BLUE FIN FROZEN FOODS PRIVATE LIMITED,MUMBAI vs. ITO 9(2)(1), MUMBAI

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ITA 953/MUM/2026Status: DisposedITAT Mumbai17 June 2026AY 2022-237 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had submitted all relevant evidence, including supplier details and bank statements reflecting payments. The AO and CIT(A) failed to point out any deficiency in these documents or conduct independent inquiries. The addition was therefore made on conjectures and surmises.

What were the facts?

The assessee company, engaged in fish processing, made purchases of Rs 70.62 crore from unregistered dealers. The Assessing Officer (AO) added Rs 7,06,29,774, representing 10% of these purchases, under Section 69C, deeming them bogus. The assessee contended that all necessary documentation, including supplier PANs, invoices, and bank statements, was provided.

What were the issues?

Whether the addition made under Section 69C for purchases from unregistered dealers was justified when the assessee provided documentary evidence and made payments through banking channels. Whether the AO and CIT(A) conducted adequate independent inquiries to doubt the genuineness of the purchases.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3),Section 44AB,Section 115BBE

AI-generated summary — verify with the full judgment below

Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR

For Appellant: Ms. Ravi Sawana, Ms. Neha Sharma, Ms. Prativa
For Respondent: Shri SwapnilChoudhari, (Sr.DR.)
Hearing: 15.04.2026Pronounced: 17.06.2026

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 19.12.2025 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. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2022-23.

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd. 2. The grounds of appeal are as under: “1. That in the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 7,06,29,774/- made by the Assessing Officer under Section 69C of the Income-tax Act, 1961, by treating bona fide purchases made by the Appellant as bogus. 2. That in the facts and circumstances of the case and in law, the CIT(A) erred in upholding the ad-hoc disallowance of 10% of purchases made from unregistered dealers, without disputing the sales made by the Appellant and assigning any reason for retaining 10% of disallowance. 3. That in the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating the documents filed by the Appellant and holding that it had failed to establish the creditworthiness and genuineness of the purchases from unregistered dealers. 4. That in the facts and circumstances of the case and in law, the impugned order passed by the CIT(A) is in violation of the principles of natural justice in as much as the Appellant was not granted an opportunity of a personal hearing via video conferencing, despite a specific request thereto.” 3. Briefly stated facts are that the assessee company was engaged in the business of processing of marine fish and also fresh water fish products. In this case, the AO noted that the assessee had made purchases of Rs 70.62 cr. from Unregistered dealers. He observed that the assessee could not prove the purchase fully. Accordingly, the assessment in this case was completed u/s 143(3) read with section 144B of the Act making addition of Rs.7,06,29,774/- u/s 69C of the Act being 10% of the total purchases.

4.

In the subsequent appeal before the ld.CIT(A),the assessee contended that all relevant details i.e.PAN of the suppliers, Name of the suppliers, Address of the suppliers,Copy of purchase Invoices,Copy of ledger Bank statements reflecting payment made to suppliers were duly submitted before the AO which was also acknowledged by the Assessment unit.The only reason for disallowance was non furnishing of either PAN or purchase bill by the

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd. assessee, though it had furnished PAN and purchase bills apart from OTHER evidences.It was submitted that the addition u/s. 69Cof Rs.7,06,29,774/-was unwarranted as the assessee during the course of assessment has provided the details of purchases made from the suppliers, not registered under GST.Further, it made all the payments through normal banking channel, i.e.RTGS/NEFT only.Besides,the accounts of the assessee were audited u/s.44AB of the Act and purchases/sales and quantitative details of stocks had been duly verified by the Auditors. There was no adverse finding by the Auditor.

4.1 It was further argued that the provisions of section 69C of the Act could not be applied as the section stipulates that where, in any financial year, the assessee has incurred an expenditure and he offers no explanation about "the source of such expenditure or part thereof", or the explanation, if it is offered by him, is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Thus, the focus of Section 69C is on the "source" of such expenditure and not on the authenticity of the expenditure itself. The sales and stock records were accepted during the assessment, indicating their accuracy. This also highlighted the importance of purchases in the sales. Without valid purchases, there could be no sales, affirming the reliability of its accounting in the regular books. As the expenditure was accounted in the regular books, the source was obviously explained and the provisions of section 69C were not applicable as

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd. there was no unaccounted expenditure. The Assessment unit had nowhere stated that the source was not explained by the assessee.

5.

The ld.CIT(A) however,rejected the contentions of the assessee stating that despite provided adequate opportunities to present its case, the onus to prove the creditworthiness and genuineness of the transaction in respect of purchases made during the period under consideration was not discharged as the information so provided by the assessee was found inadequate to prove the creditworthiness and genuineness of the parties to whom purchases were made. The assessee had submitted a list of cases but failed the substantiate the same with supporting documents i.e. copy of delivery challans, Bank Account statements and confirmation from the parties in order to justify the impugned transaction of purchasing goods. On the basis of above facts and the enquiries made by the department, the AO had established that the assessee had not undertaken and physical purchase and took only accommodation entries. Payment through banking channel was not the evidence for genuineness of purchase. The AO had narrated this fact in the assessment order that in the delivery challan, no transport vehicle details were mentioned which led to conclusion that the transportation and physical delivery of goods was doubtful. The details of GST numbers were not submitted for the parties from whom the purchase was made. The AO had doubted on the sample purchase bill submitted during assessment stage. The AO had already given relief for 90% of such purchase and had disallowed only 10% of all such tainted purchase considering the various judgements of higher

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd. appellate authorities. Hence, the AO was justified to make an addition u/s 69C of the Act. He concluded that as the assessee had failed to established the purchase as genuine, the AO was justified to make the addition of Rs. 7,06,29,774/- as bogus purchase u/s 69C r.w.s. 115BBE of the Act, being 10% of the total unverified purchase of 70,62,97,737/-, which was upheld.

6.

Before us, the ld.AR has reiterated the same contentions as made before the lower authorities. It also furnished Paper Books containing relevant supporting details which were filed before the lower authorities. It is further stated that it is not a case of accommodation entry and all the sales and purchases were genuine and duly supported by evidences which were not rejected by the authorities. The AO did not make any independent enquiry into the matter despite the assessee having furnished the names, addresses, PAN details etc. filed in support of the claim. The AO neither questioned the banks statements, delivery challans, sales, stock registers and the reconciliation statements submitted. It is stated that there was no ground for making an estimated addition at the rate of 10% in ad hoc manner and without any cogent reason. The ld.CIT(A) also erred in upholding the same without appreciating the evidence brought on record. The ld.DR relied on the orders of the authorities below.

7.

We have carefully considered the factual matrix of the case, perused the records and heard rival sunbmission. It is quite evident from the records that the assessee has submitted all the relevant evidences in support of the impugned transaction which has also been made through banking

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd. channels.Both the authorities have not pointed out any deficiency in such evidences i.e.PAN, name, address, ledger, invoice, etc. of the suppliers were given along with Bank statement.There is no adverse observation regarding the genuineness of these payments. The bank statements of all relevant accounts, reflecting the payments made were produced before us for ready reference. The accounts are duly audited u/s. 44AB of the Act and purchases/sales and quantitative details of stocks had been duly verified by the Auditors. The assessee contended that all relevant details i.e.PAN of the suppliers, Name of the suppliers, Address of the suppliers,Copy of purchase Invoices,Copy of ledger Bank statements reflecting payment made to suppliers were duly submitted before the AO. Moreover, there is palpable absence of any independent enquiry or investigation by the AO to verify the matter further,if at all harboured any doubts about their genuineness. The ld.CIT(A) has merely narrated the observations of the AO without making any effort to examine the materials on record independently.

7.1 Considering all such facts,we are inclined to agree with the ld.AR that the addition has been made purely on conjectures and surmises and lacks any substance. Disallowing only a part of the transaction and treating the rest being genuine defies any logic. Moreover,there is absolutely no case made by the AO for invoking the provisions of section 69C of the Act. Accordingly, finding no merit in the impugned addition, we set aside the appellate order and direct the AO to delete the addition,thus allowing the grounds of appeal in this regard.

ITA No. 953/Mum/2026; Blue Fin Frozen Foods Pvt. Ltd.

8.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 17/06/2026.

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

Place: म ुंबई/Mumbai ददनाुंक /Date 17.06.2026 Soumili Das / PS

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

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