ACIT, MUMBAI V. RAMCHANDRA KESHAV AND COMPANY, MUMBAI

ITA 2210/MUM/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which had modified the disallowance of certain purchases made by Ramchandra Keshav & Company from 100% to 12.5%. The purchases in question were from Aadi Impex, an entity linked to Rajendra Jain, who was found to be involved in providing accommodation entries. The revenue argued that these purchases were merely entries to inflate expenses, while the assessee provided evidence of actual transactions. The Tribunal supported the CIT(A)'s decision, emphasizing the need for concrete evidence of wrongdoing beyond mere suspicion.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714469 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2010-2011
• Other Referred Cases: PCIT vs Mohammad Haji Adam & Co. (2019) 103 taxmann.com 459 (Bombay)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: SWATI KAMAT; VIRTUALLY
• Keywords: Bogus purchase; Onus to prove; Bogus

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 2210/MUM/2025 (AY: 2010-11) (Hybrid hearing) ACIT – 19(3), Mumbai Room No. 513, 5th Floor, Piramal Chamber, Mumbai – 400012. Vs Ramchandra Keshav & Company 53, Mohan Building, 162, J.S.S. Road, Girgaum, Mumbai – 400004. [PAN: AAAFR1124J] Appellant / Revenue Respondent / Assessee Assessee by Ms. Swati Kamat, Advocate (Virtually) Revenue by Shri Surendra Mohan, Sr. DR Date of Institution 28.03.2025 Date of hearing 14.07.2025 Date of pronouncement 05.08.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by revenue is directed against the order of Ld. CIT(A) dated 08.01.2025 for assessment year (AY) 2010-11. Though, the revenue has raised multiple grounds of appeal, however, in my considered view, the substantial grounds of appeal relates to restricting the disallowance of alleged bogus purchases to the extent of 12.5% of such purchases. 2. Rival submissions of both the parties have been heard and record perused. The learned Senior Departmental Representative (ld. Sr. DR) for the revenue submits that assessment in case of assessee was completed under section143(3) rws 147 on 30.12.2017. The assessing officer while passing the assessment order made addition by disallowing certain purchases shown from Rajendra Jain and others. On Rajendra Jain and others, a search action was carried out by Investigation Wing on 03.10.2013 wherein it was found Printed from counselvise.com ITA No. 2210/Mum/2025 Ramchandra Keshav And Company 2 that Rajendra Jain and his associate were indulging in providing accommodation entry. During search action it was conclusively proved that Rajinder Jain was proving accommodation entry through various entity managed by his associates or family members. The assessee has shown purchases of diamonds from Aadi Impex, which was managed by Rajendra Jain and his associate. Aadi Impex was used for providing accommodation entry. The assessing officer on the basis of report of Investigation Wing made addition by disallowing 100% of purchases shown from Aadi Impex. Though, the assessee made his claim before assessing officer by showing purchase and sale register, and invoices and claimed that payments were made through banking channel. However, fact remains the same that department was having sufficient material to prove that purchases shown from Aadi Impex is nothing but accommodation entry to inflate the expenses. The ld CIT(A) restricted such disallowances to the extent of 12.50% only. The ld SR DR for the revenue prayed to restore the additions made by assessing officer and to reverse the finding of ld CIT(A). 3. On the other hand, learned authorised representative (ld. AR) of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that they have proved the purchases by providing tax invoices and corresponding sales, payments were made through banking channel. The assessee has also shown sales against the purchases. The assessee proved beyond doubt about the purchases as genuine. No independent investigation was carried out by assessing officer. The assessing officer solely relied upon the report of Investigation Wing without providing copy of it. The ld. CIT(A) Printed from counselvise.com ITA No. 2210/Mum/2025 Ramchandra Keshav And Company 3 allowed partial relied to the assessee by restricting addition to the extent of 12.5% by holding that sales of assessee was not disputed. The ld. CIT(A) restricted the addition to the extent of profit element embedded in such type of doubted transaction. The assessee has not file appeal against the order of ld CIT(A) due to smallness of addition. The ld. AR of the assessee submits that appeal of revenue may be dismissed. 4. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. The assessing officer made addition on the basis of information received from Investigation Wing that assessee has shown purchases from Aadi Impex which is the entity managed by Rajendra Jain and its associate. I find that assessing officer relied upon the report of Investigation Wing. The assessee during the assessment furnished books of account, sale and purchase register, purchase invoice and bank details. The assessing officer disregarded the submission of assessee and held that making entry in the books of account is unilateral Act, which cannot be considered as conclusive evidence. I find that no adverse comment or material was brought against the evidences furnished by the assessee. The payments of purchases were made through banking transaction. The assessing officer has not examined, if sale consideration paid by assessee was returned back in circular transaction or not. Similarly, the sale of assessee was not disputed. Thus, in such circumstances when the assessee has discharged his primary onus to prove the purchases, the assessing officer is not justified in making 100% disallowance, without bringing adverse material. I find that ld. CIT(A) restricted the addition to the extent of 12.5% Printed from counselvise.com ITA No. 2210/Mum/2025 Ramchandra Keshav And Company 4 of the purchase expenditure shown against purchases from Aadi Impex. The ld. CIT(A) also relied on the decision of Hon’ble Jurisdictional High Court in PCIT vs Mohammad Haji Adam & Co. (2019) 103 taxmann.com 459 (Bombay). I find that order of ld. CIT(A) in restricting the addition to the extent of 12.5%, is reasonable and sufficient to avoid the possibility of revenue leakage on such disputed purchases. I have independently examined the facts of the case and find that once, the assessee has given evidence to substantiate the expenses of purchase, the assessing officer was under obligation to at least examine such evidences. Thus, I do not find any reason to interfere with the finding of ld. CIT(A). No contrary facts or law is brought to my notice to take other view. In the result, grounds of appeal of revenue are dismissed. 5. In the result, the appeal of revenue is dismissed. Order was pronounced in the open Court on 05/08/2025. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated: 05/08/2025 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "