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

ITA 3212/MUM/2025

AI Insights

The case involves Advanced Computers and Mobiles India Private Limited, which appealed against the order of the CIT(A) confirming the additions made by the Assessing Officer during reassessment for the Assessment Year 2018-19. The reassessment was based on allegations of the company issuing bogus invoices for claiming fraudulent input tax credit without actual supply of goods. The Assessing Officer made an ad-hoc addition of Rs. 30.43 crores, estimating 2% of total sales and purchases, which was confirmed by the CIT(A). The Tribunal, however, found the addition excessive and directed a reduction to 1% on sales only, citing the absence of concrete evidence and the company's compliance with GST regulations.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831916 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-05-2025
• Other Referred Cases: N.K. Proteins Ltd. vs DCIT, DilkhushAnnraj Babel vs ITO, CIT vs Odeon Builders Pvt. Ltd., H.R. Mehta vs ACIT, Umacharan Shaw & Bros. vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: K. GOPAL; NEHA PARANJPE; ADVOCATES
• Keywords: Set aside; Business income; Reassessment proceedings; Bogus purchase; Principle of natural justice; Third party statement; TDS; Opportunity of cross examination; Bogus
• Section: 147; 148; 154; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No. 3212/MUM/2025 (AY: 2018-2019) (Physical hearing) Advanced Computers and Mobiles India Private Limited Unit No. 9, Ground Floor, Yusuf Building, Flora Fountain, Fort, Mumbai – 400001. [PAN: AAMCA5425A] Vs DCIT, Circle – 1(1)(1), Mumbai Room No. 533, 5th Floor, AayakarBhavan, M.K. Road, Mumbai – 400020. Appellant / Assessee Respondent / Revenue Assessee by Shri K. Gopal, & Ms. Neha Paranjpe, Advocates Revenue by Shri Rajesh Kumar Yadav, CIT-DR Date of Institution 07.05.2025 Date of hearing 11.11.2025 Date of pronouncement 22.01.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: This appeal by assessee is directed against the order of ld. CIT(A) / NFAC dated 10.03.2025 for Assessment Year (AY) 2018-19. The assessee has raised following grounds of appeal: “1. The Ld.CIT(A) erred in confirming the action of the Ld.A.O. in assessing the total income at Rs.50,02,91,377/- as against the returned income of Rs.3,79,83,180/- declared by the Appellant without appreciating the facts and circumstances of the case. The additions made in the assessment order are not justified and the same may be deleted. The addition made merely relying on third party statement without granting cross examination is in violation of principles of natural justice. 2. The Ld.CIT(A) erred in confirming the action of the Ld.A.O. of making ad-hoc addition of Rs.30,43,32,067/- being 2% of total sales and purchases of Rs.1505,24,56,587/- merely relying on the statement of third party recorded in the search action carried on in the case of M/s. Kushal Limited without granting the Appellant an opportunity of cross examination. Thus, the ad hoc addition Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 2 made by the Ld. A.O. and confirmed by the CIT(A) is in breach of principals of natural justice and the same may be deleted. The ad-hoc addition of Rs.30,43,32,067/- is unjustified 3. The Ld.CIT(A) erred in confirming the addition of Rs.30,43,32,067/- being 2% of total sales and purchases of Rs.1505,24,56,587/- by doubting the said transactions without appreciating that the Appellant has carried out genuine purchase and sale transactions and the profit received out of the same offered to tax. The Appellant provided all the supporting documents tosubstantiate the genuineness of purchase and sale transactions. Hence, the addition made by the Ld.A.O. and confirmed by the Ld.CIT(A) are not justified and the same may be deleted. 4. 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. 5. The Ld.CIT(A) erred in confirming the action of the Ld.A.O. in not considering the returned income of Rs.3,79,83,180/- declared in the return filed in response to the notice under section 148 of the Act instead of returned income declared in the original return under section 139(4) of the Act while computing the total income without appreciating the facts and circumstances of the case. 6. The appellant seeks leave to add, alter and amend the above grounds whenever required. 2. Vide application dated 06.08.2025, the assessee has raised following additional grounds of appeal: 1. The entire reassessment proceedings and the subsequent notice dated 31.03.2022 issued under section 148 of the Act are bad in law and void ab- initio. 2. The reassessment proceedings including the show cause notices issued under section 148A of the Act, the order passed under section 148A(d) of the Act and the notice dated 31.03.2022 issued under section 148 of the Act are in violation of the provisions of section 151A of the Act as the same have passed issued by the Jurisdictional Assessing Officer instead of Faceless Assessing Officer. Thus, Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 3 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. 3. The reopening under section 147 of the Act has been initiated on the same set of facts which were available during the course of original assessment proceedings. Thus, the reassessment proceedings initiated to verify the same facts amounting to review which is not permissible under the law. Thus, the notice dated 31.03.2022 issued under section 148 of the Act is bad in law and void ab-initio. 4. The appellant craves leave to add, alter or amend any of the above grounds of appeal.” 3. At the time of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that he is not pressing additional grounds of appeal. Considering the submission of ld. AR of the assessee, the additional ground of appeal is dismissed has not pressed. 4. Brief facts of the case are that assessee company filed its return of income for Assessment Year (AY) 2018-19 on 30.09.2019 declaring total income of Rs. 19.59 crores. The case of assessee was reopened under section 147. 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 Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 4 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 Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 5 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/-). 5. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detail statement of facts. Statement of facts furnished by assessee is recorded in various sub- para of para 2 of order of ld. CIT(A). The assessee stated that the assessing officer reopened the case merely on the basis of information that search action was carried out against Kaushal Limited, without allowing cross examination. The allegation of assessing officer is without any basis. The assessee discharged its onus for proving its transaction. The addition made by assessing officer is unreasonable. The assessee in response to notice under section 250 also furnished various written submission on 18.12.2024, 28.02.2025 and 08.03.2025, as recorded in para 4 of order of ld. CIT(A). The ld. CIT(A) has not recorded the contents of submission filed by assesse. In para-5.1.2 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 Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 6 and that assessee made transaction with sister concern to route the money.The ld. CIT(A) in para 8.1 of his order recorded that assessee declared income of Rs. 19.59 crores under section 139(4) / includes benefit derived from GST / VAT which remained unpaid. On looking to sales and purchase, it is apparent that purchase of mobiles is not consumed rather it was passed to customer through bogus billing. The assessee was acting as accommodation entry provider rather than actual beneficiary of bogus purchases. The assessing officer estimated commission @ 2.00 % of sales and purchases. There was no response from assessee to show cause notice. 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. 6. We have heard the submissions of learned Authorised Representative (ld. AR) 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. Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 7 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 Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 8 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. 8. On the other hand, ld. CIT-DR for the Revenue supported the order of lower authorities. The ld. CIT-DR for the Revenue submits that assessing officer made addition on the basis of information with him that assessee was providing bogus bills for claiming input tax credit. The assessing officer, thus, reasonably made addition only of 2.00% of sales as well as purchases. The ld. CIT(A) while confirming the order of assessing officer gave a clear finding that M/s. Kushal Ltd. of Ahmadabad has accepted that assessee issued a bogus invoice without supply of goods. Against ground no. 5 which relates to not considering the return income of Rs. 3.79 crores, filed in response to Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 9 notice under section 148, the ld. CIT-DR for the revenue submits that the assessee has already filed application before assessing officer, direction may be given to pass order in accordance with law. 9. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. Ground no. 1 is general, needs no specific adjudication. Ground no. 2, 3 & 4 relates to adhoc addition of Rs. 30.43 crores. We find during assessment, the assessing officer solely relied upon the information received from Ahmedabad. No independent investigation was carried out by assessing officer. The assessing officer on page 2 & 4 of his order has recorded the sales turnover of assessee is Rs. 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 Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 10 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. 10. We find that Hon’ble Supreme court in CIT vs Odeon Builders Pvt. Ltd. (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% Printed from counselvise.com ITA No. 3212/Mum/2025 Advanced Computers and Mobiles India Private Limited 11 on sales only, would be sufficient to meet the ends of justice. In the result, the ground No. 2 to 3 are partly allowed. 11. So far as ground No. 5, is concerned, the ld AR of the assessee while making his submissions made limited prayer to direction to the AO to pass order on the application of assessee under section 154, thus, considering the prayer of assessee, the AO is directed to pass order on such application in accordance with law. 12. In the result, appeal of the assessee is partly allowed. Order was pronounced in the open Court on 22/01/2026. Sd/- Sd/- PADMAVATHY S. ACCOUNTANT MEMBER Mumbai, Dated: 22/01/2026 PAWAN SINGH JUDICIAL MEMBER 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 "