VISHWKARMA IMPEX PRIVATE LIMITED,DELHI vs. COMMISSIONER OF INCOME TAX (APPEALS), NFAC

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 3002/Del/2026 for Assessment Year: 2018-19 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “1961 Act”) dated 23.01.2026 in DIN & Order No: ITBA/NFAC/S/250/2025- 26/1085119979(1), which in turn has arisen from the assessment order dated 27.03.2023 passed by the AO u/s 147 read with section 144 r.w.s. 144B of the 1961 Act. 2. The brief facts of the case are that the assessee filed its return of income for assessment year 2018-19 on 26.10.2018, declaring total income of Rs.9,76,940/-. Subsequently, information was flagged on insight portal (CRIU/VRIU category) in accordance with Risk Management Strategy formulated by CBDT based on inputs from

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the Investigation Wing, Delhi. The information emanated from a search conducted on 31.10.2018 in the case of Sh. Manish Gupta, Room No. 201, 2605, 2nd Floor, Naya Bazar, Delhi-110006, who was one of the 8 Hawala Operators covered , and was found to be operating various bank accounts for providing accommodation entries by issuing non- genuine sales bill of goods and non genuine purchase bills of goods as required by beneficiary . Shri Manish Gupta had two firms registered in his own name i.e M/s Shiv Rudra Trading Co. and M/s Lucky Traders, and while other accounts and firms are in the name of his relatives and friends. Shri Manish Gupta admitted in his statement recorded u/s 132(4) of the 1961 Act and also during post search investigation on oath u/s 131(1A) of the 1961 Act , that he has been providing non-genuine sales and purchase bills. The assessee company was identified as one such beneficiary, having allegedly booked fictitious purchases amounting to Rs.16,50,000/- from M/s M.K. Traders managed and controlled by Mr. Manish Gupta. The AO in order to cross examine the above information and conducting enquiries, issued notice u/s 148A(a) to Shri Manish Gupta on 11.03.2022, but, however, there was no response from said Mr. Manish Gupta.

2.2 Proceedings u/s 148A were initiated by the AO against the assessee. Show cause notice u/s 148A(b) was issued to the assessee as to why notice u/s 148 be not issued based on aforesaid information which suggest that income chargeable to tax has escaped assessment.. The assessee in its reply submitted that the assessee has purchased footwear from M/s. M.K. Traders amounting to Rs. 16,50,000/-and the payments were made through banking channels. Copy of invoices and bank statements were filed by the assessee before the AO in support of its claim. But, the AO observed that Mr. Manish Gupta Prop. M/s M.K. Traders was found to be involved in the practice of availing/issuing bogus sales/purchase bills. The AO observed that various beneficiaries have been identified , and seized material as well evidences collected during post search enquiries were collected implicating Mr. Manish Gupta, and these beneficiaries have

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recorded statements which evidences the Hawala trading by Sh. Manish Gupta. The AO observed that the assessee has filed bank statements and invoices , but has failed to file copy of GST return for verification that these purchases were disclosed in the GST returns. The confirmation from M K Traders were also not filed. The notice issued u/s 148A(a) of the 1961 Act to Mr. Manish Gupta was not complied with. Accordingly, the case was reopened by the AO u/s. 147 of the Income Tax Act, 1961 after due approval. Thereafter, notices u/s 148 ,142(1) , 144 and SCN were issued by the AO from time to time during the course of reassessment proceedings(duly recorded in page 4 of assessment order). The assessee did not file return in response to notice u/s 148 . The assessee filed part replies before the AO in the reassessment proceedings .The assessee submitted that it had no connection with Shri Manish Gupta . It was submitted that the assessee purchased footwear from M/s M K Traders against which payments were made through banking channels . The purchase invoices were duly submitted by assessee before the AO. The assessee submitted that nowhere in the statement provided by the AO to the assesse, it is mentioned that said Mr. Manish Gupta is prop. of M/s. M. K. Traders or has any connection with M/s M K Traders. In the statement furnished, no where it emerges that Shri Manish Gupta has done any transaction with the assessee.The assessee denied to have any connection with Mr. Manish Gupta. The AO relied upon the statement dated 08th February, 2019 recorded u/s 131 of Mr. Manish Gupta as well seized material, wherein reference was made to ‘MK’ and several amounts were mentioned against ‘Mk’, thus, ‘Mk’ was decoded as M K Traders by the Revenue(Page 9-10 of assessment order) . The investigation wing of the department has forwarded letter dated 19.11.2019 to Directorate of system wherein M K Traders(PAN AGCP7151N) is listed as one of the entity operated by Mr. Manish Gupta with its proprietor named ‘Mukesh’ for providing accommodation entries for bogus purchase bills and bogus sales bills. Statements of Mr. Manish Gupta were recorded on 01.11.2018 u/s 132(4) and on 08.02.2019 u/s 131(1A) of the 1961 Act. The

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AO relied upon judgment and order of Hon’ble Supreme Court in the case of Sumati Dayal v. CIT (1995)214 ITR 801(SC). The AO observed that the assessee made unexplained expenditure amounting to Rs. 16,50,000/- and the AO made addition to the income of the assessee by treating the same as unexplained expenditure u/s 69C of the 1961 Act.

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AO to complete assessment u/s 144 and 147. The Ld. CIT(A) observed that when claim of the expenditure or purchase is made by the assessee, primary onus lies on the assessee to prove the identity of the party, genuineness of the transaction , actual delivery of goods and creditworthiness/capacity of the suppliers. The Ld. CIT(A) observed that the supplier is a proven accommodation entry provider as per investigation wing, and the assessee has failed to discharge his onus. Mere payment through banking channel and production of self serving invoices cannot by themselves, establish genuineness of purchases, particularly when the surrounding circumstances and investigation material clearly shows that the supplier is a hawala operator. The ld. CIT(A) observed that the AO has rightly relied on the judgment and order of Hon’ble Supreme Court in the case of Sumati Dayal(supra). The ld. CIT(A) also rejected the contention of the assessee that only profit embedded in the purchases could be brought to tax , as there is no evidence of actual movement of goods and there is no quantitative tally or stock register produced by the assessee. The Ld. CIT(A) observed that the assessee has failed to prove even the basis existence and genuineness of the supplier, and the entire transaction is non-genuine. The ld. CIT(A) observed that the assessee has failed to discharge the primary burden costs upon it. The Ld. CIT(A) has also observed that this is not a case of mere inflation of purchase price or grey market purchases, but a case where the entire transaction itself is found to be non-genuine and only an accommodation entry. Thus, the ld. CIT(A) observed that the AO was held to be justified in invoking the provisions of section 69C of the Act making the addition of the entire amount of unexplained purchases to the tune of Rs. 16,50,000/- made by the assessee from M K Trader, and the appeal of the assessee was dismissed.

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submitted that these were genuine purchases made for resale purposes, and payments were made through banking channel. The ld. Counsel for the assessee submitted that the Authorities below invoked provisions of section 69C of the Act. The assessee has purchased footwear from M K Traders. It was submitted that allegation has been made against the assessee that the assessee made bogus purchase to the tune of Rs.16,50,000/-. It was submitted that the payments for said purchases were made through banking channel. Copy of the purchase invoices and bank statement were duly submitted. Now the assessee has submitted stock register before the ITAT as additional evidence which is placed at page 36 of the Paper Book, which is reproduced as under:

It was submitted that assessee has also submitted bank statement wherein payment were made for said purchases through banking chaanel . The ledger account of said party M K Trader in the books of accounts of the assessee as well copies of the invoices were also submitted, which are reproduced as under:

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4.2 The Ld. Sr. DR submitted that Sh. Manish Gupta was accommodation entry provider. The assessee has availed accommodation entry from M K Traders for bogus purchase to the tune of Rs. 16,50,000/-. It was submitted that the copies of the statements recorded of Mr. Manish Gupta were provided to the assessee.. The assessee failed to discharge the onus lied upon it.

4.3 The Ld. Counsel for the assessee submitted in his rejoinder that all the documents such as bank statements, invoices were furnished before the authorities below , and now stock register is also furnished. It was submitted that sales have been made by the assessee against the purchases made from the said party M/s M K Traders.

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purchases to the tune of Rs. 16,50,000/- from M/s M K Traders , which concern was also decoded by department to be entity controlled and managed by Mr. Manish Gupta for providing non-genuine purchase bills and non-genuine sale bills. The details are recorded in the orders of authorities below in detail as well recorded in preceding para’s of this order. The copies of statements u/s 132(4) and 131(1A) recorded of Mr. Manish Gupta by department, were provided by department to the assessee. Proceedings u/s 147/148 were initiated against the assessee by Revenue. The details are recorded in preceding para’s of this order as well in the orders of authorities below. The assessee did not file return of income in response to notice issued u/s 148. The assessee in response submitted part replies before the AO . The assessee denied to have dealt with or known Mr. Manish Gupta. The assessee submitted copies of invoices and bank statement before ld. AO as well ld. CIT(A). The assessee failed to furnish before the AO as well ld. CIT(A); (a) confirmation from the suppliers (b) evidence of actual movement of goods such as transport receipts, delivery challans, lorry receipts etc. (c) stock register or quantitative tally (d) GST returns or GST payment details of the supplier and (e) independent corroborative evidence to establish genuineness of the transaction. Now, at this stage , the assessee has filed stock register and claim is made that the assessee has purchased footwear from M/s M K Traders which was sold by the assessee during the year itself. The said stock register is reproduced hereunder:

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The aforesaid stock register is filed before the ITAT as additional evidence for the first time. The assessee has not filed copy of GST return evidencing that the said purchase/sale were recorded in GST return. The assessee aforesaid stock register is not even signed and does not bear any folio number etc. . It does not bear any description of goods such as type/description of footwear, whether for men/women/children/color of the footwear/size of the footwear etc. . Even the invoices do not carry these details. The cost of shoes/footwear may vary from Rs. 100 to Rs. 10000 or even lower or higher. The assessee has not filed lorry receipt, GR Number /transport /lorry number etc to prove movement of goods. Once the department has alleged based on the searches conducted u/s 132 and statement recorded u/s 132(4) of Mr. Manish Gupta that M/s M K Trader was one of the alleged entity engaged in providing accommodation non-genuine, the onus shifted to the assessee to prove that the assessee has not availed bogus accommodation entry for purchase to the tune of Rs. 16,50,000/- . The presumption u/s 132(4) shall apply. The onus shifts to the assessee to rebut such presumption by cogent evidences. The assessee has not come forward and produce the said proprietor/partner of the said concern M/s M K Traders. No cogent evidences are brought on record to disprove the allegation leveled by the Revenue. Even affidavit from M/s M K Trader and/or its partner/proprietor is not filed. Even, the assessee never asked for cross examination of Mr. Manish Gupta.

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At this stage, the assessee has half heartedly come forward and filed an unsigned stock ledger which does not have any details as discussed above. This additional evidence filed by the assessee is rejected. Merely filing bank statements and invoices are not sufficient more-so when allegations are levied by Revenue of the assessee having availed bogus accommodation entry from the alleged hawala operator. The apparent is not real . Thus, the assessee has miserably failed to bring on record evidence to substantiate that the purchases made were genuine, and I .uphold the action of the both the authorities below u/s 69C of the Act in making addition to the income of the assessee of the entire alleged bogus purchases to the tune of Rs. 16,50,000/- made by the assessee from M/s M K Traders. Section 69C of the 1961 Act is reproduced as hereunder: Section 69C of the IT Act. 69C. [ Unexplained expenditure, etc. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the ][Assessing Officer] [, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year: [Provided that notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.. The authorities below have rightly relied upon judgment and order of Hon’ble Supreme Court in the case of Sumati Dayala(supra). The authorities below have rightly invoked provisions of Section 69C which is directly applicable, and deeming fiction created by Section 69C shall apply . The first proviso to Section 69C is equally applicable to the facts and circumstances of this case. I do not find any merit in the contentions of the assessee. I affirm the order of the authorities below . The appeal of the assessee stands dismissed. I order accordingly. 6. In the result, the appeal filed by the assessee stands dismissed. Order is pronounced in the Open Court on 13.07.2026. S Sd/- -/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated:13.07.2026

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*PK, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI