DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, THANE, THANE vs. KUNDAN INDUSTRIES LIMITED, PALGHAR

Since the issues involved in both the appeals are identical and pertain to the same assessee, they have been clubbed together and heard together, and a consolidated order is being passed for the sake of brevity.

Firstly, we shall take up ITA No. 3646/Mum/2026. The Department has raised the following grounds of appeal:

All the grounds raised by the Revenue are interrelated and interconnected and relate to challenging the order of the Ld. CIT(A) in restricting the additions made by the AO on account of alleged bogus purchases. Therefore, we decide to adjudicate these grounds through the present consolidated order.

We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we noticed that during the course of survey under Section 133A and post-survey enquiries in the case of the assessee, it was alleged that the assessee had debited non-genuine purchases from the following parties for AYs 2015-16, 2016-17 and 2017-18:

In this regard, notices under Section 148 were issued, and after providing an opportunity of being heard to the assessee, the AO made additions and disallowed the entire purchases as unexplained, thereby treating the same as unexplained cash purchases.

Aggrieved by the said order, the assessee preferred an appeal, and the Ld. CIT(A), while relying on the order of the Co-ordinate Bench of the ITAT, Pune, in the assessee's own case for AY 2017-18 in ITA No. 3199/MUM/2022 dated 28/04/2023, placed at pages 61 to 66 of the paper book and involving an identical fact pattern, restricted the disallowance to 18% of the gross profit on bogus purchases used in manufacturing and 7% on those used in trading, subject to verification against the assessee's excise registers and matching sales invoices.

Thereafter, as per the statement of the Ld. AR made at the Bar, the AO had also passed a consequential order by relying on the directions of the Co-ordinate Bench of the ITAT.

Since, in the present case, the Ld. CIT(A) has passed an order following the decision of the Co-ordinate Bench of the ITAT, Pune, in the assessee's own case for AY 2017-18 in ITA No. 3199/MUM/2022 dated 28/04/2023, and the Ld. DR could not distinguish the facts of that case from those of the present case, and, moreover, a consequential order has already been passed, the Revenue has not been able to demonstrate on record whether the said order of the Co-ordinate Bench of the ITAT was ever challenged before any higher authority or court. Thus, the order of the Co- ordinate Bench of the ITAT in the assessee's own case has attained finality.

Therefore, considering the totality of the facts and circumstances and also keeping in view the doctrine of binding precedents and maintaining judicial consistency, we reject the grounds raised by the Revenue and uphold the order of the Ld. CIT(A).

In the result, appeal filed by the Department stands dismissed.

Since the issues involved in the present appeal are similar to those involved in ITA No. 3646/Mum/2026, the findings and decision rendered in the aforesaid paragraphs shall apply mutatis mutandis to the present appeal as well.

In the result, both the appeals filed by the Department stands dismissed.