NISHICA IMPEX PVT LTD,MUMBAI vs. DY, CIT, CENTRAL CIRCLE -4(4), MUMBAI

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ITA 1549/MUM/2026Status: DisposedITAT Mumbai15 July 2026AY 2018-198 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in sustaining the addition of estimated commission income. The basis for the addition was not supported by any material evidence and was disconnected from the original assessment.

What were the facts?

The Assessing Officer reopened the assessment and added Rs. 99,21,904 under Section 69C for alleged bogus purchases. The CIT(A) found no purchases but sustained an addition of Rs. 4,96,100 by estimating commission income on sales.

What were the issues?

Whether the CIT(A) can sustain an addition based on estimated commission income when the original assessment was for unexplained expenditure, and if there is sufficient evidence to support the commission income.

Which sections of the Income-tax Act were involved?

Section 69C,Section 251

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Shri Ketan L. Vajani
For Respondent: Shri Shree Kumar C. (SR. AR)
Hearing: 25.06.2026Pronounced: 15.07.2026

आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal is preferred by the assessee against the order dated 17.12.2025 passed by the Commissioner of Income Tax (Appeals)-54, Mumbai under section 250 of the Income-tax Act, 1961 for the Assessment Year 2018-19, arising out of the assessment order dated 15.03.2024 passed by the Assessing Officer under section 147 read with section 144B of the Act.

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2.

The assessee has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals), hereinafter referred to as the CIT(A), has erred in making an addition of Rs.4,96,100/- on account of alleged bogus commission income earned by the appellant. The CIT(A) has further erred in invoking the provisions of section 69C of the Act in respect of the said amount of addition. 2. Your appellant respectfully submits that the impugned addition has been made merely on the basis of assumptions, surmises and suspicions without any evidence in support of the said addition. 3. Your appellant also submits that the addition made by the CIT(A) is in the nature of finding a new source of income, in fact a non-existing one, and accordingly the said addition is beyond the powers available to the CIT(A) under the provisions of section 251 of the Act. 4. In view of the above, the appellant respectfully submits that the impugned addition of Rs.4,96,100/- deserves to be deleted. The appellant, therefore, prays that the same may please be deleted. 5. Without prejudice to the above, the appellant submits that the provisions of section 69C cannot be invoked in relation to the impugned addition by any stretch of imagination. The appellant, therefore, prays that the said addition may please be deleted for this reason as well.

Facts of the case

3.

The assessee is a private limited company. It filed its return of income for Assessment Year 2018-19 on 25.12.2018 declaring total income of Rs.16,39,030/-. Originally, the assessment was completed under section 143(3), wherein an addition of Rs.2,36,243/- under section 40(a)(ia) on account of non-deduction of tax at source on commission paid to Amazon was made, which was accepted by the assessee.

3.1 Subsequently, the assessment was reopened under section 147 of the Act. The Assessing Officer passed an order dated

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15.03.2024 under section 147 read with section 144B determining the total income at Rs.1,15,60,934/- after making an addition of Rs.99,21,904/- under section 69C by treating the transaction with M/s Advance Computers and Mobiles Pvt. Ltd. as unexplained expenditure. The Assessing Officer proceeded on the basis that the said concern was engaged in issuing bogus invoices and that the assessee had allegedly entered into bogus purchase transactions with it. Accordingly, the amount of Rs.99,21,904/- was treated as unexplained expenditure under section 69C.

4.

Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). During the appellate proceedings, the assessee consistently contended that the transaction in question was not a purchase transaction but represented sales made by the assessee to M/s Advance Computers and Mobiles Pvt. Ltd. It was submitted that the sales were duly recorded in the books of account, GST had been collected and paid, sale proceeds had been received through banking channels and the income had been offered to tax. The assessee also furnished copies of invoices, delivery challans, bank statements, ledger accounts, reply filed by M/s Advance Computers and Mobiles Pvt. Ltd. to the notice issued under section 133(6), GSTR-1 and GSTR-2A.

5.

The learned CIT(A), after examining the material, recorded a categorical finding that there were no purchases made by the assessee from M/s Advance Computers and Mobiles Pvt. Ltd. The learned CIT(A) accepted that the assessee's GSTR-2A contained no

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purchases from the said concern, whereas GSTR-1 reflected sales aggregating to Rs.99,21,904/-. The learned CIT(A) further accepted that sale proceeds had been received through banking channels and that M/s Advance Computers and Mobiles Pvt. Ltd. had also responded to the notice issued under section 133(6).

5.1 However, the learned CIT(A) held that although the assessee had not made purchases from M/s Advance Computers and Mobiles Pvt. Ltd., the sales made by the assessee to the said concern constituted bogus sales and, therefore, estimated commission income at 5% of the sales amounting to Rs.4,96,100/. Invoking the concurrent powers available under the Act, the learned CIT(A) sustained the addition of Rs.4,96,100/- as commission income and deleted the balance addition of Rs.94,25,804/-. Thus, the appeal before the learned CIT(A) was partly allowed.

6.

The learned Authorised Representative (AR) reiterated the submissions advanced before the lower authorities and submitted that the entire foundation of the assessment was erroneous. He submitted that the Assessing Officer invoked section 69C treating the impugned transaction as unexplained expenditure, whereas the undisputed factual position, as accepted by the learned CIT(A), was that the assessee had not made any purchases from M/s Advance Computers and Mobiles Pvt. Ltd. but had only effected sales to the said concern.

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6.1 The learned AR submitted that the assessee had recorded the sales in its books, collected and paid GST, received the sale consideration through RTGS and offered the sales to tax. The invoices, bank statements, GSTR-1, GSTR-2A and reply furnished by M/s Advance Computers and Mobiles Pvt. Ltd. under section 133(6) clearly established the genuineness of the sales. It was contended that once the learned CIT(A) accepted that there were no purchases, the very basis for invoking section 69C disappeared. It was further submitted that there was no material whatsoever to conclude that the assessee had earned any commission income by providing accommodation entries. The learned CIT(A) merely presumed commission income at 5% without any evidence and thereby travelled beyond the subject matter of the assessment. It was, therefore, prayed that the addition sustained by the learned CIT(A) be deleted.

7.

The learned Departmental Representative relied upon the order of the learned CIT(A).

8.

We have heard the rival submissions and perused the material available on record. The short controversy before us is whether the learned CIT(A) was justified in sustaining an addition of Rs.4,96,100/- by estimating commission income after holding that the transaction between the assessee and M/s Advance Computers and Mobiles Pvt. Ltd. represented sales and not purchases.

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8.1 The assessment order proceeds entirely on the footing that the assessee had incurred unexplained expenditure by making bogus purchases from M/s Advance Computers and Mobiles Pvt. Ltd. and, therefore, invoked section 69C of the Act. However, during the appellate proceedings, the learned CIT(A), after examining the documentary evidence including GSTR-1, GSTR-2A, invoices, bank statements and the reply furnished by M/s Advance Computers and Mobiles Pvt. Ltd. under section 133(6), has categorically recorded that the assessee had not purchased any goods from the said concern and had only effected sales to it. Thus, the very factual foundation on which the Assessing Officer invoked section 69C stands demolished by the findings recorded by the learned CIT(A) himself.

8.2 Once it is accepted that the assessee had not incurred any expenditure towards purchases from M/s Advance Computers and Mobiles Pvt. Ltd., the provisions of section 69C, which deal with unexplained expenditure, cease to have any application. The jurisdictional fact necessary for invoking section 69C is the incurring of expenditure whose source remains unexplained. In the present case, the learned CIT(A) himself has accepted that no such expenditure existed.

8.3 Having accepted the assessee's case on facts, the learned CIT(A) proceeded to hold that the sales themselves constituted accommodation entries and estimated commission income at 5% thereof. We find that such conclusion is unsupported by any

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material on record. There is no evidence brought either by the Assessing Officer or by the learned CIT(A) to establish that the assessee received any commission or that the sale consideration received through banking channels was returned in cash or otherwise represented accommodation entries. The addition sustained by the learned CIT(A) is thus founded merely on presumption and suspicion.

8.4 It is well settled that however strong the suspicion may be, it cannot substitute legal evidence. An addition cannot be sustained merely on conjectures or by estimating hypothetical commission income in the absence of any cogent material demonstrating that the assessee actually earned such commission.

8.5 We also find considerable force in the contention of the learned AR that the learned CIT(A), after accepting that there were no purchases, could not have sustained an altogether different addition by assuming the existence of commission income without any supporting evidence. Such finding is entirely disconnected from the basis adopted in the assessment order and is not supported by any independent material establishing accrual or receipt of commission income.

8.6 Considering the entirety of the facts and circumstances, we are of the considered opinion that the addition of Rs.4,96,100/- sustained by the learned CIT(A) cannot be upheld. The same is

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directed to be deleted. The grounds raised by the assessee are accordingly allowed.

9.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 15.07.2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER

Mumbai, Dated 15/07/2026 PS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / The CIT(A) 3. आयकर आयु�(अपील) / Concerned CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मु�ई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�ािपत �ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�ई / ITAT, Mumbai

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