AGNELO GUSTAVO EUGENIO RODRIGUES,MUMBAI vs. DY COMMISSIONER OF INCOME TAX CIRCLE 24 1 MUMBAI , MUMBAI

ITA 5079/MUM/2025Status: DisposedITAT Mumbai19 February 2026AY 2007-0818 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee failed to discharge the primary onus of proving the genuineness of the impugned purchases. While the assessee provided invoices and mentioned VAT registration, the untraceability of the parties, even after multiple attempts by the AO and the assessee's own employee, raised serious doubts. The Tribunal noted that Sales Tax registration and absence from a 'bogus dealer' list are not conclusive for Income Tax purposes, and mere payment through banking channels is insufficient if the supplier's genuineness cannot be established. The AO's findings regarding the lack of a stock register further weakened the assessee's claim. Therefore, the grounds related to the disallowance of purchases were dismissed. Regarding the ad hoc disallowance of expenses, the Tribunal agreed that the quantum appeared high. While acknowledging the AO's reasons for disallowance due to lack of proper documentation and potential personal element, the Tribunal found that restricting the disallowance to 10% instead of 20% would serve the interest of justice. The grounds related to ad hoc disallowance were partly allowed. The grounds regarding the assessment order being time-barred were not pressed by the assessee and were accordingly dismissed.

What were the facts?

The assessee, Agnelo Gustavo Eugenio Rodrigues, proprietor of M/s Weather Cool Sales, engaged in trading and services of air conditioners, filed an appeal against the order dated 16.06.2025 passed by the CIT(A), which upheld the assessment order u/s. 143(3) dated 31.12.2009 for Assessment Year 2007-08. The appeal challenges the disallowance of purchases amounting to Rs. 1,35,66,404/- and an ad hoc disallowance of expenditure. The Assessing Officer (AO) found that notices issued to certain purchase parties were unserved, and even new addresses provided by the assessee did not lead to their location. The AO also noted the absence of a quality-wise stock register and observed unusual profit patterns in the initial months, suggesting inflated purchases. The CIT(A) upheld the disallowance, relying on High Court decisions regarding the assessee's onus to prove genuineness.

What were the issues?

1. Whether the disallowance of purchases of Rs. 1,35,66,404/- is justified, considering the assessee provided bank statements, VAT registration details of parties, and consumption charts, and the parties were not listed as bogus dealers by the Sales Tax Department? (Question of law and fact, turning on Section 68 of the Income-tax Act, 1961). - Assessee's contention: Purchases were genuine, supported by invoices from registered dealers, material was consumed, and untraceability was due to passage of time. Relied on VAT registration and absence from 'bogus dealer' lists. - Revenue's contention: Purchases were not genuine as parties were untraceable, and the assessee failed to discharge the onus of proof. Relied on AO's findings and High Court decisions like CIT v. Sophia Enterprises and CIT v. Shamim M. Bharwani. 2. Whether the ad hoc disallowance of genuine business expenditure is justified, given that the expenses were wholly and exclusively for business purposes, supported by vouchers/bills, and represented a small percentage of turnover? (Question of law and fact). - Assessee's contention: Disallowances were ad hoc, without specific reasons, and expenses were vouched, verifiable, and supported by audited accounts. - Revenue's contention: Disallowances were reasoned estimates due to lack of proper documentation, potential personal element, and non-verifiable nature of expenses. Relied on High Court decisions like CIT v. P.D. Agarwal and CIT v. B.D. Gupta. 3. Whether the assessment order is time-barred? (Question of law). - Assessee's contention: The assessment order is undated and therefore not in accordance with law, and the CIT(A) order was passed after an unreasonable delay.

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6)

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP GOSAIN

For Appellant: Shri Ajay Singh & Shri Akshay Pawar,ARs
For Respondent: Shri Surendra Mohan (Sr. DR)
Hearing: 16.12.2025Pronounced: 19.02.2026

PER PRABHASH SHANKAR [A.M.] :-

The present appeal arising from the appellate order dated 16.06.2025 is filed 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 assessment order passed u/s. 143(3) of the Income-tax Act, 1961

[hereinafter referred to as “Act”] dated 31.12.2009 for the Assessment

Year [A.Y.] 2007-08. A.Y. 2007-08 A

The order continues below.

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