PRATAPRAM G. CHOUDHARY,MUMBAI vs. ITO WARD-19(2)(5), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.9157/Mum/2025 (Assessment year: 2009-10)

Pratapram G. Choudhary vs ITO Ward 19(2)(5), Mumbai 203 Shree Swami Samarth 203 Shree Swami Samarth Darshan 2nd, Bldg., 2nd, Kumbharwada-400004 Darshan Bldg., Kumbharwada-400004 PAN: AGSPC8984F APPELLANT RESPONDENT Assessee by : Shri Ayush Netani Revenue by : Shri V.S. Mahajan (Sr.DR) Date of hearing : 13/05/2026 Date of pronouncement : 20/05/2026 O R D E R Per:Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2009-10, date of order 07.10.2025. The impugned order emanated from the order of the Ld. Income Tax Officer-19(2)(5), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 147 of the Act date of order 12.03.2015.

2 ITA No.9157/Mum/2025 Pratapram G. Choudhary 2. The brief facts of the case are that the assessee filed his return declaring total income of Rs.6,82,180/-. The case was reopened u/sec. 148 of the Act. During the assessment proceeding the Ld. AO found that the assessee is the beneficiary of the bogus purchase amount to Rs.7,04,56,518/-. In the impugned assessment order he noted that the assessee had made the transaction with the bogus entity and purchase made in the grey market. So the books of accounts were duly rejected u/sec. 145(3) of the Act and treated the entire transactions as non-genuine which was added back with the total income of the assessee. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) rejected the appeal due to the in-complete submission of evidence before the Ld. CIT(A) and in the remand proceeding. So, the Ld. CIT(A) upheld the impugned addition due lack of evidence. Being aggrieved assessee filed an appeal before us. 3. The Ld. AR argued filed a paper book comprising page 1 to 49 which has been placed on record. The Ld. AR contended that both in assessment and in appeal proceeding the 100% of the purchase was duly added back with the total income. The revenue has treated the entire purchase as a non-genuine but the Ld. AO had accepted that the assessee had made the purchase in grey market and corresponding sale was duly credited in the books of accounts. The observations of the Ld. AO in relevant paragraph in impugned assessment order is reproduced as below: “After elucidation of facts of the case and discussion as above it is found that the assessee has recorded such purchases in the books of account and had not effected the corresponding sales of such quantities out of the books of account Hence, an amount of Rs. 7,04,56,518/- is taken as unproved/non-genuine purchases and hence added to the total income. Penalty proceedings u/s. 271(1)(c) for filling inaccurate particulars of income in respect of the above are hereby separately initiated.”

3 ITA No.9157/Mum/2025 Pratapram G. Choudhary 4. The Ld. AR further contended that the same issue was duly adjudicated and decided by the Coordinate Bench of ITAT, Mumbai in assessee’s own case bearing ITA No.3413 and 3253/Mum/2017 date of pronouncement 01.06.2018 where the Coordinate Bench has considered the assessee’s plea and restrict the bogus purchase only in rate of profit adopted at the rate of 12.5% which was considered as most reasonable and appropriate for the assessee. 5. The Ld. DR argued and stated that the assessee had not complied before any of the revenue authorities and had not filed the evidence like sale bill, stock registers, delivery challan or transportation which the Ld. AO sought for during assessment proceeding. In the remand proceeding before the Ld. CIT(A) the assessee had not complied any of the documents. Considering the order of Hon'ble Bombay High Court in the case of CIT vs. Kanak Impex India Ltd. reported in (2025) 172 taxmann.com 283(Bom) he prayed to uphold the impugned appellate order. 6. The Ld. DR argued and invited our attention in impugned appellate order para no.5.3.2 to 6 which is reported as below: “5.3.2 In this instant case also, the assessee is involved in trading of ferrous and non-ferrous metals and could not furnish evidences ie stock register. accounts, delivery challans, lorry receipts, transportation details as sought by the assessing officer during the assessment proceedings. The appellant could not provide the evidences during the current appellate proceedings as well and failed to prove the genuineness of the purchase transactions. It can be seen that facts of the instant case are similar to the above mentioned case of Principal Commissioner of Income Tax Vs Kanak Impex (India) Limited. 5.3.3 Moreover, the additional evidences furnished by the appellant at the current stage were communicated to the Assessing Officer and a remand report was sought in this regard. The Assessing Officer vide its letter dated 26.09.2024 & 23.07.2025 submitted its remand report and stated that opportunities to provide explanation or evidence were granted to the appellant but the appellant did not avail the said opportunity. Reminder was issued to the appellant on

4 ITA No.9157/Mum/2025 Pratapram G. Choudhary 26.09.2025 to furnish rejoinder in respect of remand report furnished by the AO. However, till date, the appellant has not furnished any reply. 5.3.4 It can be seen that the appellant was not able to prove its claim at the time of original assessment proceedings and again chose not to utilize the opportunities granted to him during remand proceedings to provide corroborative evidence in support of its claims. The non- compliant nature of appellant reflects that either the appellant has nothing to offer as evidence in support of its claim of purchases being genuine or it does not want to furnish the evidences at the remand stage to protect the falsity of its claims. 6. From the above, it is amply clear that the appellant has failed to furnish any material evidences or documents in support of its claim of impugned purchases of Rs.7,04,56,518/- being genuine. In view of the discussion above and decision of Hon'ble Jurisdictional High Court of Bombay in the case of Kanak Impex (India) Limited, I sustain the addition made by the Assessing Officer for full amount of Rs.7,04,56,518/- on account of bogus purchases and do not find any merit in the grounds of appeal.” 7. We heard the rival submissions and perused the material available on record. The assessment in the present case was reopened on the allegation that the assessee was a beneficiary of bogus purchase transactions from hawala entities. The Ld. AO treated the purchases amounting to Rs.7,04,56,518/- as non- genuine and consequently made an addition of 100% of such purchases to the total income of the assessee. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), while adjudicating the appeal, observed that the assessee had failed to furnish relevant supporting documents such as stock registers, purchase bills, transportation documents, and other evidences before the Ld. AO during the course of assessment proceedings. It was further observed that even during the remand proceedings, the assessee failed to comply with the directions of the Assessing Officer by not producing the requisite documentary evidence. Accordingly, relying upon the judgment of the Hon’ble Bombay High Court in the case of Kanak Impex India Ltd. (supra), the Ld. CIT(A) upheld the

5 ITA No.9157/Mum/2025 Pratapram G. Choudhary addition of 100% of the alleged bogus purchases and confirmed the impugned assessment order. On perusal of the assessment order, we find that the Ld. AO himself has accepted that the assessee had carried out transactions in the grey market and that the corresponding sales were duly recorded and accepted. However, solely on the ground that the purchases were made from non-genuine parties, the entire purchase amount was added back. In our considered opinion, such observation of the Ld. AO is inherently contradictory, as sales cannot ordinarily be effected without corresponding purchases. At the same time, it is also an undisputed fact that the assessee failed to substantiate the genuineness of the purchases by producing cogent supporting evidence before the revenue authorities. Further, we note that the Coordinate Bench of the ITAT, Mumbai, in the assessee’s own case for earlier years, had sustained the addition to the extent of 12.5% of the alleged bogus purchases. Considering the totality of the facts and circumstances of the case, we deem it appropriate to set aside the impugned appellate order and restore the matter to the file of the Ld. AO for de novo verification of the alleged purchases. The assessee is directed to furnish all relevant supporting documents and evidences before the Ld. AO in support of its claim. Both the rival parties fairly agreed to the course adopted by the Bench. Accordingly, the matter is restored to the file of the Ld. AO for fresh adjudication in accordance with law. Needless to state, the assessee shall be afforded a reasonable opportunity of being heard during the set-aside assessment proceedings. The assessee is also directed to extend full cooperation and avoid seeking unnecessary adjournments so as to facilitate expeditious disposal of the proceedings.

6 ITA No.9157/Mum/2025 Pratapram G. Choudhary 8. In the result, the appeal of the assessee bearing ITA No.9157/Mum/2025 is allowed for statistical purpose. Order pronounced in the open court on 20th day of May 2026. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 20/05/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI