BHAVESH MULJI KATIRA ,MUMBAI vs. ASST. CIT CIRCLE 41(2)(1), MUMBAI

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 26.09.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 147 r.w.s 144 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 18.03.2024 for the Assessment Year [A.Y.] 2019-20.

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira 2. The grounds of appeal are as under: “1. 1. Validity of Reassessment 1.1 On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals)-NFAC, hereinafter referred to as the "CIT (A)", has erred in confirming the validity of reassessment made in the case of the appellant 1.2 The appellant respectfully submits that the reassessment made in his case is not justified considering the following facts:  The reassessment had been initiated on incorrect facts and therefore the formation of belief itself is invalid.  The reassessment had been initiated merely on the basis of borrowed satisfaction from Investigation wing and the assessing officer has not applied his mind before initiation of the proceedings.  The reassessment had been initiated by the Jurisdictional Assessing Officer in violation of the provisions of section 151A of the Act and the notifications issued thereunder. As such, the initiation of reassessment is without jurisdiction. 1.3 The appellant, therefore, prays that the impugned reassessment may please be treated as invalid and the same may please be quashed. 2 Confirming addition of Rs. 7,54,622/- on account of alleged commission and applying provisions of section 69A in respect of the same 2.1 Without prejudice to Ground 1 above, the CIT(A) has erred in confirming the addition of Rs. 7,54,622/- as made by the assessment unit on account of alleged commission income of the appellant and applying the provisions of section 69A in respect of the same. 2.2 The appellant respectfully submits that the impugned addition has been made merely on the basis of conjectures, surmises and suspicions and the same is not supported by any evidence whatsoever. 2.3 The appellant further submits that the addition made is contrary to the finding by own finding of the assessment unit that the appellant did not have any transaction with the person surveyed. 2.4 The appellant also submits that the impugned addition is in violation of the principles of natural justice and without providing the material to the appellant and hence the same is not valid for this reason also. 2.5 Without prejudice to the above contentions, the appellant respectfully submits that in any case the provisions of section 69A of the Act cannot be applied on the facts of the case. The assessment unit has failed to discharge its onus of proof as required u/s. 69A and therefore the application of section 69A is completely misplaced. 2.6 In view of the above, the appellant prays that the impugned addition is not permissible in law and the same deserves to be deleted. The appellant, therefore, prays that the addition of Rs. 7,54,622/- may please be deleted or any other relief as deemed fit may please be allowed to the appellant.”

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira 3. We take up first the ground no.2 relating to the addition of Rs Rs. 7,54,622/- on account of alleged commission and application if the provisions of section 69A of the Act in respect of the same. Brief facts of the case are that the assessee was carrying on Brokerage Business in Pulses and Cereals in his Proprietary concern name of M/s Dalai Bhavesh Brothers during the relevant previous year. His other source of income was remuneration from partnership firm and investment income. For the relevant year, he filed Return declaring total income of Rs.3,25,99,910/-.He received notice u/s 148A(b) of the Act proposing issuance of notice u/s 148 in respect of being alleged beneficiary of bogus purchase of Rs. 7,54,62,221/- from one Mahavir Prasad Suresh Kumar, Proprietor, Suresh Kumar servant of Ashok Kumar Gupta. In response, he denied any such transactions of any nature with the party mentioned in the said notice. 3.1 However, the AO proceeded to issue the notice and after assignment to the Assessment Unit (AU) under Faceless Assessment Scheme u/s 144B of the Act, the AU issued notice u/s 142(1) & 143(2) from time to time requiring him to furnish details called for, to which he replied with necessary evidences and clarifications. Finally, AU after issuing show cause and taking into account the reply submitted, passed the assessment order u/s 143(3) of the Act making the impugned addition, being commission income of Rs.7,54,622/-, @ 1% of alleged, accommodation entry of purchase.

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira bogus/accommodation purchase entry of Rs.7,54,62,221/- from one Suresh Kumar Prop. M/s Mahaveer Prasad Suresh Kumar. A survey u/s 133A was carried out in the case of Shri Ashok Kumar Gupta on 30.11.2018 and statement u/s 131 on oath was taken by the DDIT(Inv.) in which he admitted that he was involved in providing accommodation entry of sales and purchase. He also admitted that there were 15 dummy partnership and proprietorship concerns in which the assessee made bogus purchase and Suresh Kumar Prop. M/s Mahaveer Prasad Suresh Kumar, the servant of Ashok Kumar Gupta was one of bogus proprietorship concern who made bogus purchase transactions with the assessee who, however, denied any transactions of any nature with Ashok Kumar Gupta or Shri Suresh Kumar. The assessee further stated that correct name of his proprietary concern was M/s Keshav Trading not M/s Keshav Trading Company. The assessee claimed that business activity of Keshav Trading was discontinued since March, 2017 and only balance sheet prepared. But considering the consolidated P&L of the Sh. Bhavesh Katira and balance sheet of M/s Keshav Trading Company, the plea of the assessee was not accepted and accordingly 148 proceedings started. The Video Conference for cross examination was allowed to the assessee .However, on the given date, only assessee attended proceedings and Ashok Gupta neither attended for VC nor filed for any adjournment. During the VC the assessee requested to provide copy of sale/purchase bills of concerned transactions alongwith bank statement. On perusal of statement of Sh. Ashok Gupta, the AO observed that it was evident that the Exhibit „B‟ impounded from the premises of Sri Sunil

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira Kumar mentioned the list of those beneficiaries who had made in genuine/bogus sales to concern maintained by Ashok Kumar Gupta or on the instruction of the said party, bogus purchase entry made by the concern of Shri Gupta to accommodate bogus sales to that beneficiary party.

4.1 The assessee vehemently opposed any such transaction and sought copy of sales bills, bank statement of Suresh Kumar under beneficiaries transactions. The assessee claimed that no sales or purchase were made in M/s Keshav Trading Company, no creditors or debtors were reflected in the said concern and also no payments were made or received from Shri Kumar in the bank accounts of the above concern, with City Union Bank and HDFC during the period. The AO observed that examination of both bank statements supported the claim of the assessee. He opined that the assessee may not have made direct sales to the concern of Shri Kumar. It was also found on perusal of ITR and financial statement for the year that there was no such turnover declared by the assessee. However, the name of the assessee was appearing in the Exhibit „B‟ at S.No.38, being the list of beneficiary who had booked sales to M/s Mahaveer Prasad Suresh Kumar and assessee was engaged in the trading of grains as well as commission agent of the same. Further, till 2016-17 books of accounts of M/s Keshav Trading Company and M/s Dalal Bhavesh Brothers had been maintained jointly and had got audited jointly as well.

4.2 Thus, on the basis of the above discussion, circumstantial evidences and statement of Shri Suresh Kumar, the AO observed that the fact emerged that the assessee had not directly taken the accommodation entry of sale but 5

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira had provided certain entities the same had earned a commission income thereupon. Further, as stated by the assessee he got commission to the range of 1 to 1.5% of the accommodation entry provided. Hence, it was concluded that the assessee had earned 1% of the accommodation entry as commission in lieu of making arrangement to provide accommodation entry of sale or purchase through the concern managed and controlled by Shri Sunil Kumar to the intended beneficiary parties. Accordingly, the reply of the assessee was rejected and 1% of Rs.7,54,62,221/- being Rs.7,54,622/-, was considered as suppressed commission of the assessee which was added to the total income of the assessee u/s 69A of the Act.

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira 5.1 The ld.CIT(A) reiterated the observations and findings of the AO that, “...on the basis of the above discussion, circumstantial evidence and submissions of the appellant assessee, the fact emerge on surface that the assessee has not directly taken the accommodation entry of sale but has provided certain entities the same has earned a commission income thereupon.....”.He was of the view that, the AO had taken a very fair and balanced approach while making the said addition and had taken a lenient view as he added only 1% of the said total bogus purchase for Rs. 7,54,62,221/- in this case i.e. Rs.7,54,622/-. Consequently, the addition made was upheld.

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira 8. We have carefully considered all the relevant facts of the case, heard rival submissions and perused the record and find sufficient force in the contentions of the ld.AR. It is quite evident that apart from alleging unaccounted accommodation entry of purchase based on the statement of Sri Sunil Kumar, there is no corroborative evidence brought on record to disprove the contentions of the assessee. Even the materials relied upon for drawing adverse inference were not supplied to the assessee despite specific request. No cross examination could take place due to absence of Sri Sunil Kumar. No fresh efforts were made by the AO either in this respect. The addition made by applying rate of 1% of alleged purchase is devoid of any merit. Accordingly, we set aside the appellate order and direct the AO to delete the addition made, thus allowing the above grounds of appeal

Order pronounced in the open court on 18/06/2026.

Sd/- Sd/- SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 18.06.2026 Lubhna Shaikh / Steno

ITA No. 7671/Mum/2025 A.Y. 2019-20 Bhavesh Mulji Katira

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीअतधकरण