BHIKSHU MARGAM,PUNE V. CIT CIRCLE 2 , PUNE, PUNE

ITA 1769/PUN/2025

AI Insights

The case involves Bhikshu Margam, a firm engaged in the business of manufacturing and trading of marble and other stones, which appealed against the order of the CIT(A) / NFAC, Delhi, for the assessment year 2017-18. The primary contention was the ad hoc disallowance of Rs.50 lakhs from purchases and other expenses made by the Assessing Officer due to alleged insufficient details provided by the assessee. The Tribunal examined the submissions, evidence, and the precedents set in similar cases, particularly noting that the assessee had indeed furnished comprehensive details in response to the notices issued by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791375 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 24-07-2025
• Other Referred Cases: ACIT vs. Bhikhsu Granimart
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A D KULKARNI
• Assessee Lawyers: NIKHIL S PATHAK
• Keywords: Set aside; Business income; Corroborative evidences; Depreciation
• Section: 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1769/PUN/2025 Assessment year : 2017-18 Bhikshu Margam S No 52A, Mula Road, Khadki, Pune – 411003 Vs. DCIT, Circle – 2, Pune PAN: AACFB9767B (Appellant) (Respondent) Assessee by : Shri Nikhil S Pathak Department by : Shri A D Kulkarni Date of hearing : 26-11-2025 Date of pronouncement : 08-12-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 11.07.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18. 2. Facts of the case, in brief, are that the assessee is a firm engaged in the business of manufacturing and trading of marble and other stones used for building construction. It filed its return of income on 28.09.2017 declaring total income of Rs.54,20,819/-. The return was selected for scrutiny through CASS and accordingly notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee. Subsequently the Assessing Officer issued notice u/s 142(1) of the Act along with a questionnaire calling for Printed from counselvise.com 2 ITA No.1769/PUN/2025 certain details. In response to the statutory notices the assessee filed various details from time to time. 3. During the course of assessment proceedings the Assessing Officer noted that in the Profit and Loss Account the assessee has shown total sales to the tune of Rs.39.28 crores. Other incomes have been shown at Rs.38.61 lakh. Against these sales/receipts, the assessee has shown the cost of sales at Rs.34.35 crores as well as other expenses to the extent of Rs.3.79 crore and has shown book profit of Rs.1.52 crore before payment of salary and interest to partners. During the course of assessment proceedings, the assessee was asked to furnish the party-wise details of purchases and other expenses. The Assessing Officer observed from the details furnished that the assessee has made local as well as high sea and import purchases. However, the details of the local purchases, which were to the extent of Rs.6.48 crores during the year or even the names/addresses were not provided. In view of this vide notices dated 14-10-2019 and 07-11-2019 the assessee was further asked to furnish some details/submissions. The assessee in response to the same filed incomplete details. Since there was absence of complete details of the names of the parties from whom the assessee has purchased the goods, the Assessing Officer could not issue notices u/s 133(6) of the Act. He, therefore, again issued a show cause notice to the assessee to furnish the confirmations from all the sundry creditors exceeding Rs.1 lakh with details / evidence. In response to the said notice the assessee filed the submissions. However, according to the Assessing Officer, the books of account / bills / vouchers were not produced. Printed from counselvise.com 3 ITA No.1769/PUN/2025 Since according to the Assessing Officer full details were not produced by the assessee to his satisfaction, therefore, he held that the entire claim of purchases and other expenses made by the assessee cannot be accepted as genuine. He, therefore, made an adhoc disallowance of Rs.50 lakhs from the purchases and expenses by observing as under: Printed from counselvise.com 4 ITA No.1769/PUN/2025 4. In appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer by observing as under: “5. Ground No.1: The AO erred in disallowing ad-hoc amount of Rs.50,00,000 out of purchases/other expenses on grounds that the onus cast to establish veracity of the claim had not been discharged. The appellant pleads that its accounts were adequately supported, supporting were furnished in asst. proceedings and that its claim of purchases was legitimate and in order. In this ground the appellant had challenged the addition of Rs.50 lakhs made by the Assessing Officer on account of disallowance out of cost of sales and expenses. The appellant had submitted that he furnished voluminous supporting evidences physically along with submission dated 26.08.2019 furnished on 05.06.2021. The appellant submitted that details of expenses of Rs.38,14,22,866/- are as under- Sr No Particulars Amount Rs. 1 Cost of Sales 34,35,77,885 2 Manpower Expenses 51,67,121 3 Administrative Expenses 73,43,507 4 Selling Expenses 13,38,937 5 Finance Cost 2,16,84,916 6 Depreciation 23,10,500 Total Rs. 38,14,22,866 The appellant submitted that he had furnished reply and explanation sought by the Assessing Officer during the assessment proceedings. The appellant submitted that the details of sundry creditors and expenses as required by the Assessing Officer were filed on 20.11.2019. I have gone through the submission of the appellant and also through the replies filed by him before the Assessing Officer. It has been mentioned by the appellant in the reply filed on 04.12.2019 that list of parties for expenses exceeding Rs.1 lakh was submitted on 05.09.2019 but I don't find any details of expenses filed on 05.09.2019. Therefore, the appellant has had not filed the complete details as required by the appellant and in these circumstances the Assessing Officer was right making an ad-hoc Printed from counselvise.com 5 ITA No.1769/PUN/2025 disallowance of Rs.50 lakh. Therefore, the ground of appeal is not tenable and is dismissed.” 5. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: 1. That the learned CIT(A) erred in upholding the ad hoc disallowance of ₹50,00,000 out of purchases and other expenses, without establishing any specific or concrete deficiency in the audited accounts or in the supporting documents and explanations duly furnished during both assessment and appellate proceedings. The learned CIT(A) failed to appreciate that the assessee's accounts were duly audited and that the assessee, had provided extensive and verifiable evidence including sample invoices, purchase register, creditors details, ledger extracts of other expenses and tally backup of accounts to substantiate its claims. The appellant pleads that in the absence of any clear finding of non-genuineness, or fictitious claims, an ad hoc disallowance is neither justified nor sustainable in law and is to be deleted. 2. The appellant pleads for directions allowing the appeal and craves leave to, add to, alter, amend, modify or withdraw any or all grounds of appeal. 6. The Ld. Counsel for the assessee referring to para 3.2 of the assessment order submitted that according to the Assessing Officer the assessee did not furnish the details. Referring to para 3.8 of the assessment order he submitted that the Assessing Officer in the said order has mentioned that the assessee has furnished some details. Referring to para 5 of the order of the Ld. CIT(A) / NFAC at page 19, he drew the attention of the Bench to the findings of the Ld. CIT(A) / NFAC where he has mentioned that the assessee has not submitted the details of expenses on 05.09.2019. Referring to page 11 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the sales shown at Rs.39,28,11,881/- as per schedule-12. Similarly, cost of sales as per schedule-14 is Rs.34,35,77,885/-. Referring to page 17 of the paper book, the Ld. Counsel for the assessee drew the Printed from counselvise.com 6 ITA No.1769/PUN/2025 attention of the Bench to the bifurcation of cost of sales as per schedule-14. Referring to page 61 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the response to the notice issued by the Assessing Officer which are as per pages 62 onwards of the paper book. Referring to page 63 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to item No.12 wherein the assessee has given the details of purchase and creditors list along with copy of ledger account and sample bills. Referring to page 65 of the paper book he drew the attention of the Bench to the purchase details. Referring to pages 67 and 68 of the paper book, he drew the attention of the Bench to the details of imports made by the assessee. Referring to page 273 of the paper book, he drew the attention of the Bench to the ledger account of Devay Mermer. Referring to page 342 of the paper book, he drew the attention of the Bench to the ledger account of Marmo Granite International. Referring to page 328 of the paper book he drew the attention of the Bench to the ledger account of IN MA SA SRL. The Ld. Counsel for the assessee referring to the ledger accounts of the above creditors and sample invoices submitted that they are completely tallied. 7. He submitted that the assessee vide reply dated 15.11.2019, copy of which is placed at pages 227 to 233 of the paper book, filed the requisite details such as details of sundry creditors exceeding Rs.1 lakh during the year with names / full addresses / PAN as per annexure-1. Similarly, the assessee has also enclosed the list of parties for expenses exceeding Rs.1 lakh during the year with names, full addresses / PAN as per annexure-2 which were received by the Assessing Officer Printed from counselvise.com 7 ITA No.1769/PUN/2025 on 04.12.2019 in physical copy. Referring to pages 234 and 235 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the reply given on 04.12.2019 wherein the assessee has also given the complete details as asked by the assessee. Referring to page 266 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the copy of purchase register which was filed before the Assessing Officer. Referring to pages 127 and 128 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the ledger account of job work amounting to Rs.1,13,30,974/-. Referring to pages 92 and 93 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the details of clearing and forwarding charges amounting to Rs.2,51,62,850/-. He submitted that no defects were pointed out by the Assessing Officer to the various details furnished by the assessee including the books of account. 8. Referring to the order of the Tribunal in the case of ACIT vs. Bhikhsu Granimart vide ITA No.1158/PUN/2024 order dated 29.07.2025 for assessment year 2017-18, he submitted that the Tribunal in the case of sister concern of the assessee under identical circumstances has dismissed the appeal filed by the Revenue wherein the Ld. CIT(A) / NFAC deleted various additions made by the Assessing Officer. He accordingly submitted that the order of the Ld. CIT(A) / NFAC being not in accordance with law should be set aside and the grounds raised by the assessee be allowed. Printed from counselvise.com 8 ITA No.1769/PUN/2025 9. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that many details were not filed by the assessee and no books of account were ever produced before the Assessing Officer. Since the assessee failed to furnish the full details, the Assessing Officer could not issue notices u/s 133(6) of the Act to various parties. He submitted that since the orders of the Assessing Officer and the Ld. CIT(A) / NFAC are based on facts, therefore, the same should be upheld and the grounds raised by the assessee be dismissed. 10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made an adhoc disallowance of Rs.50 lakhs out of total claim of purchase / cost of sales / various expenses of the assessee on the ground that the assessee failed to submit the details whatsoever of the purchases as well as expenses and the assessee failed to produce the copies of bills / ledger/ details of foreign remittances and ledger extracts to discharge the onus cast on it to establish the veracity of its claim. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that since the full details were produced before the Assessing Officer in response to the various notices issued, therefore, without going through the details filed by the assessee and without pointing out any Printed from counselvise.com 9 ITA No.1769/PUN/2025 mistakes therein the Assessing Officer should not have made adhoc addition and the Ld. CIT(A) / NFAC should not have upheld the same. 11. We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the paper book furnished by the assessee shows that the assessee in response to the notices issued by the Assessing Officer had furnished various details. The contention of the Revenue that the assessee has not filed any details is not correct. A perusal of the paper book shows that the assessee in response to the notice issued u/s 142(1) of the Act in his reply dated 21.10.2019 has furnished the following details: Printed from counselvise.com 10 ITA No.1769/PUN/2025 Printed from counselvise.com 11 ITA No.1769/PUN/2025 12. Similarly the assessee has furnished the details which include inter-state purchases, local purchases, imports etc. We find the assessee vide letter dated 15.11.2019 has furnished the following details before the Assessing Officer: Printed from counselvise.com 12 ITA No.1769/PUN/2025 13. Similarly a perusal of pages 127 and 128 of the paper book shows that the assessee has filed full details of the ledger account of the job work. Similarly the assessee has filed the details of clearing and forwarding charges, the details of which are placed at pages 92 and 93 of the paper book. Therefore, the Ld. CIT(A)/NFAC in our opinion is not justified in sustaining the adhoc disallowance made by the Assessing Officer. We further find the Tribunal in the case of the sister concern of the assessee has dismissed the appeal filed by the Revenue when the Ld. CIT(A) / NFAC had deleted the disallowance made by the Assessing Officer under identical circumstances. In view of the above discussion, we set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to delete the adhoc disallowance of Rs.50 lakhs made by him out of total claim of purchase / cost of sales / various expenses. The grounds raised by the assessee are accordingly allowed. 14. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 8th December, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 8th December, 2025 GCVSR Printed from counselvise.com 13 ITA No.1769/PUN/2025 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 03.12.2025 Sr. PS/PS 2 Draft placed before author 05.12.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "