ASSISTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE-4(3), MUMBAI , MUMBAI vs. ABANS COMMODITIES(I) PRIVATE LIMITED, MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the Assessing Officer's addition on account of ad-hoc commission was based on conjecture and lacked sufficient evidence. The Tribunal affirmed the CIT(A)'s deletion of such additions, following its own prior decisions.
What were the facts?
The Revenue appealed against the CIT(A)'s decision to delete disallowances made by the Assessing Officer on purchases from non-genuine entities. The Assessing Officer had treated a portion of these purchases as commission for accommodation entries.
What were the issues?
Whether the disallowance of purchases from non-genuine entities, treated as commission for accommodation entries, was justified. Whether the CIT(A) erred in deleting such disallowances without proper consideration of evidence.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Heard together (10 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER BENCH;
These group of five appeals by the Revenue and cross objections therein
by respective assesses are directed against the separate orders of CIT(A)
all for assessment year 2019-20. In all appeals, the Revenue has raised
similar grounds of appeal except variation of figures of disallowance made
by Assessing Officer and deleted by CIT(A), the respective assesses have
also raised similar ground in their Cross Objections (C.O’s). All appeals
relates to all the same group, however, different, entity (assessee), thus,
all appeals were clubbed, heard together and are decided by common
order to avoid the conflicting decision. For appreciation of fact in ITA no.
702/Mum/2026 for AY 2019-20 is treating as lead case. The Revenue has
raised following ground of appeal:
"Whether, on the facts and in the circumstances of the case, the Ld. CIT A erred in deciding the disallowances of Rs.59,75,332/- 1.e., 0.25% of total purchase amounting to Rs.2,39,01,33,000/- from non-genuine entities appearing in the assessee's books of accounts which is equivalent to the commission or services charges prevailing in the market for providing such accommodation entries.
"Whether the Ld. CIT A erred in law and in facts in not considering the binding precedent laid down by the Hon'ble Bombay High Court in the case of CIT v. Alag Securities Pvt. Ltd. (ITA No. 1512 of 2017, dated 12.06.2020), wherein it was held that commission paid to an entry provider at the rate of 0.15% was a plausible estimate, and consequently, whether the ITAT erred in not sustaining
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
the estimation of commission expenditure at 0.25% in view of the appellant's involvement in non-genuine transactions?"
Whether the Ld. CIT A has erred in ignoring the judicial dictum laid down in McDowell and Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)], where it was held that colorable devices cannot form part of legitimate tax planning and such arrangements must be looked through for what they are - dubious methods to avoid tax liability?
Whether the Ld. CIT A has erred in ignoring the judicial dictum laid down in McDowell and Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)], where it was heid that colorable devices cannot form part of legitimate tax planning and such arrangements must be looked through for what they are dubious methods to avoid tax liability?
Whether the Ld. CIT A has erred in law in disregarding the incriminating statement of Shri Arun Shah, Director of M/s Aryav Securities Pvt. Ltd., recorded under section 131(1A), admitting to facilitating accommodation entries through circular trading, thereby reinforcing the non-genuineness of transactions undertaken by the assessee.
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer by ignoring overwhelming material evidence on record demonstrating that the alleged shareholders and directors lacked financial capacity, creditworthiness, and genuineness, thereby implying the transactions as non-genuine and mere accommodation entries as also found during the course of search?
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in disregarding the detailed field enquiries, third-party verifications, and on-spot inspections conducted by the Assessing Officer, which conclusively established that the directors/shareholders were persons of little means, non-filers or marginal filers of returns, had no commensurate financial strength, negligible employees, non-functional or dilapidated business premises, and were incapable of carrying on business involving such substantial turnover?
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the cumulative findings of the Assessing Officer, including lack of awareness of directors regarding core business activities, trading transactions, bank accounts, investments, and counterparties, clearly established that the impugned transactions were not genuine but accommodation entries, and that the ld. CIT(A) erred in isolating individual facts instead of examining the issue holistically, contrary to settled judicial principles?
On receipt of notice and memorandum of appeal of Revenue, the
assessee filed its Cross Objection raising following grounds:
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
Whether, in the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) ("CIT(A)") was justified in not recording any findings on Ground Nos. 1 and 2 which were raised by the Respondent?
Whether, in the facts and circumstances of the case and in law, the Ld. AO erred in reopening the assessment of the Respondent under Section 147 of the Act?
Whether, in the facts and circumstances of the case and in law, the Ld. AO was justified in issuing the notice under section 148 of the Act in violation of the e- Assessment of Income Escaping Assessment Scheme 2022 wherein issuance of notice under section 148 of the Act and the completion of the assessment under section 147 of the Act was to be done in a faceless manner, as it stood at the time of issuance of the reopening notice?
Whether, in the facts and circumstances of the case and in law, the Ld. AO was was justified just in initiating re-assessment proceedings under Section 147 of the Act based on information which was received almost three years prior to the issuance of the notice under Section 148 of the Act?
Whether, in the facts and circumstances of the case and in law, the Ld. AO was justified in initiating re-assessment proceedings under Section 147 of the Act without providing to the Respondent a copy of a valid sanction obtained under Section 151 of the Act, complete in all respects including DIN?
Whether, in the facts and circumstances of the case and in law, the appeal filed by the Appellant-Department is liable to be dismissed on the ground of being below the monetary limits specified under Circular No. 09/2024 dated 17.09.2024 issued by the CBDT?
Rival submissions of both the parties have been heard and record
perused. The ld. Authorized Representative (AR) submits that grounds of
appeal raised by the Revenue is covered in Assesses group cases or in
their own cases by the order of Tribunal in Assessment Year (AY) 2018-19
or 2020-21. The ld. CIT(A) while allowing relief to the assessee has
followed the order of Tribunal dated 30.09.2024 in the following ITAs:
Sr. ITA Number Assessment Party Name No. Year 1. ITA No. 3315/Mum/2024 2014-15 Abans Commodities(I) Pvt. Ltd. v. 2. ITA No. 3443/Mum/2024 2015-16 Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 3. ITA No. 3444/Mum/2024 2016-17 4. ITA No. 3445/Mum/2024 2020-21 5. ITA No. 3446/Mum/2024 2018-19 6. ITA No. 3516/Mum/2024 2018-19 Abans Jewels Ltd. v. Assistant 7. ITA No. 3317/Mum/2024 2020-21 Commissioner of Income Tax, Central Circle 4(3), Mumbai 8. ITA No. 3318/Mum/2024 2021-22 9. ITA No. 3666/Mum/2024 2013-14 to Abans Securities Pvt. Ltd. v.
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
to ITA No. 2015-16 Assistant Commissioner of Income 3668/Mum/2024 Tax, Central Circle-4(3), Mumbai 10. ITA No. 3669/Mum/2024 2018-19 11. ITA No. 3670/Mum/2024 2020-21 12. ITA No. 3499/Mum/2024 2020-21 Abans Enterprises Ltd. v. Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 13. ITA No. 3437/Mum/2024 2014-15 Abans Broking Services Pvt. Ltd. v. 14. ITA No. 3438/Mum/2024 2018-19 Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 15. ITA No. 3439/Mum/2024 2020-21 16. ITA No. 3520/Mum/2024 2020-21 Abans Metals Pvt. Ltd. v. Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 17. ITA No. 3664/Mum/2024 2018-19 Abans Fintrade Pvt. Ltd. v. 18. ITA No. 3665/Mum/2024 2020-21 Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 19. ITA No. 3521/Mum/2024 2013-14 Abhishek Pradeepkumar Bansal v. 20. ITA No. 3522/Mum/2024 2015-16 Assistant Commissioner of Income Tax, Central Circle-4(3), Mumbai 21. ITA No. 3523/Mum/2024 2018-19
The ld AR of the assessee further submits that Assessing Officer while
passing the Assessment Year made addition at the rate of 0.25% of
purchases/sales as unaccounted commission. However, the ld. CIT(A) by
following the decision of Tribunal deleted the entire addition. The ld. AR of
the assessee filed the copy of the decision of Tribunal dated 30.09.2024.
On going through copy of decision of Tribunal, the ld. Senior Departmental
representative (Sr DR) for the revenue submits that he is strongly relied
upon the decision of Assessing Officer.
We have considered the rival submissions of the parties and have gone
through the orders of lead authorities carefully. We find that while passing
assessment order, the Assessing Officer, the Assessing Officer noted that
survey action was carried out on assessee group on 03.12.2019. As per
enquiry report the assessee group were indulging in providing
accommodation entries to various beneficiaries. The assessee has shown
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
purchases from three entities aggregating of Rs. 239.01 crores. The
Assessing Officer made additions of commission income at the rate of
0.25% by taking view that transaction made by assessee during the year
are not genuine business activities and the transaction recorded in the
books of accounts do not reflect the true picture of assessee. It was held
that as per market practice the commission rate for obtaining entries is
around 0.25% of the entry provided. The Assessing Officer disallowed
0.25% of total purchases from non-genuine entities and worked out
disallowance of Rs. 59,75,332/- (0.25% of Rs. 239.01 crore. The ld.
CIT(A) allowed relief to the assessee by following the decision of Tribunal
in assessee’s group case, which is relied by ld. AR of the assessee. We find
that coordinate bench of Tribunal in assesses group case for AY 2014-15,
2015-16, 2016-17, 2018-19 and 2020-21 dated 30.09.2024 passed in
various ITA(s) recorded in para-3 (supra). We find that the coordinate
bench of Tribunal on similar grounds of appeal in batch of aforesaid
appeals passed the following order:
“13. We have heard both the parties at length and also perused various materials referred to before us and the relevant finding given in the impugned orders. From the perusal of the assessment order, it is seen that 1d. AO has solely relied upon the report of Investigation Wing known as 'project falcon'. He has not carried out any independent enquiry or any investigation, whether the assessee had entered into any such transaction and has ignored all the evidence placed before the AO in support of all the trade transactions. One very important fact which has been brought on record by the ld. Counsel for the assessee that assessee had done many trades during the year in currency derivatives and commodity derivatives, out of which only couple of trades have been selected by the Id. AO holding it to be non-genuine only because in such trades assessee has incurred loss and under same trade where assessee has shown profit has been accepted. As submitted by the Id. Counsel, assessee is engaged in screen based electronic trading wherein it is not possible to chose or even know the counter party involved in any trade and the identities of the counter parties are not displayed on the screen at the time of the trading. Unlike in the case of stock market that the SEBI has
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
circuit breakers limits (10%, 15% and 20%), however, no such limits are there in derivative markets and therefore, derivative markets are more volatile than the traditional stock market. Further, assessee had produced all the relevant information in respect of all the trades carried out in the united stock exchange to prove the genuineness of the transaction, however, Id. AO has even failed to take note of such contract notes. Further, assessee had submitted that since the trade was executed through sister concern M/s. Abans Securities Pvt. Ltd., there was no question of paying the commission to its own entity. Further, Id. Counsel submitted that there was an action u/s.133A in the office premises of group companies on 03/09/2019. However, in the comprehensive survey action not a single evidence relating to any manipulation of his alleged trades or unaccounted cash commission, the payments were found in the course of such actions.
On the other hand, Id. DR strongly relied upon the order of the ld. AO submitted that there was a specific report that they were manipulating reversal trading by the parties to book fictitious and non-genuine losses and few of the trades of the assessee were also highlighted by the AO and accordingly, the order of the ld. AO should be sustained.
From the perusal of the assessment order it is seen that, the entire basis of the Id. AO is based on 'Project Falcon' report passed on by the Investigation wing which admittedly pertains to stock option trading carried out on the Bombay Stock Exchange, which has no connection with the assessee as assessee trading was in currency options in United Stock Exchange and it has carried out various opportunities in which assessee had shown profit. All those trades in which assessee disclosed profit has not been disturbed or adversely viewed except for few transactions of losses. For instance in A.Y.2014-15 there were 11 trades in United Exchange segment, some in futures and some in options, out of which only two trades of currency options have been alleged by the Id. AO. Similarly, in A.Y.2015-16, the alleged trades in question which were executed in April 2014. The assessee had declared trading profit of Rs.6,72,64,310/- in A.Y.2014-15 and the alleged non-genuine loss which has been picked up by the Id. AO is only Rs.7,20,400/-. Similarly, in A.Y.2015-16 assessee had declared trading profit of Rs.2,50,52,106/- and alleged non-genuine trading loss is of Rs.12,47,500/-. Over and above assessee had declared total income of Rs.1,61,99,415/- in A.Y.2014-15 and Rs 1,84,72,074/- in A.Y.2015-16. Thus, on these facts it cannot be inferred that assessee was engaged in booking of loss through dubious devise only for two transactions when all the transaction were done in same manner in currency options have been held to be genuine. Ld. AO should have at least analysed all the transactions and how come only two transactions are fictitious and rest all the other transactions conducted in which assessee had declared profit from the same stock exchange conducted in the same manner are genuine and only two transactions in which assessee had incurred minor loss are non-genuine. This shows that AO has just misinterpreted the Report to apply in assessee's case without independent analyzing the transactions. At least Id. AO should have conducted some enquiry qua these transactions on which assessee had claimed loss instead of blindly relying upon the Project Falcon' report which has nothing to do with trades in USE. Once the transactions are based on screen based electronic trading and the identities of the buyers and sellers are not displayed, then to presume that the transactions have been manipulated are non-genuine cannot be upheld. Thus, prima facie, there is no material that trade transactions in which assessee had incurred losses (that is, in two transactions) is non-genuine especially when assessee had declared huge profit and income from such trade in similar transactions, which has not been doubted.
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
There has to be basis and inquiry to arrive to any conclusion that out of many transactions, few were manipulated to show fictitious loss and were non-genuine. Accordingly, the additions on account of non-genuine loss and illiquid options are deleted.
Now coming to the notional addition of commission u/s.69C for non-genuine losses, it is seen that same is based on statement of Shri Arun Shah of M/s. Aryav Securities allegedly recorded in the course of 'Porject Falcom'. However, nowhere in such statement there is any reference of the trade carried out by the assessee or involvement of the assessee. Further, if such statement was to be relied, then law provides that same should have been confronted with the assessee to rebut or cross examine. Ultimately, the addition has been sustained by applying adhoc commission rate of 2% which has been scaled down to 0.25% by the ld. CIT(A) that assessee might have incurred such expenditure in cash. There is no evidence brought on record that assessee had actually paid such expenses outside the books and the entire addition is based on conjecture. In any case we have already held that the transactions in which assessee has incurred loss are genuine, therefore, there is no question of imputing any kind of adhoc commission. Accordingly, addition of Rs.4,718/- in A.Y.2014-15 and addition of Rs.4,881/-in A.Y.2015- 16 is deleted.
Accordingly, appeal for the A.Y.2014-15 is allowed.
Coming to the appeal for the A.Y.2015-16, in so far as the issue relating to non- genuine loss in illiquid options and commission of such non-genuine trading, we have already deleted addition after detail discussion in appeal for A.Y.2014-15. Accordingly, these two additions are deleted.
The other issue which has been raised in A.Y. 2015-16 which is also therein A.Ys. 2016-17, 2017-18 and 2020-21 relates to purchases made from entities which were held to be non-genuine and addition had been made on adhoc percentage of commission on such purchases. The Id. AO noted that the survey u/s.133A was conducted of Abans group on 03/12/2019 and it was found that there were certain entities from whom purchases have been made were found to be non-genuine parties. The list of such six entities from which assessee had made purchases were as under:-
Name of Entity Amount (Rs.)
Aavim Trading Services Private Limited 28,98,700/-
Mavaiya Marketing Pvt. Ltd. 22,24,37,313/-
Manmish Ventures Private Limited 4,55,97,900/-
Yogdarshan Commercial Trading Pvt. Ltd. 20,17,06,000/-
Trishna Trading Services Private Limited 1,72,95,000/-
LM Tradecom Pvt. Ltd. 6,44,31,280/-
Total 55,43,66,19/-
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
The ld. AO for all the six entities has held that the source of the funds/capital is less when compared to the turnovers; email has been handled by Abans group; ITRs filed from the premises of Abans group from same IP address; shareholders are not men means there was no response received to the summons issued to the Directors; books of accounts were found in the data recovered from the premises. In some other cases, he has alleged that company does not have any employees or negligible number of employees and summons were issued to the Directors and in some of the cases enquiry was conducted and the Inspector reported that there was no business activity happening at this premises and statement of shareholders and Directors were reported and they were not aware of most of the times. Based on this analysis, the Id. AO stated that these purchases were not genuine and accordingly, he disallowed 0.25% as alleged commission on total purchases from the above mentioned non-genuine entities which worked out to Rs. 13,85,915/-. The Id. CIT
(A) too has confirmed the said addition holding that Id. AO has pointed out various discrepancies in his orders and also the financials and pointed out that most of these entities have a very poor financials and low profit margin.
Before us, Id. Counsel submitted that the assessee had given detailed explanation for each and every entity which has been though incorporated in the order of ld. CIT(A) but has not been dealt with. In a summarized manner, the assessee has given its rebuttal on the various allegations made by the Id. AO which are as under:-
Sr. No. Allegations made by the Assessee’s Rebuttal/Submissions AO Common Allegations for all six entities A. Source of funds/Capital is The assessing officer has compared turnover with less compared to the share capital as the only source of funds. However 1. turnover trading does not require only large own capital. Based on the information received from the supplier, the source of funds can be traced to inter taken loans corporate from various business associates purely for working capital requirements. Further, in trading businesses, there is по requirement of high source of funds. In any event, the profit is commensurate to the funds invested. Email was being handled No evidence that email was actually being handled by Abans group by Abans group. The AO has not brought on record 2. any evidence to support the basis on which this allegation is made. He has not mentioned who was operating such email nor provided evidence for the same. E mail by its very nature can be operated from anywhere. It is vehemently contended that the email and ITR of the company was not operated from the office of Abaris Group. ITRs filed from premises of This is factually incorrect. Based on the information Abans group from IP received from IP the six suppliers, the ITR has not 3. address 103.207.9.67. been filed from IP mentioned in the order but from some other IP address. The assessing officer has not indicated the location where the IP address was found nor has he provided any evidence to prove that. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act.
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
The shareholders are not The shareholders have regularly filed their returns men of means of income. There returns of income are sufficient to 4. make the investment in share capital. In any event, this by itself does not render the transactions as non-genuine. No. Response received to Summons were COVID-19 issued on to 09.09.2020, the summons issued to the i.e., during peak lockdown. The Directors had 5. Directors actually responded stating inability to attend due to lockdown, however, the same is completely ignored. The assessing officer has merely reproduced the investigation report prepared during COVID, but failed to verify and conduct any investigation during assessment proceedings. It is noteworthy, that all the directors were available at the premises verified and that the assessing officer had the powers to compel attendance and duty to verify the same in assessment proceedings, but failed to do so Books of accounts were The assessing officer did not provide the evidence found in data recovered in support of this allegation. He did not even 6. from premises provide the details of content of data, the period to which it pertained, the location where was found. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act. Specific Allegations for Mavaiya B. The company does not Based on the information provided by the supplier, have any employees or there was considerable amount of employee benefit 1. negligible number of expenses such as Rs. 23.79 lakhs for AY 2015-16, employees Rs. 66 lakhs for AY 2018-19. Specific Allegations for Yogdarshan D. Inquiry was conducted in Based on the information provided by the supplier, this case at the address of the inquiry was conducted during peak Covid period 1. the registered office. The at Mumbai premise, whereas the transactions are Inspector reported that done from premises situated in Gujarat. there was no business Interestingly, the Inspectors report in all cases is activity happening at this identical. It says that the office is small, is premises. dilapidated and is closed. It further says it is unused for a long time. It further refers to enquiries from staff of another premise, but fails to even mention the name of such office or any staff. This clearly shows it to be a prejudiced report. The statements of AO has not shared the statement. The complete Shareholders & Directors inferences drawn are not supported by the extracts 2. were recorded. They were reproduced in the assessment order. The directors not aware of most of the had given details brokers, sales, purchase parties, things. transport etc., therefore the above observation is not correct. Extracts show that they had asked for time to provide details. They did inform that stocks are maintained in Gujarat. No details of accounting details found was provided to the directors. Nor are copy of such documents shared assessment proceedings. The assessing officer conducted no verification during assessment proceedings. No opportunity of cross examination was provided. Books of accounts were The assessing officer did not provide the evidence found in data recovered in support of this allegation. He did not even 3. from premises provide the details of content of data, the location where was found. It is alleged that some data of some earlier years, not current, was found. In the absence of specific details and sharing of actual
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
data, it cannot be commented upon. Further, there is no indication of compliance with the requirements of Section 65B of the Indian Evidence Act. Alleged allegations for Aavim E. Office was closed and no The inspectors report mentions the office was operations were carried closed. Yet, he states that the office is very small 1. out. and is not used for long time, when he could not have seen that. This indicates biased reporting. Director did not attend Inspector report makes sweeping comment that summons looking at size of residence, director Brijesh Mehta 2. is not men of means. He has attached only a picture of door of the Flat. In Mumbai, size of residence is not an indicator to judge means. Merely on the basis of address at Rajasthan, it is concluded that Daksh Soni, a director is not men means. sought of Further, the director adjournment to another date, but no fresh date was given by the investigation wing during COVID. AO also did not seeks his attendance in assessment proceedings. Alleged allegations for Trishna F. Based on returns filed and The income shown in return does not prove the addresses of directors, it is allegation made by the investigation wing. It is 1. concluded that they are prejudged inference irrespective of evidence. not men for means. The shareholder does not With a share capital of Rs. 1 lakhs, it is clear that have means to hold the the allegation levelled in the investigation wing 2. shares of the company. report is unwarranted and has been accepted without any application of mind by assessing officer. Shri Pulkit Mehta with returned incoe of about Rs. 4 lakhs is capable of making this investment. Furthe, source need not be current income alone. It is biased inference. Alleged allegations of L M Tradecom G. Directors are not men of The details of return of income narrated and their means addresses do not justify such inference. Q 1. IP address The extract of the statement reproduced in the 112.196.138.237 filing assessment order in Answer to Q22 does not 2. return of income is at mention this IP address. It is learnt that the IP Abans Group office as per address was 112.196.129.164. This shows that Q22 of statement of Shiv allegations made in the investigation report is false Shankar Singh and the assessing officer failed to verify and draw correct inferences.
All these submissions which were given before the Id. AO and ld. CIT (A) has not been considered at all. Most of these inferences have been drawn from the Investigation report and did not even verify the various allegations made in the report while assessee brought on record all the details and evidences. Ld. counsel further submitted that investigations were carried out during the peak Covid period and verifications were made in Mumbai when the operations were in Gujarat, thus, there was basic fallacy in the investigation and this fact was duly highlighted before the ld. AO and Id. CIT (A). He further submitted that there is neither evidence nor any allegation that these entities are involved in bogus sales/purchase or accommodation entry. All the transactions are supported by GST returns of the parties. Further Abans entities came up for examination by CGST Mumbai and Gujarat, but no adverse inference was drawn in relation to sales
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
and purchase transaction with said entities. It has been informed that CGST Gujarat conducted audit in case of Yogdarshan and transaction of sales and purchase were found to be in order CGST Mumbai conducted audit in the cases of Abans Broking Services Private Limited and Abans Securities Private Limited which had transactions with these very companies alleged to be non-genuine in the assessment order, but did not draw any adverse inference. There is no evidence of any underlying flow of cash was found even during the 55 extensive survey operations under section 133A carried out in December 2019. No evidence for considering rate of 0.25% as alleged commission.
Ld. Counsel further submitted that sales for the year under consideration have not been disputed and making any such kind of adhoc addition of 0.25% on such sales is uncalled for.
On the other hand, Id. DR relying upon the various facts brought on record by the ld. AO pointed out that detailed enquiry was carried out by the Investigation wing and it was found that either these parties were not existing at their address and these entities did not have any infrastructure for supplying such goods nor any credence. Accordingly, he strongly relied upon the findings and observations of the ld. AO and Id. CIT (A).
We have heard the rival submissions and also perused the material placed on record. It is seen that the Id. AO had treated The purchases from 6 entities as non-genuine and has applied profit rate of commission on such purchases @0.25%. He has accepter hat these purchases are duly recorded in the books of accounts, and has not disturbed the purchases. However, according to him as per market practice there is commission rate of obtaining such entry at @ 0.25% which needs to be added. First of all in so far as the transactions of purchases from these parties are concerned, the same had not been doubted for the reason that ultimately the Id. AO's allegation is that assessee might have earned commission on such purchases as these are non genuine parties with no credentials and on inquiry by the investigation wing various facts have emerged about their credibility. If the purchases are from the books and source of purchases are not in doubt and assessee has produced all the evidences to prove the purchases then how can on such purchases adhoc addition on account of commission can be made. Before the AO assessee has submitted following details to prove the purchases:
(i) Purchase invoices;
(ii) Warehouse receipts showing physical receipt of the goods in the warehouse;
(iii) Delivery Orders;
(iv) Bank statements demonstrating payment towards the purchases;
(v) GST returns showing receipt of the goods and availment of input tax credit on such purchases.
If these documents have not been doubted then where is the question of making adhoc addition of commission on such purchases.
Coming to the various allegations made by the AO and the rebuttal given by the assessee before the AO as well as before the CIT(A), it is seen that one of the allegations of the AO was that the source of funds in capital of these entities are less compared to the turn over. What was required to be seen is whether there was actual trading or not as trading does not require large own capital but what are the source of funds in their balance sheet. Another allegation regarding e- mail was only by the Abans group. There was nothing which has been brought on record by the ld. AO that e-mail was actually being handled by the Abans group nor he has mentioned who was
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
operating the said e-mail. Assessee had already countered that e-mail and ITR of the company was not operated from the office of the Abans group and had given detailed explanation before the ld. CIT(A) also which was not even being committed upon. In so far as ITR filed from the premises of Abans group from a particular IP address, assessee has categorically denied that it is incorrect and no such ITR has been filed from the IP mentioned in the order but from some other IP address which was provided before the ld. CIT (A). This has not been rebutted by the department when assessée brought on record that the IP address which has been mentioned by the ld. AO were different. In so far as the shareholders were not men of means, already it has been brought on record that they were filing their regular income tax returns and have shown investment of share capital from their own sources. In any case, this cannot she the ground for treating the transaction as non-genuine. 25.1 Now, coming to the summons issued to the Directors, it has been stated that the summons were issued during the peak Covid 19 lockdown period and directors had actually responded their inability to attend due to lockdown which has been ignored. If the Id. AO has simply relying upon the comments of the investigation wing and he did not ask the assessee during the course of assessment proceedings to file their confirmations and he could have independently verified once the assessee had stated that all the Directors were available at the premises and ld. AO can ask for their attendance which ld. AO had failed to do so. In so far as books of accounts found in the audit report from the premises, the assessee's contention was that neither, the Investigation Wing nor the Id. AO had provided the evidence in support of such allegation nor any details of content of date and period to which it pertain was provided or found. Thus, such ground cannot be adversely viewed. Similarly, with regard to every allegation, counter submissions as noted above has not been dealt by the ld. CIT (A) specifically when they were duly explained through various documents and facts. Once these facts were brought on record, Id. AO should have at least himself carried out any enquiry or verification rather than blindly apply and relying upon the investigation report. Thus, in view of the aforesaid submissions given by the assessee and rebuttal given against various allegations of the AO are liable to be accepted. In any case, the case of the ld. AO is that assessee might have entered commission from such purchases of 0.25% which cannot be sustained as ld. AO has applied commission of 2% and reduced to 0.25% by CIT (A) are on mere conjecture. It is not a case where the entire purchases have been added, albeit Id. AO has presumed that assessee might have earned commission on such purchases made from non-genuine parties. Accordingly, such adhoc application of commission of 0.25% is deleted.
Similar issue of application of commission of 0.25% has been applied for the A.Y.2016-17, 2018-19 and 2020-21, therefore, in view of the finding given hereinabove, such addition on account of adhoc commission are deleted. Accordingly, appeal for A.Y.2015-16, 2016-17, 2018-19 and 2020-21 are allowed.
We further find that while following the aforesaid finding in Abans
Commodities (I) Pvt. Ltd. assessee’s same order was followed in other
group of companies. We further find that ld. CIT(A) while allowing relief to
the assessee has followed the decision of Tribunal. We also find that
no further appeal is filed by Revenue against the decision of coordinate
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
bench of Tribunal. Thus, respectively following the decision of Tribunal in
assessee’s own case we do not find any illegality or infirmity in the finding
of ld. CIT(A) which we affirm. In the result grounds of appeal raised by
Revenue are dismissed.
In the result appeal of the Revenue is dismissed.
Considering the fact that we have dismissed the appeal of Revenue on
merit, therefore, adjudication of grounds raised in Cross Objection bearing
no. CO No. 119/MUM/2026 by assessee have become academic in the
result appeal of Revenue is dismissed and Cross Objection by assessee is
dismissed as infructuous.
ITA No. 704/MUM/2026, ITA No. 705/MUM/2026, ITA No. 709/MUM/2026, ITA No. 712/MUM/2026, CO No. 121/MUM/2026, CO No. 122/MUM/2026, CO No. 117/MUM/2026 and CO No. 120/MUM/2026
Since the facts and issues involved in the present appeals are identical and
materially similar to those considered and adjudicated upon in ITA No.
702/Mum/2026, the findings, observations, and conclusions recorded therein
shall apply mutatis mutandis to the present appeals as well. No distinguishing
feature in facts or law has been brought on record by either side warranting
a different view. Accordingly, following the decision rendered in ITA No.
702/Mum/2026, these appeals bearing ITA No. 704/MUM/2026, ITA No.
705/MUM/2026, ITA No. 709/MUM/2026 and ITA No. 712/MUM/2026 are also
treated as dismissed in terms indicated therein. Further CO No.
ITA No. 702,704, 705/MUM/2026, 709/MUM/2026, & 712/MUM/2026, CO No. 119,121, 122, 117 & 120/MUM/2026
121/MUM/2026, CO No. 122/MUM/2026, CO No. 117/MUM/2026 and CO No.
120/MUM/2026 become infructuous in terms indicated therein.
In the result all the appeals of Revenue are dismissed and COs filed by
assessee in all years are dismissed as infructuous.
Order was pronounced on 18/05/2026 in open Court.
Sd/- Sd/-
GIRISH AGRAWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER
MUMBAI, Dated: 18/05/2026 Ankit, P.S.
Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order
Assistant Registrar ITAT, Mumbai
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