DCIT, MUMBAI vs. BHAGWANA RAM BISHNOI, MUMBAI

Bhagwana Ram Bishnoi 3 & 3903/MUM/2025 assessee agamst the order of flon'ble fligh Court of Gujarat assessee agamst the order of flon'ble fligh Court of Gujarat assessee agamst the order of flon'ble fligh Court of Gujarat reversing the order of Ld. CIT(A), Ahmadabad in the case of reversing the order of Ld. CIT(A), Ahmadabad in the case of reversing the order of Ld. CIT(A), Ahmadabad in the case of NK. Protein Ltd, which is on the similar issue of bogus NK. Protein Ltd, which is on the similar issue of bogus NK. Protein Ltd, which is on the similar issue of bogus purchases and that this order of the Hon'ble High Court of purchases and that this order of the Hon'ble High Court of purchases and that this order of the Hon'ble High Court of Gujarat disallow Gujarat disallowing 100% of the bogus purchases was ing 100% of the bogus purchases was already law of the land when the I.d. CTI(A) pronounced its already law of the land when the I.d. CTI(A) pronounced its already law of the land when the I.d. CTI(A) pronounced its order?" order?" 4. "Whether of the facts and in the eircumstances of the case "Whether of the facts and in the eircumstances of the case "Whether of the facts and in the eircumstances of the case and in Jaw, the order of L.d. CTICA) is right in not and in Jaw, the order of L.d. CTICA) is right in not and in Jaw, the order of L.d. CTICA) is right in not considering that this was not a case of estimation of considering that this was not a case of considering that this was not a case of percentage of gross profit but of an unexplained expenditure percentage of gross profit but of an unexplained expenditure percentage of gross profit but of an unexplained expenditure in books which was incurred Reuting laws of the land and in books which was incurred Reuting laws of the land and in books which was incurred Reuting laws of the land and whose nature was non whose nature was non-genuine since its very inception?" genuine since its very inception?" 5. "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case and in la and in law, the order of L.d. CIT(A) is right in not considering w, the order of L.d. CIT(A) is right in not considering the decision of Hon'ble Apex court in case of Sumati Dayal the decision of Hon'ble Apex court in case of Sumati Dayal the decision of Hon'ble Apex court in case of Sumati Dayal which Jaid the principle of preponderanee of human which Jaid the principle of preponderanee of human which Jaid the principle of preponderanee of human probabilities and also not considering that paper and probabilities and also not considering that paper and probabilities and also not considering that paper and banking audit banking audit-unil can he castly created in such cases of ated in such cases of bogus purchases?"* bogus purchases?"* 6. " Whether on the facts and in the eircumstances of the case " Whether on the facts and in the eircumstances of the case " Whether on the facts and in the eircumstances of the case and in law, the order of Ld. CIT(A) is right in not considering and in law, the order of Ld. CIT(A) is right in not considering and in law, the order of Ld. CIT(A) is right in not considering the latest decision of Hon'ble Apex Bombay High Court on the latest decision of Hon'ble Apex Bombay High Court on the latest decision of Hon'ble Apex Bombay High Court on this issue in case of Kanak Impex this issue in case of Kanak Impex that addition a 100% of that addition a 100% of bogus purchase can be made in bogus purchase can be made in such cases?"* cases?"* 3. Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed its return of income on 29.09.2012 declaring total income of its return of income on 29.09.2012 declaring total income of its return of income on 29.09.2012 declaring total income of ₹5,95,292/-. The said return was duly processed under section . The said return was duly processed under section . The said return was duly processed under section 143(1) of the Income 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the tax Act, 1961 (hereinafter referred to as ‘the Act’). Subsequently, information was received from the office of the Act’). Subsequently, information was received from the office of the Act’). Subsequently, information was received from the office of the Director General of Income Director General of Income-tax (Investigation), Mumbai, th tax (Investigation), Mumbai, that the assessee had obtained accommodation entries, in the nature of assessee had obtained accommodation entries, in the nature of assessee had obtained accommodation entries, in the nature of hawala bills, aggregating to ₹35,75,460/- from M/s. Sundha Steel hawala bills, aggregating to from M/s. Sundha Steel Pvt. Ltd. during the relevant financial year corresponding to the Pvt. Ltd. during the relevant financial year corresponding to the Pvt. Ltd. during the relevant financial year corresponding to the assessment year under consideration. Based on such credible assessment year under consideration. Based on such credi assessment year under consideration. Based on such credi information, the Assessing Officer recorded reasons to believe that information, the Assessing Officer recorded reasons to believe that information, the Assessing Officer recorded reasons to believe that Bhagwana Ram Bishnoi 4 & 3903/MUM/2025 ITA No. 1815 income chargeable to tax had escaped assessment, and accordingly income chargeable to tax had escaped assessment, and accordingly income chargeable to tax had escaped assessment, and accordingly issued notice under section 148 of the Act on 30.03.2019, which issued notice under section 148 of the Act on 30.03.2019, which issued notice under section 148 of the Act on 30.03.2019, which was duly served upon the assessee. was duly served upon the assessee.

3.1 It is a matter of record that the assessee did not file any return f record that the assessee did not file any return f record that the assessee did not file any return in response to the notice issued under section 148. Thereafter, in response to the notice issued under section 148. Thereafter, in response to the notice issued under section 148. Thereafter, statutory statutory statutory notices notices notices under under under section section section 142(1) 142(1) 142(1) dated dated dated 26.08.2019, 26.08.2019, 26.08.2019, 05.09.2019, 16.09.2019 and 30.09.2019 were issued and duly 05.09.2019, 16.09.2019 and 30.09.2019 were issued and duly 05.09.2019, 16.09.2019 and 30.09.2019 were issued and duly served. During the reasse served. During the reassessment proceedings, the Assessing Officer ssment proceedings, the Assessing Officer also caused a notice under section 133(6) of the Act to be issued to also caused a notice under section 133(6) of the Act to be issued to also caused a notice under section 133(6) of the Act to be issued to M/s. Sundha Steel Pvt. Ltd. at the address furnished by the M/s. Sundha Steel Pvt. Ltd. at the address furnished by the M/s. Sundha Steel Pvt. Ltd. at the address furnished by the assessee. However, the notice was returned by the postal assessee. However, the notice was returned by the postal assessee. However, the notice was returned by the postal authorities as unserved, the authorities as unserved, thereby indicating the non- -existence of the said concern. The factum of non said concern. The factum of non-existence of the alleged supplier existence of the alleged supplier was duly communicated to the assessee and a show cause notice was duly communicated to the assessee and a show cause notice was duly communicated to the assessee and a show cause notice was issued calling upon the assessee to explain why the said was issued calling upon the assessee to explain why the said was issued calling upon the assessee to explain why the said purchases should not be tr purchases should not be treated as non-genuine.

3.2 In response, the assessee filed certain documents in support In response, the assessee filed certain documents in support In response, the assessee filed certain documents in support of the purchases. However, upon examination thereof, the of the purchases. However, upon examination thereof, the of the purchases. However, upon examination thereof, the Assessing Assessing Assessing Officer Officer Officer found found found the the the same same same to to to be be be insufficient insufficient insufficient and and and unsatisfactory. The Assessing Officer, inter alia, recorded the unsatisfactory. The Assessing Officer, inter alia, recor unsatisfactory. The Assessing Officer, inter alia, recor following findings:

“3.6 The submission / details furnished by the assessee as also The submission / details furnished by the assessee as also The submission / details furnished by the assessee as also the materials available on record have been carefully perused the materials available on record have been carefully perused the materials available on record have been carefully perused and considered. From the above discussions, the followings facts and considered. From the above discussions, the followings facts and considered. From the above discussions, the followings facts emerge

Bhagwana Ram Bishnoi 5 & 3903/MUM/2025 ITA No. 1815

(i) The Sale Tax Department h The Sale Tax Department has conducted independent enquires as conducted independent enquires in each of the 'non genuine' parties and conclusively proved that in each of the 'non genuine' parties and conclusively proved that in each of the 'non genuine' parties and conclusively proved that these parties are engaged in the business of providing these parties are engaged in the business of providing these parties are engaged in the business of providing accommodation entries only. The parties are issuing bills without accommodation entries only. The parties are issuing bills without accommodation entries only. The parties are issuing bills without delivering any goods and services. delivering any goods and services. (ii) Independent enquiries / investigations have been carried out (ii) Independent enquiries / investigations have been carried out (ii) Independent enquiries / investigations have been carried out by this office under the I.T. Act and the assessee has been duly by this office under the I.T. Act and the assessee has been duly by this office under the I.T. Act and the assessee has been duly confronted with the same. Evidently, the assessee had adopted a confronted with the same. Evidently, the assessee had adopted a confronted with the same. Evidently, the assessee had adopted a modus operandi to reduce his true profits by inflating his modus operandi to reduce his true profits by inflating his modus operandi to reduce his true profits by inflating his expenses including purchase expenses by taking accommodation penses including purchase expenses by taking accommodation penses including purchase expenses by taking accommodation entries from such parties. entries from such parties. (iii) The assessee was asked to produce the said 'non genuine (iii) The assessee was asked to produce the said 'non genuine (iii) The assessee was asked to produce the said 'non genuine dealers' for examination, but the assessee failed to do so. Thus, dealers' for examination, but the assessee failed to do so. Thus, dealers' for examination, but the assessee failed to do so. Thus, in the books of accounts of the assessee, in the books of accounts of the assessee, the purchases to the the purchases to the extent made from the above said parties remained unverifiable extent made from the above said parties remained unverifiable extent made from the above said parties remained unverifiable and hence I arrive at a conclusion that the purchases shown by and hence I arrive at a conclusion that the purchases shown by and hence I arrive at a conclusion that the purchases shown by the assessee in the books of accounts are inflated and bogus the assessee in the books of accounts are inflated and bogus the assessee in the books of accounts are inflated and bogus purchases are debited to trading account to suppr purchases are debited to trading account to suppress the true ess the true profits to be disclosed to the department in specific and to the profits to be disclosed to the department in specific and to the profits to be disclosed to the department in specific and to the public in general. public in general. (iv) The assessee could not file the vital documents such as (iv) The assessee could not file the vital documents such as (iv) The assessee could not file the vital documents such as delivery challans, transport receipts, octroi receipt for payment of delivery challans, transport receipts, octroi receipt for payment of delivery challans, transport receipts, octroi receipt for payment of Octroi duty, receipt of weigh Octroi duty, receipt of weighbridge for weighing of goods, excise bridge for weighing of goods, excise gate gate gate pass, pass, pass, goods goods goods inward inward inward register register register maintained maintained maintained at at at godown/warehouse/storage house etc. Whatever documents godown/warehouse/storage house etc. Whatever documents godown/warehouse/storage house etc. Whatever documents placed on record is not capable of sustenance. The items shown placed on record is not capable of sustenance. The items shown placed on record is not capable of sustenance. The items shown to have purchased from the said parties are of such in to have purchased from the said parties are of such in to have purchased from the said parties are of such in nature that they require separate transportation. Hence the mode of that they require separate transportation. Hence the mode of that they require separate transportation. Hence the mode of transportation is not explained properly. transportation is not explained properly. The onus was upon the assessee to establish the genuineness of The onus was upon the assessee to establish the genuineness of The onus was upon the assessee to establish the genuineness of purchases made by the assessce. (v) purchases made by the assessce. (v) (vi) Mere filing of evidences in support of p (vi) Mere filing of evidences in support of purchases and payment urchases and payment through account payee cheque cannot be conclusive in a case through account payee cheque cannot be conclusive in a case through account payee cheque cannot be conclusive in a case where genuineness of transaction is in doubt. Payment by where genuineness of transaction is in doubt. Payment by where genuineness of transaction is in doubt. Payment by account payee cheques are not sacrosanct. account payee cheques are not sacrosanct. (vii) The Sales Tax Department certified that the aforesaid parties (vii) The Sales Tax Department certified that the aforesaid parties (vii) The Sales Tax Department certified that the aforesaid parties are 'non genuine operators' after conducting independent genuine operators' after conducting independent genuine operators' after conducting independent enquiries. It is evident that the assessee did not make any effort enquiries. It is evident that the assessee did not make any effort enquiries. It is evident that the assessee did not make any effort to controvert the finding recorded by the DGIT (Inv.) and it made to controvert the finding recorded by the DGIT (Inv.) and it made to controvert the finding recorded by the DGIT (Inv.) and it made no efforts to produce the seller parties. no efforts to produce the seller parties.

Bhagwana Ram Bishnoi 6 & 3903/MUM/2025 ITA No. 1815

(viii) If all the evidences (viii) If all the evidences point to the fact that no actual goods point to the fact that no actual goods were supplied by the above parties, then the argument of were supplied by the above parties, then the argument of were supplied by the above parties, then the argument of assessee that it purchased goods in good faith is not tenable. assessee that it purchased goods in good faith is not tenable. assessee that it purchased goods in good faith is not tenable. Thus, from the above analysis of the facts, it is crystal clear that Thus, from the above analysis of the facts, it is crystal clear that Thus, from the above analysis of the facts, it is crystal clear that the purchases made by the as the purchases made by the assessee from the above parties and sessee from the above parties and claimed as debit in his profit and loss account are claimed as debit in his profit and loss account are not not genuine.” 3.3 On the basis of the aforesaid analysis, the Assessing Officer On the basis of the aforesaid analysis, the Assessing Officer On the basis of the aforesaid analysis, the Assessing Officer concluded that the purchases claimed by the assessee from M/s. concluded that the purchases claimed by the assessee from M/s. concluded that the purchases claimed by the assessee from M/s. Sundha Steel Pvt. Ltd. were not genuine and accordingly, by order Sundha Steel Pvt. Ltd. were not genuine and accordingly, by order Sundha Steel Pvt. Ltd. were not genuine and accordingly, by order dated 23.12.2019 passed under section 143(3) read with section dated 23.12.2019 passed under section 143(3) read with section dated 23.12.2019 passed under section 143(3) read with section 147 of the Act, disallowed the same and made an addition of 7 of the Act, disallowed the same and made an addition of 7 of the Act, disallowed the same and made an addition of ₹35,75,460/-.

“8. I have considered the submiss I have considered the submissions of the assessee. In ground no ions of the assessee. In ground no 1, the assessee challenged the re 1, the assessee challenged the re-opening of the assessment. The opening of the assessment. The AO received information from the investigation wing that the AO received information from the investigation wing that the AO received information from the investigation wing that the assessee received accommodation entry in the form of purchases assessee received accommodation entry in the form of purchases assessee received accommodation entry in the form of purchases from one of the entities of M/s from one of the entities of M/s Sunda Steels Pvt Ltd, which is a Sunda Steels Pvt Ltd, which is a paper entity which provided bogus entry/accommodation bill paper entity which provided bogus entry/accommodation bill paper entity which provided bogus entry/accommodation bill providers to the tune of Rs 35,75,460/ providers to the tune of Rs 35,75,460/- Since assessee was one of Since assessee was one of the beneficiaries of such accommodation entry and the outcome of the beneficiaries of such accommodation entry and the outcome of the beneficiaries of such accommodation entry and the outcome of investigation of another enforcem investigation of another enforcement department prima facie ent department prima facie indicated that income has escaped assessment, the AO rightly indicated that income has escaped assessment, the AO rightly indicated that income has escaped assessment, the AO rightly issued notice u/s 148 after duly considering the information issued notice u/s 148 after duly considering the information issued notice u/s 148 after duly considering the information received and recorded his reasons for re received and recorded his reasons for re-opening by applying his opening by applying his mind independently. The fresh material/inf mind independently. The fresh material/information received was ormation received was Bhagwana Ram Bishnoi 7 & 3903/MUM/2025 sufficient to re sufficient to re-open the case for AY 2012- 13 which was within six 13 which was within six years from the end of assessment year. In view of this, the years from the end of assessment year. In view of this, the years from the end of assessment year. In view of this, the assessee's plea that the conditions for re assessee's plea that the conditions for re-opening of the assessment opening of the assessment was not fulfilled is rejected and gro was not fulfilled is rejected and ground no. 1 filed by the assessee und no. 1 filed by the assessee is dismissed. As regards the merits of the case, the CIT(A) vide order CIT(A) As regards the merits of the case, the CIT(A) vide order CIT(A) As regards the merits of the case, the CIT(A) vide order CIT(A)- 53/IT-200/ITO 200/ITO- 19(1)(2)/2017-18 dated 02.01.2028 confirmed the 18 dated 02.01.2028 confirmed the addition adopting 12.5% of the value of the transaction as profit in addition adopting 12.5% of the value of the transaction as profit in addition adopting 12.5% of the value of the transaction as profit in the assessee's the assessee's case for AY 2011-12. Following the said appellate 12. Following the said appellate order, I direct the AO to restrict the addition to 12.5% order, I direct the AO to restrict the addition to 12.5% order, I direct the AO to restrict the addition to 12.5% of the purchases. purchases.”

5. Aggrieved with the finding of the Ld. CIT(A) Aggrieved with the finding of the Ld. CIT(A), both the assessee both the assessee and the Revenue are in appeal before the Tribunal by way of raising and the Revenue are in appeal before the Tribunal by way of ra and the Revenue are in appeal before the Tribunal by way of ra grounds as reproduced above. grounds as reproduced above. The Revenue is aggrieved with the he Revenue is aggrieved with the relief granted to the assessee whereas assessee is aggrieved with the relief granted to the assessee whereas assessee is aggrieved with the relief granted to the assessee whereas assessee is aggrieved with the sustaining of the addition @ 12.5% of the bogus purchase entries. sustaining of the addition @ 12.5% of the bogus purchase entries. sustaining of the addition @ 12.5% of the bogus purchase entries.

“4.5. Even if materials have been purchased, they are not 4.5. Even if materials have been purchased, they are not 4.5. Even if materials have been purchased, they are not purchased form these parties and purchased form these parties and may be in cash from un may be in cash from un-disclosed parties. By purchasing from the grey market, the appellant would parties. By purchasing from the grey market, the appellant would parties. By purchasing from the grey market, the appellant would have benefitted by the savings of taxes. Therefore, in fact and have benefitted by the savings of taxes. Therefore, in fact and have benefitted by the savings of taxes. Therefore, in fact and circumstances of the case, in this particular case, the assessing circumstances of the case, in this particular case, the assessing circumstances of the case, in this particular case, the assessing officer has considered most officer has considered most appropriate to adopt 12.5% profit which appropriate to adopt 12.5% profit which can take care of the rotation of capital utilised for such transaction. can take care of the rotation of capital utilised for such transaction. can take care of the rotation of capital utilised for such transaction. Considering non Considering non-compliance on the part of appellant in the compliance on the part of appellant in the Bhagwana Ram Bishnoi 8 & 3903/MUM/2025 assessment assessment assessment proceedings, proceedings, this proceedings, this this cannot be considered to be cannot cannot be be considered considered to to be be unreasonable. Thus the Groun unreasonable. Thus the Grounds of Appeal are dismissed. dismissed.” 6.1 The Ld. counsel further referred to the assessment order for The Ld. counsel further referred to the assessment order for The Ld. counsel further referred to the assessment order for assessment year 2009 assessment year 2009-10 where, also the Assessing Officer 10 where, also the Assessing Officer restricted the disallowance to 12.5% of the purchases from the said restricted the disallowance to 12.5% of the purchases from the said restricted the disallowance to 12.5% of the purchases from the said party M/s Sundha Steel Pvt. Ltd. party M/s Sundha Steel Pvt. Ltd. The learned CIT(A) has followed learned CIT(A) has followed the said consistent view. the said consistent view.

6.2 The principle of consistency, as laid down by the Hon’ble The principle of consistency, as laid down by the Hon’ble The principle of consistency, as laid down by the Hon’ble Supreme Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 Supreme Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 Supreme Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) and further explained in Bharat Sanchar Nigam Ltd. v. Union (SC) and further explained in Bharat Sanchar Nigam Ltd. v. Union (SC) and further explained in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 282 ITR 273 (SC), as also applied by the Hon’ble 006] 282 ITR 273 (SC), as also applied by the Hon’ble 006] 282 ITR 273 (SC), as also applied by the Hon’ble Bombay High Court in Pr. CIT v. Quest Investment Advisors (P.) Bombay High Court in Pr. CIT v. Quest Investment Advisors (P.) Bombay High Court in Pr. CIT v. Quest Investment Advisors (P.) Ltd. [2018] 96 taxmann.com 157 (Bom), mandates that in the Ltd. [2018] 96 taxmann.com 157 (Bom), mandates that in the Ltd. [2018] 96 taxmann.com 157 (Bom), mandates that in the absence of any change in material facts or law, a different view absence of any change in material facts or law, a different view absence of any change in material facts or law, a different view ought not to be taken for subsequent years. taken for subsequent years.

6.3 The ld Counsel The ld Counsel submitted that in absence of any change in submitted that in absence of any change in circumstances, following the principle following the principle of consistency, of consistency, assessee’s addition cannot be sustained up to 100% during the year under addition cannot be sustained up to 100% during the year under addition cannot be sustained up to 100% during the year under consideration. He referred to the various order of the Co He referred to the various order of the Co He referred to the various order of the Co-ordinate Bench and submitted that disallowance should be restricted to the Bench and submitted that disallowance should be restricted to the Bench and submitted that disallowance should be restricted to the 5% of the bogus purchases. 5% of the bogus purchases.

6.4 In the present case, the factual matrix as well as the parties In the present case, the factual matrix as well as the parties In the present case, the factual matrix as well as the parties involved are identical to earlier years. R involved are identical to earlier years. Respectfully following the rule espectfully following the rule of consistency and the judicial precedents, we hold that the action of consistency and the judicial precedents, we hold that the action of consistency and the judicial precedents, we hold that the action

Bhagwana Ram Bishnoi 9 & 3903/MUM/2025 of the CIT(A) in restricting the disallowance to 12.5% of the of the CIT(A) in restricting the disallowance to 12.5% of the of the CIT(A) in restricting the disallowance to 12.5% of the impugned purchases is fair and reasonable. We see no reason to impugned purchases is fair and reasonable. We see no reason to impugned purchases is fair and reasonable. We see no reason to interfere with the same. interfere with the same.

Order pronounced in the open Court on nounced in the open Court on 26/08/2025. /08/2025.