DCIT CENTRAL CIRCLE 7(2), MUMBAI, MUMBAI vs. VISAGAR POLYTEX LIMITED, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER I.T.A. No.6134/Mum/2025 A.Y: 2015 with I.T.A. No. 6135/Mum/2025 A.Y: 2016 with I.T.A. No. 6156/Mum/2025 A.Y: 2017 with I.T.A. No. 6157/Mum/2025 A.Y: 2018 DCIT Central Circle 7(2), Vs Visagar Polytex Limited Mumbai . 907, Dev Plaza, SV Road, 653, 6th Floor, Aayakar Andheri – West, Mumbai- Bhavan, Mumbai-400020 400059 PAN – AAACB1691D (Appellant) (Respondent)

CO. No. 384/Mum/2025 (Arising out of ITA No. 6134/Mum/2025) A.Y: 2015 with CO. No. 385/Mum/2025 (Arising out of ITA No. 6135/Mum/2025) A.Y: 2016 with CO. No. 386/Mum/2025 (Arising out of ITA No. 6156/Mum/2025) A.Y: 2017 with CO. No. 387/Mum/2025 (Arising out of ITA No. 6157/Mum/2025) A.Y: 2018

Visagar Polytex Limited Visagar Polytex Limited Vs DCIT Central Circle 7(2), 907, Dev Plaza, SV Road, . Mumbai Andheri – West, Mumbai- 653, 6th Floor, Aayakar 400059 Bhavan, Mumbai-400020 PAN – AAACB1691D (Appellant) (Respondent) Assessee by Shri Kapil Hirani, Adv. (Virtually Present) Revenue by Smt. Kavita P. Kaushik Sr. Ar. Date of Hearing 11.02.2026 Date of Pronouncement 02.04.2026

ORDER PER BENCH: The present appeals have been filed by the Revenue and cross objections by the assessee challenging the impugned order dt. 30.07.2025, passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment years 2015, 2016, 2017 & 2018. 2. Since all the issues involved in these appeals and cross objections are common and identical and belongs to one assessee therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly, we shall take ITA No. 6134/Mum/2025, A.Y 2015 as lead case and facts narrated therein. The grounds raised by the Revenue are as follows: 1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in not considering the fact that the Assessing Officer treated the impugned 2

Visagar Polytex Limited purchases as bogus purchases and estimating profit at 5% to the tune of Rs. 1,32,45,098/-of purchases made from SVG Style and Textile Company Pvt. Ltd? 2. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 1,32,45,098/-in respect of bogus purchases made from SVG Style and Textile Company Pvt. Ltd? 4. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in deletion the addition made by the AO of Rs. 1,32,45,098/- and restricting the same to Rs. 4,54,533/- in respect of bogus purchase made from SVG Style and Textile Company Put. Ltd? 5. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law by disregarding the fact that the purchase transactions in question were part of a scam, as the purchases were made from SVG Style and Textile Company Pvt. Ltd controlled by Gopal Bhattar, in light of the information provided by the DDIT(Inv.), Unit-4(3), Mumbai and the inquires conducted therein?

Visagar Polytex Limited engaged in providing bogus bills/accommodation entries to various beneficiaries, and that there was no actual movement of goods in respect of sales and purchases. Therefore, after calling for an explanation from the assessee and after providing an opportunity of hearing to both parties, the AO concluded and estimated the profit on the unverifiable purchases at 5%. Accordingly, 5% of Rs. 26,49,01,969, i.e., Rs. 1,32,45,098, was added back to the income of the assessee. 5. Aggrieved by this order, the assessee preferred an appeal before the Ld. CIT(A), and the Ld. CIT(A) restricted the said addition to 0.15% of the total bogus sales, thereby partly allowing the appeal of the assessee. 6. After meticulously going through the facts of the case and evaluating the documents placed on record, we noticed that it is an undisputed fact that Gopal Bhattar was the director of M/s SVG Style and Textile Pvt. Ltd., and in his statement recorded under Section 131 of the Act, he categorically admitted that the said company was not carrying on any actual business and was engaged in providing bogus bills/accommodation entries to various beneficiaries. He further submitted that there were no details of transportation, delivery challans, driver details, or other supporting evidence in respect of purchases and sales shown by the entities controlled and managed by him, including M/s SVG Style and Textile Pvt. Ltd. 7. It is also important to mention that in his statement, Gopal Bhattar categorically admitted that the assessee company, i.e., Visagar Polytex, was one of the beneficiaries to whom bogus bills

Visagar Polytex Limited had been issued by entities controlled by him. On the contrary, the Ld. AR submitted that the assessee had made genuine purchases from M/s SVG Style and Textile Pvt. Ltd. and other companies controlled by Gopal Bhattar. However, the assessee failed to produce the required documents regarding the actual movement of goods, such as transportation details, delivery challans, driver details, and other supporting evidence. Even the statement of Gopal Bhattar was not rebutted at any stage by the assessee. 8. What is important to consider is that a genuine transaction must be proved to be genuine in all respects, and the initial onus lies on the assessee to prove that the transactions entered into were genuine and not premeditated arrangements to evade taxes. In the present case, the assessee has completely failed to discharge this onus. Reliance in this regard has been placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More (1972) 82 ITR 540, wherein it has been held: "It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the

Visagar Polytex Limited documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. 9. Thus, by relying upon the above principle, we are of the considered view that the burden was on the assessee to establish that the purchases made from the aforesaid entities were genuine. However, such a burden has not been discharged with cogent and convincing evidence. No serious efforts were made by the assessee to discharge this burden. 10. Considering the totality of the facts and circumstances, it is clearly established that there was no physical delivery of goods in respect of purchase transactions from the entities controlled and managed by Gopal Bhattar. However, the Ld. CIT(A), without disputing the factual and legal position, restricted the addition to 0.15% of the total bogus sales by holding that the assessee had inflated both purchases and sales and booked profit on such transactions. The Ld. CIT(A) further observed that the issue before him was whether the rate of profit adopted by the assessee was reasonable. 11. In our view, the basis adopted by the Ld. CIT(A) is contrary to the provisions of law. This is not merely a case of inflated purchases and sales but a case of entirely bogus transactions from inception. In such circumstances, no leniency can be extended to parties indulging in such activities, and being a judicial authority, we cannot approve such bogus transactions. Moreover, no reasonable basis has been recorded by the Ld. CIT(A) for reducing the addition from 5% to 0.15%.

Visagar Polytex Limited 12. Accordingly, we set aside the order of the Ld. CIT(A) and restore the order of the AO. Thus grounds raised by the Revenue are allowed.

CO. No. 384/Mum/2025 (Arising out of ITA No. 6134/Mum/2025) A.Y: 2015

The grounds raised by the assessee are as follows:

Visagar Polytex Limited corresponding sales to the extent of Rs. 30,30,22,156 to also be bogus and further erred in sustaining the addition made by the AO to the extent of profit embedded in the said alleged sales and restricting the addition to 0.15% of alleged bogus sales of Rs. 30,30,22,156. The finding of the CIT(A) of treating purchases to the extent of Rs. 26,49,01,969 to be unverified, bogus and non-genuine and in the nature of accommodation entries and also the finding that the corresponding sales of Rs. 30,30,22,156 to also be bogus is illegal and untenable in law and consequently the addition sustained relying on the same by CIT(A) is also illegal and which deserves to be deleted as per law. 7. On the facts and circumstances of the case and in law, the AO and CIT(A) grossly erred in treating the purchases made by the Respondent amounting to Rs. 26,49,01,969 to be unverified, bogus and non-genuine and in the nature of accommodation entries and the CIT(A) grossly erred in holding the corresponding sales of Rs. 30,30,22,156 to also be bogus ignoring the evidence filed and the submissions of the Respondent and the legal proposition on the same and proceeded to make the addition on mere assumptions, presumptions, surmises and conjectures, without giving opportunity of cross examination, which makes the additions illegal, bad in law, violative of the principles of natural justice and liable to be deleted as per law and in the interest of justice. 8. On the facts and circumstances of the case and in law, the entire purchases allegedly held to be unverified, bogus and non-genuine and in the nature of accommodation entries as well as corresponding sales being duly supported by third party evidences, the addition made by the AO to the extent sustained by CIT(A) without objectively and subjectively disproving the evidences so filed, and solely on the basis of information as shared with the AO, makes the addition grossly illegal and liable to be deleted as per law and in the interest of justice. 9. On the facts and circumstances of the case and in law the entire purchases and sales made by the Respondent are genuine and verified and which deserves to be accepted as such. 10. On the facts and circumstances of the case and in law the purchases allegedly held to be unverified, bogus and non-genuine and in the nature of accommodation entries having been correspondingly sold at a profit and which is duly offered to taxation, no separate addition is warranted in law and the addition as sustained by the CIT(A) deserves to be deleted in the interest of justice. 11. Without prejudice, in case it is held that any transactions undertaken by the Respondent are not genuine, then the insome estimated and sustained by the CIT(A) is highly excessive and which deserves to be substantially reduced in the interest of justice. 12. On the facts and circumstances of the case and in law, the AO grossly erred in making and the CIT(A) grossly erred in sustaining the addition of Rs. 22,032 which is illegal and which deserves to be deleted as per law.

Visagar Polytex Limited 13. The Respondent craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of cross objection with the kind permission of the Hon'ble Tribunal.

Visagar Polytex Limited the material relied upon by the AO and the reasons recorded for reopening the assessment of the assessee. 15. We are also of the view that, for the reopening of the assessment, what is required under the law is that there should be some material on the basis of which the AO could form a belief that income chargeable to tax has escaped assessment. The statement of Gopal Bhattar carries a presumption of correctness, as it was recorded during the discharge of official duties by the officials of the Department. Thus, in that eventuality, if the assessee wanted to uproot that presumption, it was the onus of the assessee to prove otherwise; however, the assessee has failed to disprove the presumption attributed to the statement of Gopal Bhattar. 16. Therefore, considering the entirety of the facts and circumstances, we are of the view that the information on the basis of which proceedings under Section 148 of the Act were initiated, and the contents of the statement which were also made known to the assessee, were sufficient to initiate the reopening. Thereafter, when the assessee failed to rebut the presumption, the reassessment proceedings were validly initiated. 17. Apart from this, no other grounds raised before us were raised by the assessee before the First Appellate Authority, and no application for taking additional grounds has been placed on record before us. Apart from this, the assessee has not addressed any arguments or filed any submissions with regard to the other legal grounds raised before us for the first time in the cross-

Visagar Polytex Limited objections. Therefore, in the absence of any submissions, these grounds raised by the assessee stand rejected. Accordingly, Ground Nos. 1 to 4 raised by the assessee stand dismissed. 18. In view of our discussion, the other grounds raised by the assessee becomes infructuous and therefore does not require adjudication. 19. In the net result appeal filed by the Revenue is allowed and cross objection filed by the assessee stands dismissed. 20. As the facts and circumstances in the connected matters i.e. I.T.A. No. 6135/Mum/2025 A.Y: 2016; I.T.A. No. 6156/Mum/2025 A.Y: 2017; I.T.A. No. 6157/Mum/2025 A.Y: 2018; CO. No. 385/Mum/2025; CO. No. 386/Mum/2025 and CO. No. 387/Mum/2025 are identical to ITA No. 6134/Mum/2025 for the A.Y 2015 and CO No. 384/M/2025 (except variance in days of delay) and therefore, the decision rendered in above paragraphs would apply mutatis mutandis for connected appeals also. Accordingly, the grounds of appeal of the raised by the Revenue stands allowed and the grounds of appeal raised by the assessee stands dismissed.

Order pronounced in the open court on 02/04/2026

Sd/- Sd/-

(BIJAYANANDA PRUSETH) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Visagar Polytex Limited

Mumbai: Dated: 02/04/2026 RY, Sr. PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order

(Asstt.Registrar) ITAT, Mumbai