DCIT CENTRAL CIRCLE-7(2), MUMBAI, MUMBAI vs. PATODIA FILAMENTS PRIVATE LIMITED, MUMBAI

ITA 3067/MUM/2026Status: DisposedITAT Mumbai07 July 2026AY 2019-205 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged its primary onus by providing documentary evidence for the purchases. The AO did not dispute the evidence, and the corresponding sales were also not doubted.

What were the facts?

The assessee made purchases from certain entities, and the AO reopened the assessment based on information suggesting these were bogus purchases. The assessee provided documentary evidence including invoices, bank statements, and sales details.

What were the issues?

Whether the addition made by the AO on account of alleged bogus purchases is sustainable when the assessee has provided documentary evidence and the corresponding sales are not disputed.

Which sections of the Income-tax Act were involved?

Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE NARENDER KUMAR CHOUDHRY & HON’BLE ARUN KHODPIA

For Appellant: Mr. Parteek Jain, Ld. A.R

For Respondent: Mr. Ajay Soneji, Ld. D.R

Pronounced: 07.07.2026

आदेश / ORDER

PER: NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Assessee against the order dated 29.01.2026, impugned herein, passed by the National Faceless Appeal Centre(NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2019-20.

During the year under consideration, the Assessee had made purchases from the following entities:

The Ld. AO, on receipt of information from the DDIT (Investigation Unit-3), Mumbai, that the Assessee was one of the beneficiaries to whom bogus purchase bills had allegedly been issued by various entities controlled by Shri Gopal Bhattar, who in his statement recorded by the Investigation Wing, had admitted that he was not carrying on any genuine business and was merely engaged in providing accommodation entries/bogus purchase bills to various beneficiaries”, reopened the matter for verification.

During the assessment proceedings, the Assessee furnished complete documentary evidences in support of the impugned purchases, inter alia, comprising:

Copies of purchase invoices;  Copy of the ledger account of M/s. SVG Style & Textile Company in  the books of the Assessee; Bank statements evidencing payments made through banking  channels; Details of corresponding sales effected against such purchases; and  Copies of delivery challans in respect of the purchases made from  M/s. SVG Style & Textile Company and M/s. Rathi Style & Textiles Pvt. Ltd. However, the Ld. AO still doubted the genuineness of the transactions mainly on the ground that there was no satisfactory evidence regarding actual physical delivery of the goods by either the Assessee or the suppliers despite opportunities having been granted, and further relying upon the statement of Shri Gopal Bhattar.

The Ld. AO Accordingly, treating the purchases aggregating to ₹16,40,88,822/- as unverifiable, estimated the profit element embedded therein at 12.5% and made an addition of ₹2,05,11,102/-.

The Ld. Commissioner, after independently examining the facts and circumstances of the case and relying upon various judgments including by the Hon'ble Bombay High Court in CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. [372 ITR 619], as well as the orders passed by the Coordinate Bench of the Tribunal in the Assessee's own case for A.Ys. 2016-17 and 2018-19, deleted the impugned addition.

Thus, the Revenue, being aggrieved by the impugned order, has preferred the present appeal.

Heard the parties and perused the material available on record. Admittedly, the Assessee, by producing the aforesaid documentary evidences, duly discharged the primary onus cast upon it to establish the genuineness of the impugned purchases. It is also an admitted position that the Ld. AO neither disputed nor controverted the documentary evidences furnished by the Assessee. Likewise, the corresponding sales effected out of the impugned purchases have also not been doubted by the Revenue.

Further, we find that the Coordinate Bench of the Tribunal, in the Assessee's own case for A.Ys. 2016-17 and 2018-19 vide common order dated 31.12.2024 in ITA Nos. 5696/Mum/2024 and 5698/Mum/2024, while dealing with an identical issue, has held as under:

“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 Id. 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 ld. 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.

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) in Α.Υ.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”. 10. The facts and circumstances of the present appeal, the nature of the issue involved and the addition made by the Ld. AO are identical to those considered by the Coordinate Bench in the Assessee's own case for the earlier assessment years, except for the variation in figures. We further find that the Assessee, by specifically referring to sample tax invoices placed at pages 82 and 874 of the Paper Book, demonstrated that the invoices themselves contained particulars of transportation, including Lorry Nos. GJ- 15-YY-0100 and DN-09-K-9482, thereby effectively rebutting the observation of the Ld. AO that there was no evidence regarding actual delivery of goods.

11.

In view of the aforesaid factual position and respectfully following the decision of the Coordinate Bench in the Assessee's own case, we find no infirmity in the order of the Ld. Commissioner deleting the impugned addition. Thus, the impugned order is affirmed.

12.

In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced in the open court on 07.07.2026.

Sd/- Sd/- ARUN KHODPIA NARENDER KUMAR CHOUDHRY JUDICIAL MEMBER ACCOUNTANT MEMBER (Tarun Kushwaha) Sr. Private Secretary

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

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