DCIT CC 8(2),MUMBAI, MUMBAI vs. MANNIL TRADECOMM PRIVATE LIMITED, MUMBAI
In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the AO's addition of 12.5% on bogus purchases was justified, citing judicial precedents. The CIT(A)'s reduction to 3% was considered unjustified.
What were the facts?
The Revenue appealed against the CIT(A)'s order which reduced the addition on account of bogus purchases from 12.5% to 3%. The assessee's purchases were found to be non-genuine and accommodation entries during a search.
What were the issues?
Whether the profit addition on bogus purchases should be 12.5% as determined by the AO or 3% as decided by the CIT(A). The genuineness of purchases and the estimation of profit on such purchases.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 874, 875, 876 & 877/MUM/2026 (AY: 2017-18, 2018-19, 2019-20 & 2020-21) DCIT CC 8(2), Room No vs. Mannil Tradecomm. Private Limited, 658, Aaykar Bhavan. M.K 8-701, Neptune Vasant Galaxy Bangur Road, Mumbai-100030. Nagar, New Link Road, Goregaon West, Mumbai-400090. PAN/GIR No: AAKCM329500 (Appellant) (Respondent) Appellant by None Respondent by Shri Umashankar Prasad (CIT DR) Date of Hearing 28.04.2026 Date of Pronouncement 29.04.2026
O R D E R PER BIJYANANDA PRUSETH, AM:
These appeals filed by the revenue emanate from the orders passed under section 250 of the Income-tax Act, 1961 (in short, 'Act') by the Commissioner of Income Tax, Appeals, 48, Mumbai dated 06.11.2025 for the assessment years (AY) 2017-18, 2018-19, 2019-20 and 2020-21. Since facts are and grounds are similar for all appeals, with the consent for the Ld. Sr. DR all the appeals were clubbed together and heard and a common order is passed for the sake of convenience and brevity. ITA NO.874/Mum/2026 (AY: 2017-18) is taken as the “lead case.” 2. The grounds of appeal raised by the assessee in ITA No.874/Mum/2026
(AY: 2017-18) are as under:
"1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition on account of bogus purchases from 12.5% to 3% of the alleged bogus purchases amounting to Rs.25,80,54,626/ without proper appreciation of the facts brought on record by the AO?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the addition to Rs.77,41,639/- as against Rs.3,22,56,828/-made by the AO, despite confirming the finding that the purchases were non-genuine and accommodation entries?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee was a direct beneficiary of a large-scale bogus billing cartel, unearthed during a search and seizure action u/s 132 of the Act, and therefore the estimation of profit at 3% is unjustified and unreasonable?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the AO had adopted the rate of 12.5% after considering judicial precedents and the facts of the case, and the same represented a reasonable and justified estimation of suppressed income?
The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.” 3. The grounds of appeal raised by the assessee in ITA No.875/Mum/2026
(AY: 2018-19) are as under:
" 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition on account of bogus purchases from 12.5% to 3% of the alleged bogus purchases amounting to Rs.27,69,05,365/- without proper appreciation of the facts brought on record by the AO?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the addition to Rs.83,07,160/- as against Rs.3,46,13,170/-made by the AO, despite confirming the finding that the purchases were non-genuine and accommodation entries?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee was a direct beneficiary of a large-scale bogus billing cartel, unearthed during a search and seizure action u/s 132 of the Act, and therefore the estimation of profit at 3% is unjustified and unreasonable?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the AO had adopted the rate of 12.5% after considering judicial precedents and the facts of the case, and the same represented a reasonable and justified estimation of suppressed income?
The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”
The grounds of appeal raised by the assessee in ITA No.876/Mum/2026
(AY: 2019-20) are as under:
" 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition on account of bogus purchases from 12.5% to 3% of the alleged bogus purchases amounting to Rs.24,14,11,585/- without proper appreciation of the facts brought on record by the AO?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the addition to Rs.72,42,348/- as against Rs.2,29,34,100/-made by the AO, despite confirming the finding that the purchases were non-genuine and accommodation entries?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee was a direct beneficiary of a large-scale bogus billing cartel, unearthed during a search and seizure action u/s 132 of the Act, and therefore the estimation of profit at 3% is unjustified and unreasonable?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the AO had adopted the rate of 12.5% after considering judicial precedents and the facts of the case, and the same represented a reasonable and justified estimation of suppressed income?
The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”
The grounds of appeal raised by the assessee in ITA No.877/Mum/2026
(AY: 2020-21) are as under:
" 1. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in restricting the addition on account of bogus purchases from 12.5% to 3% of the alleged bogus purchases amounting to Rs.21,52,04,434/- without proper appreciation of the facts brought on record by the AO?
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the addition to Rs.64,56,133/ as against Rs.2,69,00,554/- made by the AO, despite confirming the finding that the purchases were non-genuine and accommodation entries? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee was a direct beneficiary of a large-scale bogus billing cartel, unearthed during a search under seizure action u/s 132 of the Act, and therefore the estimation of profit at 3% is unjustified and unreasonable? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the AO had adopted the rate of 12.5% after considering judicial precedents and the facts of the case, and the same represented a reasonable and justified estimation of suppressed income? 5. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”
The case was originally posted for hearing on 28.04.2026. These appeals
were filed by the revenue and the Sr. DR of the revenue appeared during the
hearing. However, none appeared on behalf of the assessee nor any request for
adjournment nor any written submission was filed. Hence, no useful purpose
would be served by prolonging the proceedings before us. The case is, accordingly,
decided on the basis of materials on record.
Facts of the case, in brief, are that the assessee filed its return of income
for the AY 2017-18 on 21.01.2022 declaring total income at Rs.9,10,522/-. A
search and seizure u/s 132 of the Act was carried out in case of M/s One World
. Industries Pvt. Ltd. & Ors. on 06.11.2019. In the documents, loose papers and
digital data found and seized during the search proceedings, information about
the assessee was found. The case was accordingly centralized with DCIT Central
Circle A-2, Mumbai. After hearing the assessee, the AO added 12.5% of the bogus
purchases of Rs.22,28,70,151/- made by the assessee to the total income by
observing that the expenses were inflated to reduce profitably. Since sales were
also recorded, only profit element of 12.5% was added. Accordingly, addition of
Rs.2,78,58,768/- was made and the total income was determined at
Rs.2,87,69,290/-.
Aggrieved by the order AO, the assessee filed appeal before the CIT(A). The
CIT(A) reduced the addition to 3% of the total bogus purchases amounting to
Rs.77,41,639/- by observing that the average gross profit ratio of the last four
years was 1.74%. Hence, 3% would be fair to cover the income embedded in the
impugned purchases.
Aggrieved by the order CIT(A), the revenue filed appeal before the
Tribunal. As stated earlier, the case was posted for hearing on 28.04.2026. The Sr.
AR of the revenue attended and supported the order of AO. He submitted that
the AO has passed a detailed and speaking order, which was liable to be sustained
but the CIT(A) reduced the profit element to only 3% instead of 12.5% added by
the AO. As stated earlier, the appellant did not appear nor requested for
. adjournment. No written submission along with relevant details were filed. It is
thus clear from the above facts that the appellant has no specific submissions to
file to rebut the grounds of appeal raised by the revenue. We find that there are
number of decisions in case of bogus purchase where the Hon’ble high Court and
Tribunal have sustained addition to the extent of 12.5% to 15% of the bogus
purchases. In case of PCIT vs. Ramelex Pvt. Ltd. in Income-tax Appeal No.14 of
2022 dated 13.10.2025, the Hon’ble jurisdictional Bombay High Court has upheld
addition @15% in respect of bogus purchases. The Hon’ble Gujarat High Court in
case of CIT vs. Simit Seth, 356 ITR 451 (GUj.) has also upheld addition @15% of
the impugned purchases. Therefore, we do not find any infirmity in the order of
AO in restricting the addition to 12.5% of the bogus purchases. Hence, the order
of CIT(A) in restricting the addition to 3% is set aside and the original addition
@12.5% made by the AO is restored. Accordingly, the grounds of revenue are
allowed.
We make it clear that the Tribunal has inherent power to decide the appeal
in case the parties to the appeal remain absent. However, liberty is granted to the
assessee to seek recalling of this order by substantiating the reasons for non-
appearance/compliance/prosecution.
In the result, the appeal of the revenue is allowed.
ITA No.875, 876 & 877/Mum/2026 (AY: 2018-19, 2019-20 & 2020-21)
The facts of these appeals are similar to those of ITA No.874/Mum/2026
decided above. Hence, following the reasons given above, these appeals of
revenue are also allowed.
In the combined result, all appeals of the revenue are allowed.
Order is pronounced on 29.04.2026.
Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER
*Aniket Chand; Sr. PS MUMBAI Date: 29.04.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The PCIT/CIT 4. DR/AR, ITAT, MUMBAI 5. Guard File
By Order
Assistant Registrar ITAT, MUMBAI
More judgments on Section 132
- Vinod Agrawal, Kawardha vs Assisstant Commissioner of Income Tax…ITA 666/RPR/2026[2019-20]Status: Heard21 Oct 2026AY 2019-20
- Ashok Singh, Jaipur vs ACIT, Circle-2 Jaipur, JaipurITA 1540/JPR/2025[2015-16]Status: Disposed21 Oct 2026AY 2015-16
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Venish Vinodray Lalani, Rajkot vs Income Tax Officer, MorbiITA 197/RJT/2026[2019-20]Status: Disposed19 Oct 2026AY 2019-20
- Naresh Chandra Khattar, Agra vs ITO Ward-1(1)(2), AgraITA 475/AGR/2026[2019-20]Status: Disposed16 Oct 2026AY 2019-20
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