ITO 20(1)(1), MUMBAI, MUMBAI vs. DILIP SUKANRAJ GOWANI, MUMBAI

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ITA 2278/MUM/2026Status: HeardITAT Mumbai05 May 20266 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 upheld the order of the CIT(A), finding no fault in restricting the addition to 5% of the bogus purchases. No new facts or contrary judgments were presented by the Revenue.

What were the facts?

The Assessing Officer (AO) made an addition for bogus purchases based on information that the assessee had taken accommodation entries. The CIT(A) restricted the addition to 5% of the bogus purchases, following a previous decision in the assessee's own case.

What were the issues?

Whether the CIT(A) erred in restricting the addition for bogus purchases to 5% instead of the full amount proposed by the AO, and whether the assessee discharged the onus of proving the genuineness of purchases.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “J (SMC

Before: HON’BLE SHRI SANDEEP GOSAINHON’BLE SHRI BIJAYANANDA PURUSETH

For Appellant: Shri Dilip Gowani
For Respondent: Shri Aditya Rai, (SR. DR)
Hearing: 29.04.2026Pronounced: 05.05.2026

PER SANDEEP GOSAIN, JM: The present appeal has been filed by the Revenue challenging the impugned order dated 22.12.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the CIT (Appeal), for the Assessment Year 2011-12. The following grounds are reproduced below: Ground no. 1: Whether on the facts and in the circumstances of the case and in law the Ld. Addl JCIT Appeal has erred in restricting the addition to 5 percent of bogus purchases. Ground no. 2: Whether on the facts and in the circumstances of the case and in law the Ld. Addl JCIT Appeal has erred in not appreciating the action of the AO that the disallowance was made of Rs. 5,87,069/- on account of bogus purchase under Section 69C of the Income Tax Act, 1961. Ground no. 3: Whether on the facts and in the circumstances of the case and in law the Ld. CIT (Appeal) has erred in not appreciating that the assessee had failed to discharge the onus of proving the genuineness of the purchases with supporting documentary evidence and therefore the Assessing Officer was justified in treating the impugned purchases as unexplained expenditure under section 69C of the Income Tax Act 1961 in accordance with the legal position laid down by the Hon’ble Bombay High Court in the cases of Kanak Impex India Ltd. 2025 172 taxmann.com 283 Bombay and Drisha Impex Pvt. Ltd. 2025 173 taxmann.com 571 Bombay. Ground no. 4: Whether on the facts and in the circumstances of the case and in law the Ld. Addl JCIT Appeal has erred in restricting the disallowance to profit margin on unproven purchases without considering the position of law established by the Hon’ble Bombay High Court in the case of Drisha Impex Pvt. Ltd. that 100 percent disallowance on bogus purchases is upheld. Ground no. 5: It is prayed that the tax effect involved in this case is Rs. 84,920/- which is below the monetary limits as prescribed in the CBDT’s Circular no. 09 of 2024 dated 17.09.2024 and but the case falls in the exceptions mentioned in para 3 point 1 of the Circular no. 05 of 2024 dated 15.03.2024. 2. The Ground nos. 1 to 5 raised by the Revenue are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in restricting the additions made by AO.

Therefore, we have decided to adjudicate these grounds through the present consolidated order.

3.

We have heard the counsels for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that during the course of assessment proceedings it was the case of the Assessing Officer that as per the information received from DCIT (Investigation), Mumbai, the Assessee was found to be one of the party who had taken accommodation entries of bogus purchases without actual delivery of goods from the following suspicious parties/Hawala parties, and the details of which are mentioned here in below:

Sr. no. Name of Parties Amount in rupees

1.

Mahavir Corporation Rs. 1,92,785/-

2.

Atlas International (I) Rs. 2,00,023/-

3.

Prakash Steel India Rs. 9,04,433/-

4.

Jagdish Enterprises Rs. 10,01,112/-

5.

Suraj Steel India Rs. 51,563

6.

Master Trading Co. Rs. 5,85,596/-

7.

Newzone Multitrade Pvt. Ltd. Rs. 3,16,507/-

8.

Siddhivinayak Corporation Rs. 5,52,619/-

9.

Shree Gnesh Metal & Alloys Rs. 8,91,912/- Total Rs. 46,96,550/-

4.

Thus, after providing opportunity of hearing and seeking reply as well as documents from the Assessee it was found that the Assessee had been benefited by inflating the purchases and reducing the profit thereby evading the Income Tax payable thereon. Therefore, after evaluating the documents it was found that the Assessee had obtained bogus purchase bills from the above parties and consequently had suppressed the profit to the tune of 12.5% of non genuine purchases. Thus made additions to the total income of the Assessee.

5.

Ld. CIT(A) restricted the said additions to 5% of the bogus purchases by relying upon the decision of the coordinate bench of the ITAT in Assessee’s own case in ITA no. 3254/Mum/2017 for the A.Y. 2009-10 in case titled ITO v. Dilip Sukhraj Gowani which was decided on 08.11.2017. The operative portion of the said decision is reproduced herein below:

“We have carefully heard the rival contentions and perused relevant material on record. We are of the considered opinion that there could be no sale without purchase of material since the assessee was a trader. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The purchases were backed by invoices. At the same time, the assessee cold not produce any confirmation from the impugned suppliers and all notices sent u/s 133(6) remained un-served, which cast serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account from profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases, which Ld. CIT(A) has rightly done. However, keeping in view the overall circumstances and nature of assessee’s business, we find that the same to be on lower side and therefore, estimate the additions @ 5% of alleged bogus purchases of Rs. 2,71,71,538/- which comes to Rs. 13,58,577/-. The Ld. AO is directed to re-compute the income of the assessee in terms of our order.”

6.

After considering the totality of the facts and circumstances as discussed by us as above and considering the facts that Ld. CIT(A) had restricted the additions by following the decision of the coordinate bench of the ITAT in the Assessee’s own case for the A.Y. 2009-10, therefore, no fault has been found in the order of Ld. CIT(A).

7.

No new facts or circumstances have been placed before us and no contrary judgments have been cited in order to controvert or rebut the findings so recorded by the Ld. CIT(A), therefore, we find no reasons to interfere into or to deviate from the orders passed by the Ld. CIT(A). Thus we dismissed these grounds raised by the Revenue and uphold the order of Ld. CIT(A).

8.

Consequently appeal filed by the Revenue stand dismissed with no order as to cost.

Order pronounced in the open court on 05.05.2026 (BIJAYANANDA PURUSETH) ACCOUNTANT MEMBER Mumbai, Dated 05/05/2026 Ankit, PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Assessee 1. प्रत्यथी / The Respondent. 2. संबंधधत आयकर आयुक्त / The CIT(A) 3. 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण,मुम्बई/ DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/BY ORDER, सत्याधपत प्रधत ////

उि/सहायक िंजीकार ( Asst.

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