ADVANCED COMPUTERS AND MOBILES INDIA PRIVATE LIMITED ,MUMBAI vs. DCIT CIRCLE 1(1)(1), MUMBAI

The Ld.CIT(A) failed to appreciate that the Appellant has complied with all the GST compliances with respect to the above transactions and there is no default in any manner about GST. Thus, the addition of Rs.30,43,32,067/- is unjustified and the same may be deleted.

Not considering the returned income in response to the notice under section 148 of the Act while computing the total income is not justified.

the entire reassessment proceedings initiated under section 147 of the Act are bad in law and without jurisdiction and the same may be quashed and set aside.

Considering the submission of ld. AR of the assessee, the additional ground of appeal is dismissed has not pressed.

Notice under section 148 dated 31.03.2022 was served on the assessee. The assessee filed its return on 02.05.2022 in response to notice under section 148 declaring income of Rs. 3.79 crores.The assessee substantially reduced its return income while filing return on 02.05.2022.Case of assessee was reopened on the basis of information received from GST Department that assessee is engaged in issuing / generating bogus invoices of passing fraudulent input tax credit without supply of goods. Further, information was received from Ahmadabad that M/s. Kushal Ltd. has disclosed that they have received invoices from assessee involving Input Tax Credit (ITC) of Rs. 8.71 crores without supply of mobiles. The assessing officer recorded that on a scrutiny on document obtained from assessee, it was found that assessee transported the said goods through NidhiRoadlines. On further verification, it was found that NidhiRoadlines was non-existent or belonging non- commercial vehicle category. The assessing officer also recorded that Investigation Wing of Income Tax Department carried out analysis and found that assessee issued bogus invoices to 199 parties aggregating of Rs.

1505.24 crores on the basis of such view, the assessing officer issued show cause notice to the assessee. In response to such notice, the assessee submitted that allegation of assessing officer is same. The assessee has shown sales of Rs. 772.22 Crore and as purchases of Rs. 749.43 crores. The sales were made with GST paid. The assessee provided GST number and stated that TDS were made wherever applicable. The assessee furnished copy of return, audit report, sales turnover with GST paid, purchase turnover with GST paid, details of parties to whom sales over Rs. 1.00 lakh was made and details of parties from whom purchases of above Rs. 1.00 lakh. Copy of E-way bills were applicable on sample basis were furnished. The assessee claimed that all transactions were made through banking channel. Thus, allegation of assessing officer that assessee is engaged in issuing bogus invoices for passing fraudulent input tax credit, without supply of goods, is false. Scrutiny assessment was made in past years and all issues were examined, thus, allegations are wrong. Against the information of CGST, Mumbai in case of M/s. Kushal Ltd. & M/s. NidhiRoadlines that assessee used non-existent companies as conduit to provide false / bogus invoices, the assessee submitted that such allegation is not acceptable as per the details furnished by them. The reply of assessee was not accepted by assessing officer. The assessing officer reiterated that he has received information about issuing bogus bills by assessee for claiming input tax credit without supply of goods. The assessing officer instead of giving finding on various evidences concluded that assessee is providing fake invoices to various parties and normal rate of commission in the line of such business is 2.00%.

Accordingly, the assessing officer made addition of Rs. 30.43 crores, being 2.00% of Rs. 1521.66 crores (sale & purchases) in the assessment order dated 25.03.2023. The assessing officer in para-6 of his order computed total taxable income of Rs.52.02 Crore (Rs.19,59,59,310/-plus Rs.30,43,32,067/-).

It was further held that had the assessee been actual beneficiary of bogus purchases, there would have been addition of entire purchases of Rs. 772.22 crores on the basis of decision of Supreme Court in N.K. Proteins Ltd. vs DCIT reported in 250 Taxman 22 (SC) and no credit of sale would have been allowed. The assessing officer rightly computed 2.00% of extra commission on sale as well as purchase. To support of his finding, the ld. CIT(A) referred the decision of Gujarat High Court in DilkhushAnnraj Babel vs ITO reported in 169 taxmann.com 472 (Gujarat). The ld. CIT(A) confirmed the action of assessing officer that in response to show cause notice, the assessee could not furnish any reply. Further, aggrieved the assessee has filed present appeal before Tribunal.

of the assessee and the learned Commissioner of Income Tax – Departmental Representative (ld. CIT-DR) for the Revenue. Ground No. 1 is general.

Ground No. 2 to 4 relates to adhoc addition of commission income. The ld.

AR of the assessee submits that during the course of assessment proceeding, the assessee furnished complete details to substantiate the purchase and sales made during the year. All such details are furnished before Tribunal.

The assessee along with his reply dated 27.01.2023 submitted that ITR, computation of total income, financial statement, tax audit report, bank statement, purchase and sales details with summary along with lorry receipt.

The acknowledgement of such details is filed at page no. 19 & 20 of paper book. Further, in response to show cause notice dated 18.03.2023, the assessee filed reply dated 23.03.2023. All such submissions are filed on record at page no. 27 to 33 of paper book. Along with reply, the assessee furnished details of purchase and sales before ld. CIT(A) in response to notice under section 250 of the Income Tax Act. The submission filed before ld. CIT(A) is filed at page no. 390 to 394 of the paper book. Despite filing all such documentary evidences in order to prove the genuineness of purchase and sale transaction, the assessing officer made adhoc addition of Rs. 30.43 crores @ 2.00 % of total purchases and sales without appreciating the submission and documents furnished by assessee. The addition made by ld.

Assessing officer (AO) is solely based on presumption and surmises without any reasonable basis. The ld. CIT(A) has not taken in cognisance of any details and documents furnished by assessee and confirmed the addition.

The ld. AO as well as the ld. CIT(A) ignored and overlooked the details submission and evidences. No independent investigation of facts was carried out by the AO, his action is arbitrary and reasonable. The addition is liable to be deleted. To support his submission, the ld. AR relied upon the following decision:  Umacharan Shaw & Bros. vs CIT (1959)37 ITR 271 (SC)  CIT vs Odeon Builders Pvt. Ltd. (2019) 418 ITR 315 (SC)  H.R. Mehta vs ACIT (2016) 387 ITR 561 (Bom) 7. In support of ground no. 5, the ld. AR of the assessee submits that assessee has filed application for rectification under section 154 before assessing officer and explained that in the original return of income, the assessee inadvertently missed to claim deduction of excess VAT and GST paid by assessee. Thus, return was revised after making such claim. The refund received in A.Y. 2023-24 on account of excess VAT & GST paid was offered for tax in the year. Thus, the said amount cannot be taxed twice. Therefore, necessary direction may be given to the assessing officer for disposal of rectification application under section 154 of the Act. The ld. AR of the assessee submits that he has also placed copy of various acknowledgement of reply and submission filed before lower authorities.

772.22 crores and purchases of Rs. 749.43 crores. The assessing officer also recorded that details of sales and purchases of more than Rs. 1.00 Lakh was furnished. No adverse comments were made against such evidences. The assessing officer made addition on total turnover without giving any specific finding if any order of GST or VAT department was passed against assessee for providing fraudulent input credit. Similarly, the assessee has not brought any material on record about any action is initiated by GST department or not. There are no modus operandi or details available as to how much input credit was claimed on the basis of alleged bogus entry provided by assessee.

The ld. CIT(A) in para 5.3 of his order recorded that in the computation of income filed by assessee, a penalty of Rs. 7169/- and penalty of GST Rs.

5,000/- was levied on the basis of which the assessee was treated as violator of law. Such disclosure by assessee cannot be considered as incriminating against the assessee which is otherwise honest disclosure by assessee in its computation of income. The assessing officer has not brought any comparable instances on record to estimate extra commission income @ 2.00 % of sales as well as purchase.

(supra) held that addition based on third party information which was not subjected to further scrutiny by assessing officer, the addition was not justified.Hon’ble Supreme Court in Umacharan Shaw &Bros. vs CIT (supra) also held that suspicion could not replace the evidence. As recorded above, the assessing officer as well as ld. CIT(A) has not given any finding on various documentary evidence, therefore, we do not find any justification in estimating commission on sales as well as on purchases. The books of assessee were not rejected. Estimation of income is to be made only on the sales. The AO made estimation of income on total turnover @ 2.00% of total purchases and sales. However, facts remained the same that there is allegation on bogus transaction. Thus, in order to avoid the possibility of revenue leakage, a reasonable estimation on sales would be sufficient to meet the end of justice. We also find that in para-5.1.6 of his order, the ld CIT(A) recorded that assessing officer issued notice under section 133(6) to Kushal Limited and no response was received and that assessee made transaction with sister concern to route the money, however, no such facts were recorded by AO in the assessment order. Thus, considering the peculiar facts of the cases, and in order to avoid the possibility of revenue leakage, the AO is directed to restrict the addition of estimation of income @ 1.00% on sales only, would be sufficient to meet the ends of justice. In the result, the ground No. 2 to 3 are partly allowed.

Order was pronounced in the open Court on 22/01/2026.

Sd/- Sd/- PADMAVATHY S. PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 22/01/2026 Biswajit