records. The assessee furnished reasonable documentation including invoices, bank proofs, and sale correlation. No finding disproves actual business operations. It is settled law that mere non-response by suppliers does not conclusively prove that purchases are bogus, especially where payments are made through banking channels and goods are recorded in books. Moreover, the appellant furnished bank statements, purchase invoices, stock records, and ledger confirmations. Though not all evidences may be conclusive, the complete disregard of all submitted documents is not warranted. Further, the AO has failed to conclusively prove that the purchases did not result in actual consumption or were not reflected in finished goods sold. The application of section 69C requires proof that the expenditure was not explained. In this case. partial explanations were offered with supporting documentation. The addition of the entire purchase amount without considering the corresponding sales and input credits is excessive and arbitrary. Courts have consistently held that sales cannot be ignored if not doubted, and entire purchases cannot be disallowed in such circumstances. Reliance is placed on the Hon'ble Bombay High Court's decisions in the cases of CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. [2013] 216 TAXMAN 180 (Bom) and PCIT vs. RishabhdevTechcable Ltd. [2020] 272 ΤΑΧΜΑN 264 (Bom). Accordingly, in view of the facts and considering judicial precedents, a profit rate disallowance @12.5% of the disputed purchases amounting to Rs.1,97,39,690/- is sustained and balance addition is deleted in the absence of complete verification and to 3

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. plug revenue leakage without making an arbitrary addition, Grounds 3 & 4 are partly allowed.” 4. Since the Ld. CIT(A) had decided the issue partly in favour of the assessee by sustaining the addition on account of profit element embedded in the transaction of purchases, thereby sustaining the disallowance at 12.5%, which was determined at Rs.1,97,39,690/-. The remaining demand out of Rs.15,79,17,518/- has been directed to be deleted. Against the aforesaid decision of Ld. CIT(A), the Revenue is in appeal for scaling down of the addition, whereas the assessee is in appeal against the sustained portion at 12.5%.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. year under consideration. It is also clarified that the assessee had submitted various documents before the Ld. AO, he referred to para 3.2.1 of the assessment order, the list of such documents is culled out as under: a. Copy of ledger account in the books of assessee company. _ b. Copy of the ledger account confirmation duly signed and acknowledged by both - parties, c. Copy of the Purchases involves issued by the vendor to assessee company, d. Copy of purchase register showing the purchase made by assessee company for the year under consideration along with copy of relevant extract of ITR from wherein purchase amount was shown by the company e. Party wise and Quantitative details of stock movement (inward and outward) during the year under consideration; and f. Copy of the bank account statement showing the payment made to vendor by the assessee company for the purchases made during the year under consideration, Details of Purchases (Point No.4)

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. genuineness of purchase transactions, the quantity of purchases and corresponding sales are accepted by the Ld. AO by not rejecting the books of accounts of assessee, trading results and gross profit of the assessee thus cannot be disturbed.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. reliance on the decision of Bombay High Court in the case ofKanak Impex (India) Ltd. (2025) 474 ITR 175.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. invoices placed at the paper book duly contains the stamp of godown receipt, clearly showing that the material has been received by the assessee. Small expenses in the nature of loading and unloading are incurred by the assessee which can be seen in the P & L account, wherein the hamally charges are debited, therefore, the receipt of goods cannot be doubted. It is submitted that as per settled position, mere non-availability of transport documents cannot by itself be treated as conclusive evidence of bogus nature of purchase, particularly when the purchases are duly reflected in the books of accounts supported by purchase invoice payment through banking channels and corresponding entries in the GST filings.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. documents such as ledger accounts, confirmation on ledger accounts by the alleged parties, purchase invoices issued by the vendor, copy of purchase registered showing purchases made by the assessee-company for the year under consideration along with copy of relevant extract of ITR, party-wise and quantitative details of stock movement inward and outward, copy of bank statements showing payments made to the alleged vendors and details of purchases. The Ld. AO relied on the details surfaced during the search and seizure on One World group, wherein certain entries of purchases from certain companies of One World group were identified and treated as bogus/accommodation entries. It is observed that the assessee has obtained accommodation bills from One World group companies without any real involvement of goods so as to reduce its taxable profit. The Ld. AO has also analyzed the sales, purchases and other components of its financials and their movement against the figures of preceding year.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. that once the assessee has furnished reasonable documents and there was no finding disproving the actual business operations of the assessee. It is the settled law that mere non-response by the supplier does not conclusively prove that purchases are bogus especially where payments are made through banking channels and goods are recorded in its books. Ld. CIT(A) placed his reliance on the decision of Hon’ble Bombay High Court in the case of CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. [2013] 216 taxman 180 (Bom) and PCIT vs. RishabhdevTechcable Ltd. [2020] 272 taxman 264 (Bom)and found it appropriate to make a disallowance of 12.5% of the disputed purchases on account of additional profit received by the assessee by way of such accommodation entries.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. assessee has furnished all the necessary documentary evidences for analysis and examination of the Assessing Officer, the disallowance cannot be made merely on presumptions and surmises based on statement of third parties without any clinching evidence against the assessee to have obtained the accommodation bills.

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. the Investigation Wing in assessee's case. Therefore we hold that the addition made by the AO is liable to be deleted and the AO is directed accordingly” In the case of M/s. Patodia Filaments Pvt Ltd. “7. We have heard both the parties and also perused the relevant finding given in the impugned orders. First of all, it is not in dispute that assessee had disclosed the source of all the purchases from its books and the quantitative details of the purchases and the sales have not been disputed. It is for this reason ld. AO had applied GP rate of 12.5% on the purchases. The ld. CIT (A) following the judgment of the Hon'ble Bombay High Court held that the GP rate on purchases which have been accepted to be genuine is to be applied on alleged bogus purchases. From the perusal of the material placed on record and the submissions made before the Id. CIT (A), it is seen that assessee is dealing in the business of manufacturing of fabrics as well as trading in fabrics. It had made fabric purchases of more than Rs.49.80 Crores. The only purchases made from these two parties have been doubted on which GP rate has been applied. The assessee to prove the genuineness of the purchases made from both the parties has produced the following documents:- Copy of the Invoices received on account of purchases made. Copy of the Ledger Account of M/s SVG Style and Textile Company in the books of appellant Corresponding to the purchases made, payment made through the bank alongwith the copy of the bank statement. Details of corresponding sales on such purchases including quantity wise sales and purchases. Copy of delivery challans of the purchases made. 8. Once the assessee had provided the details of corresponding sales on such purchases, delivery challans and the quantity of purchases alongwith payments made through banking channels backed by invoices, then without rejecting the books of accounts or corresponding sales, the trading results and Gross Profit cannot be disturbed. The sole reliance has been placed on the statement of one person who was handling affairs of these two companies and that he was providing bogus bill, addition has been made by applying higher GP rate. Nowhere has it been pointed out that in his statement he has given the name of the assessee or stated that assessee was also provided any kind of accommodation bill. Once the quantitative details of purchase and sales which tallies with the trading results and overall gross profit has been accepted and corresponding one to one sale of the purchases made from these parties alongwith delivery challans has been shown, then, no addition can be made by applying any kind of GP rate. As noted above, Id. CIT (A) inA.Y.2016-17 has deleted the addition and in A.Y.2018-19 he has applied GP rate of 0.88% by taking difference. This difference for making addition on account of GP rate of 0.88% is not justified when there is no such finding that there is some discrepancy in the purchases and sales. Accordingly, the entire addition made by the ld. AO and partly confirmed by the ld. CIT (A) is deleted.”

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. 17. Regarding Department’s reliance in the case of Hon’ble Bombay High Court in PCIT vs. Kanak Impex (supra), we are of the view that the findings in that case are not applicable in the present case, as in the case of Kanak Impex (supra), the assessee has not participated in the assessment proceedings as well as in the appellate proceedings, which is categorically noted by the Hon’ble High Court that the assessee having consciously and intentionally decided not to join investigation, cannot now contend that the Revenue should have given them all the details before making the addition. Such a conduct of the assessee cannot be accepted. It is incumbent upon the assessee to have joined the re-assessment proceedings and to discharge the initial onus of providing the purchase and seek details if any. Further, regarding the transport documents, we find substance in the submissions of Ld. AR that such deliveries were received in the godowns and the receipt of godown are there, establishing the receipt of delivery of material. Regarding reduction in GP, Ld. AR has explained that the same has come down on account of introduction of GST, which cannot be doubted in absence of any contradicting material to dislodge such contentions

ITA No. 4680/Mum/2025& 5185/Mum/2025 Solar Packaging Pvt. Ltd. reliance on statement of third party without any corroborative substance, the addition u/s 69C for Rs.15,79,17,518/-, which is reduced by the Ld. CIT(A) to the extent of 12.5% at Rs.1,97,39,690/-, both are unsustainable. We thus set aside the order of Ld. CIT(A) and direct the Ld. AO to delete the entire addition u/s 69 made vide order u/s 147 r.w.s 144B of the Act dated 20.03.2023.

Order pronounced in the open court on 23-07-2026.

Sd/- Sd/- (ANIKESH BANERJEE) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 23-07-2026. 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

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai