DCIT, CENTRAL CIRCLE 7(1), MUMBAI V. BALAJI BULLIONS AND COMMODITIES INDIA PRIVATE LIMITED, MUMBAI

ITA 3915/MUM/2025

AI Insights

The case involves Balaji Bullions And Commodities India Private Limited, which faced reassessment under sections 147/148 of the Income Tax Act, 1961, for the assessment year 2017-18. The reassessment was based on information from the Investigation Wing about the company's transactions with entities suspected of providing accommodation entries. The Assessing Officer treated these transactions as unexplained expenditure under section 69C. The Tribunal examined the validity of the reassessment and the additions made, ultimately upholding the reassessment but questioning the method of estimating commission income used by the learned CIT(A).

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840369 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 31-05-2025
• Other Referred Cases: National Thermal Power Co. Ltd. Vs. CIT, Kanak Impex Pvt. Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHABANA PRAVEEN
• Assessee Lawyers: SHARWAN KUMAR JHA
• Keywords: Set aside; Difference of opinion; Change of opinion; Opportunity of being heard; Reassessment proceedings; Question of law; Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Bogus purchase; Onus to prove; Search and seizure; Accommodation entries; Reason to believe; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 132; 68; 131; 69C; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 3755/MUM/2025 Assessment Year: 2017-18 Balaji Bullions And Commodities India Private Limited, 118/120, 3rd Floor, Ashok House Zaveri Bazar, Mumbai – 400002. Vs. DCIT, Central Circle 7(1), Mumbai, Aayakar Bhawan, Mumbai, Maharashtra. PAN NO. AADCB 0236 F Appellant Respondent ITA No. 3915/MUM/2025 Assessment Year: 2017-18 DCIT, Central Circle 7(1), Room No. 653, 6th Floor, Mumbai, Aayakar Bhawan, Mumbai-400020. Vs. Balaji Bullions And Commodities India Private Limited, 118/120, 3rd Floor, Ashok House Zaveri Bazar, Mumbai – 400002. PAN NO. AADCB 0236 F Appellant Respondent Assessee by : Shri Sharwan Kumar Jha, Adv. (Virtually Appeared) Department by : Ms. Shabana Praveen, CIT. DR and Shri Leyaqat Ali Aafaqui, Sr. AR. Printed from counselvise.com Date of Hearing Date of pronouncement PER OM PRAKASH KANT, AM These cross appeals by the assessee against order dated Commissioner of Income Tax (Appeals) Ld. CIT(A)’] for Assessment Year (in short A.Y) 2017 2. The material facts, in brief, are that the assessee filed its return of income on 22.10.2017 declaring loss of Rs. 1,53,42,913/ return was processed under section 143(1) of the Income Tax Act, 1961 (in short the ‘Act’ Subsequently, the Assessing Officer received specific information from the Deputy Director of Income Tax (Investigation), Unit indicating that certain entities, alleged to be engaged in providing accommodation entries, were found cash during the demonetisation period and were suspected to be non genuine concerns. 2.1 The information revealed that post cash deposits were noticed in the bank account Tradelink Private Limited. As no satisfactory compliance was forthcoming in response to departmental enquiries, survey Balaji Bullions And Commodities India Private ITA No. Date of Hearing : 15/12/2025 Date of pronouncement : 23/02/2026 ORDER PER OM PRAKASH KANT, AM appeals by the assessee and Revenue dated 28.03.2025, passed by the Learned Commissioner of Income Tax (Appeals) – 49, Mumbai, essment Year (in short A.Y) 2017-18 The material facts, in brief, are that the assessee filed its return of income on 22.10.2017 declaring loss of Rs. 1,53,42,913/ return was processed under section 143(1) of the Income Tax Act, short the ‘Act’) on 02.03.2018, accepting the re Subsequently, the Assessing Officer received specific information from the Deputy Director of Income Tax (Investigation), Unit indicating that certain entities, alleged to be engaged in providing accommodation entries, were found to have deposited substantial cash during the demonetisation period and were suspected to be non The information revealed that post-demonetisation, substantial cash deposits were noticed in the bank accounts Private Limited. As no satisfactory compliance was forthcoming in response to departmental enquiries, survey Balaji Bullions And Commodities India Private Limited 2 ITA No. 3755 & 3915/MUM/2025 evenue are directed .2025, passed by the Learned 49, Mumbai, [in short ‘the 18. The material facts, in brief, are that the assessee filed its return of income on 22.10.2017 declaring loss of Rs. 1,53,42,913/-. The return was processed under section 143(1) of the Income Tax Act, 02.03.2018, accepting the returned loss. Subsequently, the Assessing Officer received specific information from the Deputy Director of Income Tax (Investigation), Unit-7(4), Mumbai, indicating that certain entities, alleged to be engaged in providing to have deposited substantial cash during the demonetisation period and were suspected to be non- demonetisation, substantial s of M/s Trikesh Private Limited. As no satisfactory compliance was forthcoming in response to departmental enquiries, survey Printed from counselvise.com proceedings under section 133A were conducted at the premises of the said concern. Similar survey action was undertaken in the case of M/s Pihu Gold, where significant cash deposits during the demonetisation period were also observed. 2.2 The survey proceedings revealed that the premises of M/s Trikesh Tradelink Private Limited at K and local enquiries suggested absence of any regular business activity. Further enquiries at the concern likewise did not yield any credible evidence of genuine business operations. In the case of M/ the concern had reported purchases from M/s Rishabh Jewellers; however, upon verification, the said supplier denied having conducted any transactions with M/s Pihu Gold. 2.3 The Investigation Wing further observed that the associated with these entities were linked to multiple concerns of similar nature. Surveys conducted at the premises of one such concern, M/s Access Diamond Private Limited, also resulted in findings indicative of non individual shown as director, Shri Hanvanth Singh, was not found at the recorded address. Subsequent enquiries revealed that he was employed as a cook at another establishment. In his statement recorded under section 131 of the Act, Shri Hanvanth S that he acted merely as a name Balaji Bullions And Commodities India Private ITA No. proceedings under section 133A were conducted at the premises of the said concern. Similar survey action was undertaken in the case of d, where significant cash deposits during the demonetisation period were also observed. The survey proceedings revealed that the premises of M/s Tradelink Private Limited at Kalbadevi were found locked, and local enquiries suggested absence of any regular business activity. Further enquiries at the Ahmadabad office of the said concern likewise did not yield any credible evidence of genuine business operations. In the case of M/s Pihu Gold, it was noticed that the concern had reported purchases from M/s Rishabh Jewellers; however, upon verification, the said supplier denied having conducted any transactions with M/s Pihu Gold. The Investigation Wing further observed that the associated with these entities were linked to multiple concerns of similar nature. Surveys conducted at the premises of one such concern, M/s Access Diamond Private Limited, also resulted in findings indicative of non-functional business operatio individual shown as director, Shri Hanvanth Singh, was not found at the recorded address. Subsequent enquiries revealed that he was employed as a cook at another establishment. In his statement recorded under section 131 of the Act, Shri Hanvanth S that he acted merely as a name-lender or dummy director and had no Balaji Bullions And Commodities India Private Limited 3 ITA No. 3755 & 3915/MUM/2025 proceedings under section 133A were conducted at the premises of the said concern. Similar survey action was undertaken in the case of d, where significant cash deposits during the The survey proceedings revealed that the premises of M/s albadevi were found locked, and local enquiries suggested absence of any regular business office of the said concern likewise did not yield any credible evidence of genuine s Pihu Gold, it was noticed that the concern had reported purchases from M/s Rishabh Jewellers; however, upon verification, the said supplier denied having conducted The Investigation Wing further observed that the directors associated with these entities were linked to multiple concerns of similar nature. Surveys conducted at the premises of one such concern, M/s Access Diamond Private Limited, also resulted in functional business operations. The individual shown as director, Shri Hanvanth Singh, was not found at the recorded address. Subsequent enquiries revealed that he was employed as a cook at another establishment. In his statement recorded under section 131 of the Act, Shri Hanvanth Singh admitted lender or dummy director and had no Printed from counselvise.com knowledge of the business affairs of M/s Access Diamond Private Limited. 2.4 On the basis of the survey findings, post statements recorded, the Investiga in question were merely paper concerns created for facilitating accommodation entries. It was further noticed that the assessee had reported purchase transactions with certain entities associated with the group, including India Corporation Limited, M/s Shalibhadra Exports Private Limited, M/s Worldwide Online Services Private Limited, and M/s Royal Refinery Private Limited. 2.5 Acting upon the said information, the Assessing O examined the assessee’s examination, and in light of the investigation inputs, the Assessing Officer formed a prima facie belief that income chargeable to tax had escaped assessment. Consequently, reasons were recor section 147 of the Act, and notice under section 148 was issued on 30.03.2021. The notice was duly served, and in response, the assessee filed its return of income on 29.04.2021, reiterating the loss originally declared. 3. During the course of t Assessing Officer called for and examined the details of the assessee’s purchases and sales as reflected in the books of account. Upon such Balaji Bullions And Commodities India Private ITA No. knowledge of the business affairs of M/s Access Diamond Private On the basis of the survey findings, post-survey enquiries, and statements recorded, the Investigation Wing opined that the entities in question were merely paper concerns created for facilitating accommodation entries. It was further noticed that the assessee had reported purchase transactions with certain entities associated with M/s Access Diamond Private Limited, M/s Royal India Corporation Limited, M/s Shalibhadra Exports Private Limited, M/s Worldwide Online Services Private Limited, and M/s Royal Refinery Private Limited. Acting upon the said information, the Assessing O examined the assessee’s information on record. examination, and in light of the investigation inputs, the Assessing Officer formed a prima facie belief that income chargeable to tax had escaped assessment. Consequently, reasons were recor section 147 of the Act, and notice under section 148 was issued on 30.03.2021. The notice was duly served, and in response, the assessee filed its return of income on 29.04.2021, reiterating the loss During the course of the reassessment proceedings, the Assessing Officer called for and examined the details of the assessee’s purchases and sales as reflected in the books of account. Upon such Balaji Bullions And Commodities India Private Limited 4 ITA No. 3755 & 3915/MUM/2025 knowledge of the business affairs of M/s Access Diamond Private survey enquiries, and tion Wing opined that the entities in question were merely paper concerns created for facilitating accommodation entries. It was further noticed that the assessee had reported purchase transactions with certain entities associated with M/s Access Diamond Private Limited, M/s Royal India Corporation Limited, M/s Shalibhadra Exports Private Limited, M/s Worldwide Online Services Private Limited, and M/s Royal Acting upon the said information, the Assessing Officer information on record. Upon such examination, and in light of the investigation inputs, the Assessing Officer formed a prima facie belief that income chargeable to tax had escaped assessment. Consequently, reasons were recorded under section 147 of the Act, and notice under section 148 was issued on 30.03.2021. The notice was duly served, and in response, the assessee filed its return of income on 29.04.2021, reiterating the loss he reassessment proceedings, the Assessing Officer called for and examined the details of the assessee’s purchases and sales as reflected in the books of account. Upon such Printed from counselvise.com examination, the Assessing Officer issued a show requiring the assesse Rs. 417,87,20,218/ expenditure. The assessee, however, failed to furnish any satisfactory explanation or supporting evidence in response thereto. The Assessing Officer ther gathered by the Investigation Wing, particularly the enquiries and survey actions conducted in the case of M/s Balaji Bullions & Commodities (I) Private Limited. The record reveals that summons under section 131 of pursuant to which only partial details such as copies of the purchase and sale registers, stock statements, and bank statements were furnished. Despite repeated opportunities and said entities did not produce the remaining information or documents sought by the Department. Upon perusal of the bank statements and other material available on record, the Assessing Officer observed substantial fund movements between M/s Balaji Bullions & Commodities (I) Private Limited allegedly controlled or managed by including M/s Trikesh Tradelink Private Limited and other concerns. The enquiries conducted during surve those entities were either non evidence of genuine business activity. Physical verification of premises, statements recorded under oath, and post Balaji Bullions And Commodities India Private ITA No. examination, the Assessing Officer issued a show requiring the assessee to explain why the purchases aggregating to Rs. 417,87,20,218/- should not be treated as unexplained expenditure. The assessee, however, failed to furnish any satisfactory explanation or supporting evidence in response thereto. The Assessing Officer thereafter proceeded to analyse the material gathered by the Investigation Wing, particularly the enquiries and survey actions conducted in the case of M/s Balaji Bullions & Commodities (I) Private Limited. The record reveals that summons under section 131 of the Act were issued to the said concern, pursuant to which only partial details such as copies of the purchase and sale registers, stock statements, and bank statements were furnished. Despite repeated opportunities and further notices, the id not produce the remaining information or documents sought by the Department. Upon perusal of the bank statements and other material available on record, the Assessing Officer observed substantial fund movements between M/s Balaji Bullions & (I) Private Limited i.e. the assessee and various entities allegedly controlled or managed by ‘Shri Manoj Babulal Punamiya including M/s Trikesh Tradelink Private Limited and other concerns. The enquiries conducted during survey proceedings indicated tha se entities were either non-functional or lacked any credible evidence of genuine business activity. Physical verification of premises, statements recorded under oath, and post Balaji Bullions And Commodities India Private Limited 5 ITA No. 3755 & 3915/MUM/2025 examination, the Assessing Officer issued a show-cause notice e to explain why the purchases aggregating to should not be treated as unexplained expenditure. The assessee, however, failed to furnish any satisfactory explanation or supporting evidence in response thereto. The eafter proceeded to analyse the material gathered by the Investigation Wing, particularly the enquiries and survey actions conducted in the case of M/s Balaji Bullions & Commodities (I) Private Limited. The record reveals that summons the Act were issued to the said concern, pursuant to which only partial details such as copies of the purchase and sale registers, stock statements, and bank statements were further notices, the id not produce the remaining information or documents sought by the Department. Upon perusal of the bank statements and other material available on record, the Assessing Officer observed substantial fund movements between M/s Balaji Bullions & and various entities Shri Manoj Babulal Punamiya’, including M/s Trikesh Tradelink Private Limited and other concerns. y proceedings indicated that functional or lacked any credible evidence of genuine business activity. Physical verification of premises, statements recorded under oath, and post-survey Printed from counselvise.com investigations were relied upon by the Assessing Officer to infer t such concerns were merely paper entities. The Assessing Officer further noted that the directors associated with tho persons of negligible financial means and, in certain cases, were found to be acting only as name Statements recorded under section 131 of the Act were considered, wherein it was admitted that the entities had no substantive business operations and were used primarily for routing funds. On the basis of these findings, the Assessing Officer concl transactions reflected in the books of M/s Balaji Bullions & Commodities (I) Private Limited i.e. the assessee and represented accommodation entries. Correspondingly, the purchases recorded by the assessee from the said entities were held to lack authenticity. The Assessing Officer observed that identity nor creditworthiness of the part transactions had been established by the assessee. No confirmations were produced, nor were the concerned parties made available for verification. In view of the cumulative material, including the investigation results, surve failure of the assessee to discharge the onus cast upon it, the Assessing Officer held that the purchases amounting to Rs. 417,87,20,218/- constituted unexplained expenditure within the meaning of section 69C of the Ac Balaji Bullions And Commodities India Private ITA No. investigations were relied upon by the Assessing Officer to infer t such concerns were merely paper entities. The Assessing Officer he directors associated with tho persons of negligible financial means and, in certain cases, were found to be acting only as name-lenders or dummy dire Statements recorded under section 131 of the Act were considered, wherein it was admitted that the entities had no substantive business operations and were used primarily for routing funds. On the basis of these findings, the Assessing Officer concluded that the purchase transactions reflected in the books of M/s Balaji Bullions & Commodities (I) Private Limited i.e. the assessee were not genuine and represented accommodation entries. Correspondingly, the purchases recorded by the assessee from the said entities were held to lack authenticity. The Assessing Officer observed that creditworthiness of the parties nor the genuineness of the transactions had been established by the assessee. No confirmations were produced, nor were the concerned parties made available for verification. In view of the cumulative material, including the investigation results, survey findings, banking patterns, and the failure of the assessee to discharge the onus cast upon it, the Assessing Officer held that the purchases amounting to Rs. constituted unexplained expenditure within the meaning of section 69C of the Act. The said amount was accordingly Balaji Bullions And Commodities India Private Limited 6 ITA No. 3755 & 3915/MUM/2025 investigations were relied upon by the Assessing Officer to infer that such concerns were merely paper entities. The Assessing Officer he directors associated with those concerns were persons of negligible financial means and, in certain cases, were lenders or dummy directors. Statements recorded under section 131 of the Act were considered, wherein it was admitted that the entities had no substantive business operations and were used primarily for routing funds. On the basis of uded that the purchase transactions reflected in the books of M/s Balaji Bullions & were not genuine and represented accommodation entries. Correspondingly, the purchases recorded by the assessee from the said entities were held to lack authenticity. The Assessing Officer observed that neither the ies nor the genuineness of the transactions had been established by the assessee. No confirmations were produced, nor were the concerned parties made available for verification. In view of the cumulative material, including the y findings, banking patterns, and the failure of the assessee to discharge the onus cast upon it, the Assessing Officer held that the purchases amounting to Rs. constituted unexplained expenditure within the t. The said amount was accordingly Printed from counselvise.com added to the total income of the assessee. Assessing officer is reproduced as under: “Findings in the case of the assessee i.e. M/s. Balaji Bullions & Commodities (1) Private Limited In view of the above, to verify the ge Private Limited following summon was issued to M/ Private Limited u/s 131 of the Act: Sr. No Name and address of Vendor 1 M/s. Balaji Bullions & Commodities (1) Private Limited 118/120 Ashoka House Zaveri Bazar Mumbai-400 002 In response to the summons issued u/s 131 of the act dated 26.04.2017 M/s. Bullions & Commodities (I 11.05.2017- 1. A Copy of Purchase & Sale Register for F.Y 2016 2. A Copy of Stock Statement showing the quantity and value for F.Y 2016 3. A Copy of bank statement of FY 2016 In view of partial submission by M/ letter was issued and served to M/ 29.05.2017 requesting to make remaining submission. In response to letter dated 29.05.2017 M/s. Balaji Bullions & Commodities (I submission on 05/06/2017. Thereafter a show cause notice dated 13.06.2016 was issued and served to M/s. remaining documents/information. In response to show cause notice dated 13.06.2017 M/s. Balaji Bullions & Commodities (I 21.06.2017 (received on 23.06.2017) stating that: “We M/s. Balaji Bullions & Commodities 13.06.2017 Necessary details under completion therefore we required sometime to submit the document. Inconvenience cause to your honur is deeply regretted We assure our co operation to your good self in th Balaji Bullions And Commodities India Private ITA No. added to the total income of the assessee. The relevant finding of th ssessing officer is reproduced as under: Findings in the case of the assessee i.e. M/s. Balaji Bullions & Commodities (1) Private Limited f the above, to verify the genuinity of purchases shown by M/ ollowing summon was issued to M/s. Balaji Bullions & Commodities (1) Private Limited u/s 131 of the Act:- Name and address of Vendor Date of Summons M/s. Balaji Bullions & Commodities (1) 118/120 Ashoka House Zaveri Bazar 26.04.2017 In response to the summons issued u/s 131 of the act dated 26.04.2017 M/s. Bullions & Commodities (I) Private Limited made following partial submission 1. A Copy of Purchase & Sale Register for F.Y 2016-17 2. A Copy of Stock Statement showing the quantity and value for F.Y 2016 3. A Copy of bank statement of FY 2016-17 partial submission by M/s. Balaji Bullions & Commodities (I tter was issued and served to M/s. Balaj Bullions & Commodities (I 29.05.2017 requesting to make remaining submission. In response to letter dated Balaji Bullions & Commodities (I) Private Limited again made on 05/06/2017. Thereafter a show cause notice dated 13.06.2016 was issued and served to M/s. Balajı Bullions & Commodities (I) Private Limited to furnish the documents/information. In response to show cause notice dated 13.06.2017 Balaji Bullions & Commodities (I) Private Limited furnished its reply vide letter dated 21.06.2017 (received on 23.06.2017) stating that:- Balaji Bullions & Commodities (I) Private Limited are in receipt of letter dated 13.06.2017 Necessary details under completion therefore we required sometime to submit Inconvenience cause to your honur is deeply regretted We assure our co operation to your good self in the matter\" Balaji Bullions And Commodities India Private Limited 7 ITA No. 3755 & 3915/MUM/2025 The relevant finding of the Findings in the case of the assessee i.e. M/s. Balaji Bullions & nuinity of purchases shown by M/s. Trikesh Tradelink s. Balaji Bullions & Commodities (1) Date of Summons Remarks 26.04.2017 Partial submission In response to the summons issued u/s 131 of the act dated 26.04.2017 M/s. Balaji ) Private Limited made following partial submission on 2. A Copy of Stock Statement showing the quantity and value for F.Y 2016-17 Balaji Bullions & Commodities (I) Private Limited a Balaj Bullions & Commodities (I) Private Limited on 29.05.2017 requesting to make remaining submission. In response to letter dated ) Private Limited again made partial on 05/06/2017. Thereafter a show cause notice dated 13.06.2016 was ) Private Limited to furnish the documents/information. In response to show cause notice dated 13.06.2017 ) Private Limited furnished its reply vide letter dated ) Private Limited are in receipt of letter dated 13.06.2017 Necessary details under completion therefore we required sometime to submit Inconvenience cause to your honur is deeply regretted We assure our co- Printed from counselvise.com However M/s. Balaji Bullions & Commodities (1) Private Limited did not furnish any other documents. On perusal of the bank statement submitted by M/s. Balaji Bullions & Commodities ( Private Limited it is seen that M/ rotated its huge funds through bogus entities controlled managed and operated by Shri Manoj Babulal Punamiya Shalibhadra Exports Private Limited M/s. Worldwide Online Limited M/s. Access Diamonds Private Limited etc). report that a search action was conducted in the case of Shri Manoj B Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 and the search a also carried out on M/s. Trikesh Trade Link Private Limited as part of the search and seizure action carried out in Madhukoda Group of cases and it was found that M/s. Trikesh Trade Link Private Limited is a bogus entity managed and handle by Shri Manoj B Punamiya. 14.03.2014 of M/s. Trikesh Trade Link Private Limited of A.Y 2010 On perusal of the return of income of M/ it is seen that M/s. Balaji Bullions & Commodities (I income since A.Y 2009 -10 as per the details given below Sr. No 1 2 3 4 5 6 7 8 9 The details of 'return of income of Directors of M/s. Private Limited are as under Balaji Bullions And Commodities India Private ITA No. However M/s. Balaji Bullions & Commodities (1) Private Limited did not furnish On perusal of the bank statement submitted by M/s. Balaji Bullions & Commodities ( ivate Limited it is seen that M/s. Balaji Bullions & Commodities (I rotated its huge funds through bogus entities controlled managed and operated by Shri (such as M/s. Trikesh Tradelink Private Limited M/s. Shalibhadra Exports Private Limited M/s. Worldwide Online Limited M/s. Access Diamonds Private Limited etc). As discussed in para 8 of this a search action was conducted in the case of Shri Manoj B Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 and the search a s. Trikesh Trade Link Private Limited as part of the search and seizure action carried out in Madhukoda Group of cases and it was found that M/s. Trikesh Trade Link Private Limited is a bogus entity managed and B Punamiya. (Mentioned in para-1 of the assessment order dated 14.03.2014 of M/s. Trikesh Trade Link Private Limited of A.Y 2010-11). al of the return of income of M/s. Balaji Bullions & Commodities (I Bullions & Commodities (I) Private Limited has filed its return of 10 as per the details given below:- A.Y Amount 2009-10 5595863/- 2010-11 (-) 12740527/ 2011-12 664686/- 2012-13 (-)20971519/ 2013-14 55150649/ 2014-15 (-) 37205020/ 2015-16 (-) 1392770/ 2016-17 (-) 18832311/ 2017-18 (-) 14342913/ The details of 'return of income of Directors of M/s. Balaji Bullions & Commodities (I Private Limited are as under- Balaji Bullions And Commodities India Private Limited 8 ITA No. 3755 & 3915/MUM/2025 However M/s. Balaji Bullions & Commodities (1) Private Limited did not furnish On perusal of the bank statement submitted by M/s. Balaji Bullions & Commodities (I) Commodities (I) Private Limited has rotated its huge funds through bogus entities controlled managed and operated by Shri such as M/s. Trikesh Tradelink Private Limited M/s. Shalibhadra Exports Private Limited M/s. Worldwide Online Services Private As discussed in para 8 of this a search action was conducted in the case of Shri Manoj B Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 and the search action was s. Trikesh Trade Link Private Limited as part of the search and seizure action carried out in Madhukoda Group of cases and it was found that M/s. Trikesh Trade Link Private Limited is a bogus entity managed and 1 of the assessment order dated 11). Balaji Bullions & Commodities (I) Private Limited ) Private Limited has filed its return of Amount - ) 12740527/- )20971519/- 55150649/- ) 37205020/- ) 1392770/- ) 18832311/- ) 14342913/- Balaji Bullions & Commodities (I) Printed from counselvise.com Assessment Year Manoj BaulalPunamiya 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 On perusal of the above 'return of income of income of directors of M/s. Balaji Bullions & Commodities (1) Private Limited it is seen that these directors are of no means. Here it is also relevant to mention that a of M/s. Baiju Trading and Investment Private Limited u/s 133A of the act on 21.06.2017 at 3rd Floor Plot No. 118 Mumbai 400002 (The address of M/s. Baiju Trading and Investm Bullions & Commodities (I) Private Limited are same). On this premise the sign board of Mis. Balaji Bullions & Commodities (I During the survey proceedings in the case of M/ Limited it is found that the entire survey premise was vacant. (This premise also belongs to M/s. Balaji Bullions & Commodities (I premise. It is found that the premise is being used for were found at the premise. Their statements were recorded u/s 131 of the act. At that premise one Shri Hanvant Singh was found working as cook. His statement was recorded u/s 131 of the act. In the statement recorded unde that he is working as cook at this premise. appointed as dummy director in M/s. Access Diamonds Private Manoj Babulal Punamiya. Balaji Bullions And Commodities India Private ITA No. Manoj BaulalPunamiya HastimalNathmal Khandelwal NO ITR 435000/- 504713/- 100555/ 28766/- 251143/- 1177440/- 1811257/- 2410204/- On perusal of the above 'return of income of income of directors of M/s. Balaji Bullions & Commodities (1) Private Limited it is seen that these directors are of no means. Here it is also relevant to mention that a survey action was conducted in the case of M/s. Baiju Trading and Investment Private Limited u/s 133A of the act on 21.06.2017 at 3rd Floor Plot No. 118-120 Ashok Building S.M Street Zaveri Bazar (The address of M/s. Baiju Trading and Investment Private Limited and M/s. ) Private Limited are same). On this premise the sign board of Balaji Bullions & Commodities (I) Private Limited was found. ey proceedings in the case of M/s. Baiju Trading an Limited it is found that the entire survey premise was vacant. (This premise also belongs to Balaji Bullions & Commodities (I) Private Limited) There was no stock kept at the premise. It is found that the premise is being used for address purpose only. Two persons were found at the premise. Their statements were recorded u/s 131 of the act. At that premise one Shri Hanvant Singh was found working as cook. His statement was recorded u/s 131 of the act. In the statement recorded under oath Shri Hanvant Singh confirmed that he is working as cook at this premise. He also confirmed that he has been appointed as dummy director in M/s. Access Diamonds Private Punamiya. Balaji Bullions And Commodities India Private Limited 9 ITA No. 3755 & 3915/MUM/2025 HastimalNathmal Khandelwal NO ITR NO ITR 581327/- 481379/- 252685/- 278067/- 303904/- 488085/- 468091/- On perusal of the above 'return of income of income of directors of M/s. Balaji Bullions & Commodities (1) Private Limited it is seen that these directors are of no means. survey action was conducted in the case of M/s. Baiju Trading and Investment Private Limited u/s 133A of the act on 120 Ashok Building S.M Street Zaveri Bazar ent Private Limited and M/s. Balaji ) Private Limited are same). On this premise the sign board of s. Baiju Trading and Investment Private Limited it is found that the entire survey premise was vacant. (This premise also belongs to ) Private Limited) There was no stock kept at the address purpose only. Two persons were found at the premise. Their statements were recorded u/s 131 of the act. At that premise one Shri Hanvant Singh was found working as cook. His statement was recorded r oath Shri Hanvant Singh confirmed He also confirmed that he has been appointed as dummy director in M/s. Access Diamonds Private Limited by Shri Printed from counselvise.com As discussed above a search action was co Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 in connection with Madhukoda Group of cases and in the search action M/s. Trikesh Trade Link Private Limited was also covered u/s 132 of the Act. directors of M/s. Trikesh Tardelink Private Limited, M/s. Baiju Trading and Investment Private Limited, M/s. Access Diamonds Private Limited and M/s. B Bullions & Commodities (I entities are bogus entities. All these entities are controlled managed and operated by Shri Manoj BabulalPunamiya for providing bogus accommodation entries. In view of above facts & discussions it emerges that M/s. Commodities (I) Private Limited is a bogus entity controlled managed and operated by Shri Manoj Babulal entries and is not involved in any business activity. On perusal of the bank account statement of M/s. Limited it is seen that M/s. transferred /rotated huge funds in F.Y 2016 its group entities and also transferred huge fund to outside (i) Kotak Mahindra Bank Narima Point Brach Mumbai (A/c No. 6511642623) (ii) ICICI Bank Account Landmark Race Course Circle Vadodara 642605050662) The assessee M/s. Balaji Bullions & Commodities (1) Private Limited has made following sales during FY 2016 Sr. No. Name of the party 1 Kalash Sales Agencies Pvt. Ltd. 2 Royal India Corporation Ltd. 3 Shalibhadra Exports Pvt. Ltd. 4 Trikesh Tradelink Pvt. Ltd. The sales made by M/s Balaji Bullions & Commodities (I transactions and the same are used as colorable device to provide accommodation entries Balaji Bullions And Commodities India Private ITA No. As discussed above a search action was conducted in the case of Shri Manoj Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 in connection with Madhukoda Group of cases and in the search action M/s. Trikesh Trade Link Private Limited was also covered u/s 132 of the Act. It is also relevant to submit that the directors of M/s. Trikesh Tardelink Private Limited, M/s. Baiju Trading and Investment Private Limited, M/s. Access Diamonds Private Limited and M/s. B Bullions & Commodities (I) Private Limited are common directors. entities are bogus entities. All these entities are controlled managed and operated by Shri Manoj BabulalPunamiya for providing bogus accommodation In view of above facts & discussions it emerges that M/s. ) Private Limited is a bogus entity controlled managed and operated by Shri Manoj Babulal Punamiya for providing bogus accommodation entries and is not involved in any business activity. On perusal of the bank account statement of M/s. Balaji Bullions & Limited it is seen that M/s. Balaji Bullions & Commodities (I transferred /rotated huge funds in F.Y 2016-17 through its following bank accounts among its group entities and also transferred huge fund to outside entities - (i) Kotak Mahindra Bank Narima Point Brach Mumbai (A/c No. 6511642623) (ii) ICICI Bank Account Landmark Race Course Circle Vadodara The assessee M/s. Balaji Bullions & Commodities (1) Private Limited has made following sales during FY 2016-17: Name of the party Kalash Sales Agencies Pvt. Ltd. 6900000 Royal India Corporation Ltd. 41212688 Shalibhadra Exports Pvt. Ltd. 77022680 Trikesh Tradelink Pvt. Ltd. 470711504 Total 59.58,46.872/ Balaji Bullions & Commodities (I) Private Limited are not genuine transactions and the same are used as colorable device to provide accommodation entries Balaji Bullions And Commodities India Private Limited 10 ITA No. 3755 & 3915/MUM/2025 nducted in the case of Shri Manoj Babulal Punamiya by Director of Income Tax (Inv.) Mumbai on 31.10.2009 in connection with Madhukoda Group of cases and in the search action M/s. Trikesh Trade Link Private also relevant to submit that the directors of M/s. Trikesh Tardelink Private Limited, M/s. Baiju Trading and Investment Private Limited, M/s. Access Diamonds Private Limited and M/s. Balaji ) Private Limited are common directors. All these entities are bogus entities. All these entities are controlled managed and operated by Shri Manoj BabulalPunamiya for providing bogus accommodation In view of above facts & discussions it emerges that M/s. Balaji Bullions & ) Private Limited is a bogus entity controlled managed and Punamiya for providing bogus accommodation Balaji Bullions & Commodities (I) Private Balaji Bullions & Commodities (I) Private Limited has 17 through its following bank accounts among - (i) Kotak Mahindra Bank Narima Point Brach Mumbai (A/c No. 6511642623) (ii) ICICI Bank Account Landmark Race Course Circle Vadodara - 390007 (Account no. The assessee M/s. Balaji Bullions & Commodities (1) Private Limited has made the Amount (Rs.) 6900000 41212688 77022680 470711504 59.58,46.872/- ) Private Limited are not genuine transactions and the same are used as colorable device to provide accommodation entries Printed from counselvise.com of bogus purchase to the sales parties of M/s Limited. The assessee has made the following purchases during the FY 2016 Sr. No Name of the party 1 Access Diamond Pvt. Ltd. 2 Royal India Corporation Ltd. 3 Royal Refinery Pvt. Ltd. 4 Shalibhadra Exports Pvt. Ltd. 5 Worldwide Online Services Pvt. Ltd. In view of the above discussion, the purchases and other expenses booked by the assessee are bogus as the assessee is not the entity is being used merely for routing of funds. The findings of facts from the enquiries conducted, survey action and the submission of the assessee, it is amply clear that the transactions pertaining to s (1) Private Limited are bogus transactions used as a colourable device. The entity M/s Balaji Bullions & Commodities (I business activity and has no cred have been transferred are the beneficiaries of unexplained credits to their accounts. Above set of events and their corresponding findings reveal the bogus nature of the assessee, and further it rev entries in the nature of bogus transactions among themselves and with the related parties to create artificial turn over, to accommodate non unaccounted cash amounts, to suppress profits, and to earn commissions. Addition on Ground of Bogus Purchases Balaji Bullions And Commodities India Private ITA No. of bogus purchase to the sales parties of M/s Balaji Bullions & Commodities (I The assessee has made the following purchases during the FY 2016 Name of the party Access Diamond Pvt. Ltd. 681718036 Royal India Corporation Ltd. 71559930 Royal Refinery Pvt. Ltd. 1809985238 Shalibhadra Exports Pvt. Ltd. 684184864 Worldwide Online Services Pvt. Ltd. 931272150 Total 417,87,20,218/ In view of the above discussion, the purchases and other expenses booked by the assessee are bogus as the assessee is not engaged in any genuine business activity and the entity is being used merely for routing of funds. The findings of facts from the enquiries conducted, survey action and the submission of the assessee, it is amply clear that the transactions pertaining to sale and purchases made by M/s Balaji Bullions & Commodities (1) Private Limited are bogus transactions used as a colourable device. ons & Commodities (I) Private Limited is not engaged in genuine business activity and has no creditworthiness at all. Hence, the parties to whom the funds have been transferred are the beneficiaries of unexplained credits to their accounts. Above set of events and their corresponding findings reveal the bogus nature of the assessee, and further it reveals that the assessee is involved in proving accommodation entries in the nature of bogus transactions among themselves and with the related parties over, to accommodate non-genuine transactions, to launder the mounts, to suppress profits, and to earn commissions. Addition on Ground of Bogus Purchases Balaji Bullions And Commodities India Private Limited 11 ITA No. 3755 & 3915/MUM/2025 Commodities (I) Private The assessee has made the following purchases during the FY 2016-17: Amount (Rs.) 681718036 71559930 1809985238 684184864 931272150 417,87,20,218/- In view of the above discussion, the purchases and other expenses booked by the engaged in any genuine business activity and the entity is being used merely for routing of funds. The findings of facts from the enquiries conducted, survey action and the submission of the assessee, it is amply clear that the ale and purchases made by M/s Balaji Bullions & Commodities (1) Private Limited are bogus transactions used as a colourable device. ) Private Limited is not engaged in genuine itworthiness at all. Hence, the parties to whom the funds have been transferred are the beneficiaries of unexplained credits to their accounts. Above set of events and their corresponding findings reveal the bogus nature of the eals that the assessee is involved in proving accommodation entries in the nature of bogus transactions among themselves and with the related parties genuine transactions, to launder the mounts, to suppress profits, and to earn commissions. Printed from counselvise.com On perusal of the purchase register Limited, it is seen that M/s. following purchases during Sr. No. Name of the party 1 Access Diamond Pvt. Ltd. 2 Royal India Corporation Ltd. 3 Royal Refinery Pvt. Ltd. 4 Shalibhadra Exports Pvt. Ltd. 5 Worldwide Online Services Pvt. Ltd. During the course of survey action, it was found that the assessee company has been indulging in large scale booking of bogus entries running into crores of rupees by way bogus sales & purchases through various paper entities. On physical verification of the business premises of these companies, it was found that these entities have not been doing any genuine activities. It is pertinent to mentioned that the statement gi with the ongoing assessments. It is submitted that the statement of (i) Shri Hanvant Singh (ii) Shri Rakesh Champaklal Shah (iii) Shri Dinesh Jani (iv) Ms. BhoomiMomaya Manoj B. Punamia confirmed that entities were not engaged in any genuine business activity and these were being used merely for routing of funds. The findings of facts from the enquiries conducted, survey action and the submission (o transactions pertaining to sale and purchase made by the assessee are bogus transactions used as a colourable device. As from the above, it is crystal clear that no actual business activity is being done by the assessee and this party is actively involved in routing the unaccounted money through banking channel. Despite the final notice issued to the assessee, the assessee has failed to reply to the show-cause notice dated 27.03.2022, and has fai nature and source of the amounts debited in its books of account in the name of bogus purchases. Assessee has grossly failed to establish identity of party, the genuineness of transactions and creditworthiness of the p Balaji Bullions And Commodities India Private ITA No. purchase register of M/s. Balaji Bullions & Commodities ( Limited, it is seen that M/s. Balaji Bullions & Commodities (I) Private Limit following purchases during 01.04.2016 to 31.12.2016:- Name of the party Access Diamond Pvt. Ltd. 681718036 Royal India Corporation Ltd. 71559930 Royal Refinery Pvt. Ltd. 1809985238 Shalibhadra Exports Pvt. Ltd. 684184864 Worldwide Online Services Pvt. Ltd. 931272150 Total 417,87,20,218/ During the course of survey action, it was found that the assessee company has been indulging in large scale booking of bogus entries running into crores of rupees by way bogus sales & purchases through various paper entities. On physical verification of the business premises of these companies, it was found that these entities have not been doing any genuine activities. It is pertinent to mentioned that the statement given by a person is the evidence to proceed with the ongoing assessments. It is submitted that the statement of (i) Shri Hanvant Singh (ii) Shri Rakesh Champaklal Shah (iii) Shri Dinesh Jani (iv) Ms. BhoomiMomaya Manoj B. Punamia confirmed that all the entities as mentioned above are bogus as these entities were not engaged in any genuine business activity and these were being used merely for routing of funds. The findings of facts from the enquiries conducted, survey action and the submission (or non-compliance) of the assessee, it is amply clear that the transactions pertaining to sale and purchase made by the assessee are bogus transactions used as a colourable device. As from the above, it is crystal clear that no actual business eing done by the assessee and this party is actively involved in routing the unaccounted money through banking channel. Despite the final notice issued to the assessee, the assessee has failed to reply to the cause notice dated 27.03.2022, and has failed to explain to the undersigned the nature and source of the amounts debited in its books of account in the name of bogus purchases. Assessee has grossly failed to establish identity of party, the genuineness of transactions and creditworthiness of the party. Neither the assessee entity posses means Balaji Bullions And Commodities India Private Limited 12 ITA No. 3755 & 3915/MUM/2025 of M/s. Balaji Bullions & Commodities (I) Private ) Private Limited has made Amount (Rs.) 681718036 71559930 1809985238 684184864 931272150 417,87,20,218/- During the course of survey action, it was found that the assessee company has been indulging in large scale booking of bogus entries running into crores of rupees by way of bogus sales & purchases through various paper entities. On physical verification of the business premises of these companies, it was found that these entities have not been ven by a person is the evidence to proceed with the ongoing assessments. It is submitted that the statement of (i) Shri Hanvant Singh (ii) Shri Rakesh Champaklal Shah (iii) Shri Dinesh Jani (iv) Ms. BhoomiMomaya & (v) Shri all the entities as mentioned above are bogus as these entities were not engaged in any genuine business activity and these were being used merely for routing of funds. The findings of facts from the enquiries conducted, survey compliance) of the assessee, it is amply clear that the transactions pertaining to sale and purchase made by the assessee are bogus transactions used as a colourable device. As from the above, it is crystal clear that no actual business eing done by the assessee and this party is actively involved in routing the Despite the final notice issued to the assessee, the assessee has failed to reply to the led to explain to the undersigned the nature and source of the amounts debited in its books of account in the name of bogus purchases. Assessee has grossly failed to establish identity of party, the genuineness of arty. Neither the assessee entity posses means Printed from counselvise.com to purchases such huge amounts of Gold nor the supplying party has ability to provide such huge amounts of Gold as established through the findings that these are bogus entities. Further, the assessee was not purchase parties nor it was able to produce the purchase parties before the assessing officer. In absence of the details, the undersigned is not able to verify the genuineness of the purchase parties. Further the circumstantial evidence in the case of the assessee lead the undersigned to believe that the purchases were bogus and were merely booked as colorable device to accommodate unaccounted cash deposited during the demonetization period and to further facilitate artificial creation of the bogus turnover. Some of the circumstantial evidences are as follows:  The entities are bogus in nature. There is no substantial office/shop/store space. The directors are either dummy directors or bogus. These entities have non-existent employees.  There are back to back transactions which don't adduce the picture of genuine business transactions.  The cash deposited during demonetization are immediately transferred to other parties through banking channels to the ult cash was deposited) through a complex chain of bogus transactions.  The transactions are entered between potentially related parties. The web of bogus entities is involved in proving accommodation entries as per conveni  The entity suddenly got inactive after demonetization period. A genuine business entity can't have such a huge fluctuation in the business activity that in certain periods it becomes highly active and in other periods it becomes dormant. Therefore, the entire amount of the assessee remains unexplained expenditure, and added to the total income of the assessee u/s 69C of the Act on being unexplained expenditure. Further, in the light of the provisions of section 115BBE, t held to be taxable u/s 69C will be chargeable to tax at the rate of 60% u/s 115BBE. I am satisfied that this is a fit case for initiating penalty proceedings 271AAC r.w.s 274 of the Act for under reporting of income in consequence of mi Penalty u/s 271AAC r.w.s. 274 is being initiated separately. In view of the above, the total income of the assessee is determined as under Sr No. Particulars 1 Total loss as per order u/s 143(1) dated 29.04.2021 Balaji Bullions And Commodities India Private ITA No. to purchases such huge amounts of Gold nor the supplying party has ability to provide such huge amounts of Gold as established through the findings that these are bogus entities. Further, the assessee was not able to provide any confirmations from the purchase parties nor it was able to produce the purchase parties before the assessing officer. In absence of the details, the undersigned is not able to verify the genuineness of circumstantial evidence in the case of the assessee lead the undersigned to believe that the purchases were bogus and were merely booked as colorable device to accommodate unaccounted cash deposited during the demonetization period and to further e artificial creation of the bogus turnover. Some of the circumstantial evidences are The entities are bogus in nature. There is no substantial office/shop/store space. The directors are either dummy directors or bogus. These entities have existent employees. There are back to back transactions which don't adduce the picture of genuine business transactions. The cash deposited during demonetization are immediately transferred to other parties through banking channels to the ultimate beneficiaries (i.e person whose cash was deposited) through a complex chain of bogus transactions. The transactions are entered between potentially related parties. The web of bogus entities is involved in proving accommodation entries as per conveni The entity suddenly got inactive after demonetization period. A genuine business entity can't have such a huge fluctuation in the business activity that in certain periods it becomes highly active and in other periods it becomes dormant. he entire amount of Rs.417,87,20,218/- debited in the books of accounts of the assessee remains unexplained expenditure, and added to the total income of the assessee u/s 69C of the Act on being unexplained expenditure. Further, in the light of the ons of section 115BBE, the bogus purchase of Rs.417,87,20,218/ held to be taxable u/s 69C will be chargeable to tax at the rate of 60% u/s 115BBE. I am satisfied that this is a fit case for initiating penalty proceedings 271AAC r.w.s 274 of the Act for under reporting of income in consequence of misreporting of the income. Hence, Penalty u/s 271AAC r.w.s. 274 is being initiated separately. In view of the above, the total income of the assessee is determined as under Particulars Amount (In Rs) Total loss as per order u/s 143(1) dated Balaji Bullions And Commodities India Private Limited 13 ITA No. 3755 & 3915/MUM/2025 to purchases such huge amounts of Gold nor the supplying party has ability to provide such huge amounts of Gold as established through the findings that these are bogus able to provide any confirmations from the purchase parties nor it was able to produce the purchase parties before the assessing officer. In absence of the details, the undersigned is not able to verify the genuineness of circumstantial evidence in the case of the assessee lead the undersigned to believe that the purchases were bogus and were merely booked as colorable device to accommodate unaccounted cash deposited during the demonetization period and to further e artificial creation of the bogus turnover. Some of the circumstantial evidences are The entities are bogus in nature. There is no substantial office/shop/store space. The directors are either dummy directors or bogus. These entities have meager to There are back to back transactions which don't adduce the picture of genuine The cash deposited during demonetization are immediately transferred to other imate beneficiaries (i.e person whose cash was deposited) through a complex chain of bogus transactions. The transactions are entered between potentially related parties. The web of bogus entities is involved in proving accommodation entries as per convenience. The entity suddenly got inactive after demonetization period. A genuine business entity can't have such a huge fluctuation in the business activity that in certain periods it becomes highly active and in other periods it becomes dormant. debited in the books of accounts of the assessee remains unexplained expenditure, and added to the total income of the assessee u/s 69C of the Act on being unexplained expenditure. Further, in the light of the Rs.417,87,20,218/- which has been held to be taxable u/s 69C will be chargeable to tax at the rate of 60% u/s 115BBE. I am satisfied that this is a fit case for initiating penalty proceedings 271AAC r.w.s 274 of sreporting of the income. Hence, In view of the above, the total income of the assessee is determined as under: Amount (In Rs) (1,53,42,913/-) Printed from counselvise.com Addition made u/s 69C in view of the above discussion; Total assessed Income 15. With effect from 01.04.2017, 1961 provides that where section (s) 68/69/69A/698/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set of provisions of the Act in computing 4. On appeal, the learned CIT(A), while examining both the jurisdictional challenge to the reopening and the addition, recorded detailed findings. addressed the validity of the reassessment proceedings. Upon consideration of the reasons recorded and the material forming the basis of the belief, the learned CIT(A) held that not be characterised as being founded on mere suspicion or conjecture. It was observed that the Assessing Officer had acted upon specific information received from the Investigation Wing regarding transactions with entities belonging to learned CIT(A) emphasised that, for the purposes of section 147 of the Act, what is required is the existence of a “re prima-facie material, and not conclusive proof of escapement of income at the stage o settled principles governing reassessment, noting that the sufficiency or correctness of the material cannot be scrutinised at the threshold stage. Accordingly, the challenge to the reopening was rejected. Balaji Bullions And Commodities India Private ITA No. Addition made u/s 69C in view of the above 417,87,20,218 Total assessed Income 15. With effect from 01.04.2017, sub-section (2) of section 115BBE of the Income total income of an assessee includes any income referred to in section (s) 68/69/69A/698/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under nay provisions of the Act in computing the income referred to in section 115BBE(1) of the Act. On appeal, the learned CIT(A), while examining both the jurisdictional challenge to the reopening and the addition, recorded detailed findings. The learned CIT(A) first addressed the validity of the reassessment proceedings. Upon consideration of the reasons recorded and the material forming the basis of the belief, the learned CIT(A) held that the reopening could not be characterised as being founded on mere suspicion or conjecture. It was observed that the Assessing Officer had acted upon specific information received from the Investigation Wing regarding transactions with entities belonging to the ‘Punamiya learned CIT(A) emphasised that, for the purposes of section 147 of the Act, what is required is the existence of a “reason to believe” based on material, and not conclusive proof of escapement of income at the stage of issuance of notice. Reliance was placed on settled principles governing reassessment, noting that the sufficiency or correctness of the material cannot be scrutinised at the threshold stage. Accordingly, the challenge to the reopening was rejected. Balaji Bullions And Commodities India Private Limited 14 ITA No. 3755 & 3915/MUM/2025 417,87,20,218 417,87,20,218/- 417,87,20,220/- section (2) of section 115BBE of the Income-tax Act, total income of an assessee includes any income referred to in section (s) 68/69/69A/698/69C/69D of the Act, no deduction in respect of any f of any loss shall be allowed to the assessee under nay ncome referred to in section 115BBE(1) of the Act. On appeal, the learned CIT(A), while examining both the jurisdictional challenge to the reopening and the merits of the The learned CIT(A) first addressed the validity of the reassessment proceedings. Upon consideration of the reasons recorded and the material forming the the reopening could not be characterised as being founded on mere suspicion or conjecture. It was observed that the Assessing Officer had acted upon specific information received from the Investigation Wing regarding Punamiya’ group. The learned CIT(A) emphasised that, for the purposes of section 147 of the ason to believe” based on material, and not conclusive proof of escapement of f issuance of notice. Reliance was placed on settled principles governing reassessment, noting that the sufficiency or correctness of the material cannot be scrutinised at the threshold stage. Accordingly, the challenge to the reopening was rejected. Printed from counselvise.com 4.1 Proceeding to the merits, the learned CIT(A) undertook an extensive analysis of the investigation findings. The authority concurred with the Assessing Officer’s conclusion that the concerns associated with the Punamiya group, including t whom the assessee had shown purchases, were merely paper entities lacking genuine business operations. The learned CIT(A) referred to survey actions, field enquiries, and statements recorded under oath, which indicated absence of regular business premises, and the role of certain individuals acting as dummy directors. The pattern of transactions, fund movements, and surrounding circumstances were considered sufficient to uphold the inference that the entities were engaged entries. 4.2 However, having accepted the non entities, the learned CIT(A) proceeded to examine whether the addition made by the Assessing Officer under section 69C of the Act could be sustained in law. In t the scope and legislative intent of section 69C, observing that the provision is attracted where an assessee is found to have incurred expenditure and fails to offer a satisfactory explanation regarding the source of such expenditure. The learned CIT(A) reasoned that the underlying premise of section 69C is the existence of unexplained outgoings representing application of unaccounted funds. Balaji Bullions And Commodities India Private ITA No. Proceeding to the merits, the learned CIT(A) undertook an extensive analysis of the investigation findings. The authority concurred with the Assessing Officer’s conclusion that the concerns associated with the Punamiya group, including t had shown purchases, were merely paper entities lacking genuine business operations. The learned CIT(A) referred to survey actions, field enquiries, and statements recorded under oath, which indicated absence of regular business activity, non premises, and the role of certain individuals acting as dummy directors. The pattern of transactions, fund movements, and surrounding circumstances were considered sufficient to uphold the inference that the entities were engaged in providing accommodation However, having accepted the non-genuine nature of the entities, the learned CIT(A) proceeded to examine whether the addition made by the Assessing Officer under section 69C of the Act could be sustained in law. In this context, the learned CIT(A) analysed the scope and legislative intent of section 69C, observing that the provision is attracted where an assessee is found to have incurred expenditure and fails to offer a satisfactory explanation regarding the f such expenditure. The learned CIT(A) reasoned that the underlying premise of section 69C is the existence of unexplained outgoings representing application of unaccounted funds. Balaji Bullions And Commodities India Private Limited 15 ITA No. 3755 & 3915/MUM/2025 Proceeding to the merits, the learned CIT(A) undertook an extensive analysis of the investigation findings. The ld first appellate authority concurred with the Assessing Officer’s conclusion that the concerns associated with the Punamiya group, including those from had shown purchases, were merely paper entities lacking genuine business operations. The learned CIT(A) referred to survey actions, field enquiries, and statements recorded under oath, activity, non-functional premises, and the role of certain individuals acting as dummy directors. The pattern of transactions, fund movements, and surrounding circumstances were considered sufficient to uphold the in providing accommodation genuine nature of the entities, the learned CIT(A) proceeded to examine whether the addition made by the Assessing Officer under section 69C of the Act his context, the learned CIT(A) analysed the scope and legislative intent of section 69C, observing that the provision is attracted where an assessee is found to have incurred expenditure and fails to offer a satisfactory explanation regarding the f such expenditure. The learned CIT(A) reasoned that the underlying premise of section 69C is the existence of unexplained outgoings representing application of unaccounted funds. Printed from counselvise.com 4.3 Applying the statutory provision to the facts of the present case, the learned CIT(A) noted that the purchases and corresponding sales were duly recorded in the books of account, and the related payments were effected through banking channels. It was further observed that the transactions were reflected in the regular financia there was no allegation of unrecorded expenditure or cash outflow outside the books. In such circumstances, the learned CIT(A) concluded that the purchases, though tainted by the character of accommodation entries, could not be treated as “u expenditure” within the meaning of section 69C. 4.4 The learned CIT(A) thus held that the essential conditions for invoking section 69C were not satisfied. Consequently, the addition of Rs. 417,87,20,218/- of the Act was directed to be deleted. 4.5 The learned CIT(A), having concluded that the assessee was not engaged in any genuine trading activity and that the purchases and sales reflected in the books were merely accommodation entries, proceeded to determine the tax implications of such finding. 4.6 The learned CIT(A) observed that in cases involving accommodation entry providers, the real income does not arise from the gross value of transactions recorded in the books, but from the commission earned for facilitating such entries. In support of this approach, reference was made to appellate orders passed in the cases Balaji Bullions And Commodities India Private ITA No. Applying the statutory provision to the facts of the present case, earned CIT(A) noted that the purchases and corresponding sales were duly recorded in the books of account, and the related payments were effected through banking channels. It was further observed that the transactions were reflected in the regular financia there was no allegation of unrecorded expenditure or cash outflow outside the books. In such circumstances, the learned CIT(A) concluded that the purchases, though tainted by the character of accommodation entries, could not be treated as “u expenditure” within the meaning of section 69C. The learned CIT(A) thus held that the essential conditions for invoking section 69C were not satisfied. Consequently, the addition of made by the Assessing Officer under sec of the Act was directed to be deleted. The learned CIT(A), having concluded that the assessee was not engaged in any genuine trading activity and that the purchases and sales reflected in the books were merely accommodation entries, to determine the tax implications of such finding. The learned CIT(A) observed that in cases involving accommodation entry providers, the real income does not arise from the gross value of transactions recorded in the books, but from the rned for facilitating such entries. In support of this approach, reference was made to appellate orders passed in the cases Balaji Bullions And Commodities India Private Limited 16 ITA No. 3755 & 3915/MUM/2025 Applying the statutory provision to the facts of the present case, earned CIT(A) noted that the purchases and corresponding sales were duly recorded in the books of account, and the related payments were effected through banking channels. It was further observed that the transactions were reflected in the regular financial records, and there was no allegation of unrecorded expenditure or cash outflow outside the books. In such circumstances, the learned CIT(A) concluded that the purchases, though tainted by the character of accommodation entries, could not be treated as “unexplained The learned CIT(A) thus held that the essential conditions for invoking section 69C were not satisfied. Consequently, the addition of made by the Assessing Officer under section 69C The learned CIT(A), having concluded that the assessee was not engaged in any genuine trading activity and that the purchases and sales reflected in the books were merely accommodation entries, to determine the tax implications of such finding. The learned CIT(A) observed that in cases involving accommodation entry providers, the real income does not arise from the gross value of transactions recorded in the books, but from the rned for facilitating such entries. In support of this approach, reference was made to appellate orders passed in the cases Printed from counselvise.com of group concerns, wherein additions made under section 68 of the Act were deleted and income was instead estimated by applying a commission rate to the total turnover represented by sales and purchases. 4.7 Applying the same reasoning, the learned CIT(A) afforded an opportunity to the assessee to explain why its income should not be similarly estimated. The objections raised by the as asserting the genuineness of transactions on the ground that payments were routed through banking channels, were found to be devoid of merit. The learned CIT(A) reiterated that accommodation entry operations are typically supported by com and banking trails, which by themselves do not establish the authenticity of the underlying transactions. 4.8 Upon evaluation of the material on record, including the investigation findings and surrounding circumstances, the learned CIT(A) held that the books of account of the assessee did not present a true and reliable picture of its business affairs. Consequently, the books were rejected in exercise of powers under section 145(3) of the Act, and the loss declared by the assessee was d 4.9 Thereafter, the learned CIT(A) proceeded to estimate the income attributable to the assessee’s activities by applying a commission rate of 0.5% to the aggregate value of purchases and sales for the relevant year. On this basis, commission i Balaji Bullions And Commodities India Private ITA No. of group concerns, wherein additions made under section 68 of the Act were deleted and income was instead estimated by applying a mmission rate to the total turnover represented by sales and Applying the same reasoning, the learned CIT(A) afforded an opportunity to the assessee to explain why its income should not be similarly estimated. The objections raised by the as asserting the genuineness of transactions on the ground that payments were routed through banking channels, were found to be devoid of merit. The learned CIT(A) reiterated that accommodation entry operations are typically supported by complete documentation and banking trails, which by themselves do not establish the authenticity of the underlying transactions. Upon evaluation of the material on record, including the investigation findings and surrounding circumstances, the learned (A) held that the books of account of the assessee did not present a true and reliable picture of its business affairs. Consequently, the books were rejected in exercise of powers under section 145(3) of the Act, and the loss declared by the assessee was disregarded. Thereafter, the learned CIT(A) proceeded to estimate the income attributable to the assessee’s activities by applying a commission rate of 0.5% to the aggregate value of purchases and sales for the relevant year. On this basis, commission income was computed on the Balaji Bullions And Commodities India Private Limited 17 ITA No. 3755 & 3915/MUM/2025 of group concerns, wherein additions made under section 68 of the Act were deleted and income was instead estimated by applying a mmission rate to the total turnover represented by sales and Applying the same reasoning, the learned CIT(A) afforded an opportunity to the assessee to explain why its income should not be similarly estimated. The objections raised by the assessee, primarily asserting the genuineness of transactions on the ground that payments were routed through banking channels, were found to be devoid of merit. The learned CIT(A) reiterated that accommodation plete documentation and banking trails, which by themselves do not establish the Upon evaluation of the material on record, including the investigation findings and surrounding circumstances, the learned (A) held that the books of account of the assessee did not present a true and reliable picture of its business affairs. Consequently, the books were rejected in exercise of powers under section 145(3) of the isregarded. Thereafter, the learned CIT(A) proceeded to estimate the income attributable to the assessee’s activities by applying a commission rate of 0.5% to the aggregate value of purchases and sales for the relevant ncome was computed on the Printed from counselvise.com purchases as well as the sales disclosed by the assessee. The total commission income was thus quantified at Rs. 3,14,93,489/ was directed to be assessed as the income of the assessee. 5. Aggrieved, with the above finding are before us by way of raising following grounds “Grounds of Appeal “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and on facts in deleting the ad made u/s 69C of the Income Tax Act, 1961, on account of unexplained expenditure in the form of bogus purchases/operative expenses. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that the provisions of 2 Section 69C are not applicable despite clear findings that the purchases were non entities merely for providing accommodation entries 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the assessee could not establish the identity and creditworthiness of the 3 purchase parties thereby rendering the purchases as unexplained expenditure liable for addition u/s 69C. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in placing relia banking channels, whereas the surrounding facts and evidence clearly establish that the transactions were sham in nature. 5. Whether on the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A) is against the weight of evidence gathered dur proceedings, including statements from third parties confirming the modus operandi of routing unaccounted money through bogus transactions. 6. Whether on the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A) is against the weight of evidence gathered during the course of survey proceedings, including statements from third parties confirming the modus operandi of routing unaccounted money through bogus transactions. “Grounds of Appeal of Balaji Bullions And Commodities India Private ITA No. purchases as well as the sales disclosed by the assessee. The total commission income was thus quantified at Rs. 3,14,93,489/ was directed to be assessed as the income of the assessee. with the above finding both Revenue and the assessee are before us by way of raising following grounds: Grounds of Appeal of Revenue Whether on the facts and in the circumstances of the case and in law, the Ld. (A) has erred in law and on facts in deleting the addition of Rs. /s 69C of the Income Tax Act, 1961, on account of unexplained expenditure in the form of bogus purchases/operative expenses. Whether on the facts and in the circumstances of the case and in law, the Ld. erred in holding that the provisions of 2 Section 69C are not applicable clear findings that the purchases were non-genuine and made through shell entities merely for providing accommodation entries Whether on the facts and in the circumstances of the case and in law, the Ld. has failed to appreciate that the assessee could not establish the identity and creditworthiness of the 3 purchase parties or produce any confirmations, ing the purchases as unexplained expenditure liable for addition u/s Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) reliance on the fact that the transactions were routed through , whereas the surrounding facts and evidence clearly establish that the transactions were sham in nature. Whether on the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A) is against the weight of evidence gathered during the course of survey proceedings, including statements from third parties confirming the modus operandi of routing unaccounted money through bogus transactions. Whether on the facts and in the circumstances of the case and in law, the order of he Ld. CIT(A) is against the weight of evidence gathered during the course of survey proceedings, including statements from third parties confirming the modus operandi of routing unaccounted money through bogus transactions.” Grounds of Appeal of Assessee. Balaji Bullions And Commodities India Private Limited 18 ITA No. 3755 & 3915/MUM/2025 purchases as well as the sales disclosed by the assessee. The total commission income was thus quantified at Rs. 3,14,93,489/-, which was directed to be assessed as the income of the assessee. evenue and the assessee Whether on the facts and in the circumstances of the case and in law, the Ld. dition of Rs.417,87,20,218/- /s 69C of the Income Tax Act, 1961, on account of unexplained expenditure Whether on the facts and in the circumstances of the case and in law, the Ld. erred in holding that the provisions of 2 Section 69C are not applicable genuine and made through shell Whether on the facts and in the circumstances of the case and in law, the Ld. has failed to appreciate that the assessee could not establish the identity produce any confirmations, ing the purchases as unexplained expenditure liable for addition u/s Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) that the transactions were routed through , whereas the surrounding facts and evidence clearly establish Whether on the facts and in the circumstances of the case and in law, the order of ing the course of survey proceedings, including statements from third parties confirming the modus operandi Whether on the facts and in the circumstances of the case and in law, the order of he Ld. CIT(A) is against the weight of evidence gathered during the course of survey proceedings, including statements from third parties confirming the modus operandi Printed from counselvise.com “1. That the Ld. CITI(A) has erred in law and on facts of the case by making addition estimated @ 0.5% on sales/purchase enhancing above the reasons recorded with order is not sustainable and liable to quashed. 2. The Ld. CIT(A) erred in enha new issue not dealt in the body of the assessment order or raised in the appellate proceeding by the assessee. 3. The Ld. CIT(A) erred in enhancing the addition without issuing specific notice u/s 251 of the Act. The power of enhancement u/s 251 (2) of the Act restricted the subject matter shall not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement. But in our case addition is en passed order is impugned. 4. All of the above grounds of appeal are without prejudice and notwithstanding each other. 5. The Appellant craves leave to add, amend, vary, omit or substitute any o aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 6. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, thus may be g The Appellant as per rule 11 of ITAT take additional ground for instant appeal ITAT rule 11 the assessee take Addition Ground Additional Grounds of appeal being raised by the assessee before the Ld. CIT (A): At this juncture, the assessee craves to raise some additional grounds of appeal which were not raised while filing the appeals before the Ld. CIT (A) Supreme Court in the case of 229 ITR 383(SC) has held that it is open to the assessee to raise the points of law even before the tribunal which was not raised earlier. A Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee and where the tribunal is only required to consider a question of law arising from the facts, it should allow it to be raised when it to correctly assessee The inability of the learned A to take into consideration this important piece of legal proposition was also not called for and the assessee at this juncture also craves to raise this legal objection as an additional years. Balaji Bullions And Commodities India Private ITA No. “1. That the Ld. CITI(A) has erred in law and on facts of the case by making addition estimated @ 0.5% on sales/purchase enhancing above the reasons recorded with order is not sustainable and liable to quashed. 2. The Ld. CIT(A) erred in enhancing the addition without having jurisdiction on a t in the body of the assessment order or raised in the appellate proceeding by the assessee. 3. The Ld. CIT(A) erred in enhancing the addition without issuing specific notice u/s 251 of the Act. The power of enhancement u/s 251 (2) of the Act restricted the subject matter shall not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement. But in our case addition is enhanced without following the said settled provision, hence passed order is impugned. 4. All of the above grounds of appeal are without prejudice and notwithstanding 5. The Appellant craves leave to add, amend, vary, omit or substitute any o aforesaid grounds of appeal at any time before or at the time of hearing of the 6. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, thus may be g The Appellant as per rule 11 of ITAT take additional ground for instant appeal ITAT rule 11 the assessee take Addition Ground Additional Grounds of appeal being raised by the assessee before the Ld. At this juncture, the assessee craves to raise some additional grounds of appeal which were not raised while filing the appeals before the Ld. CIT (A) Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (1998) has held that it is open to the assessee to raise the points of law even before the tribunal which was not raised earlier. A Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities ng a bearing on the tax liability of the assessee and where the tribunal is only required to consider a question of law arising from the facts, it should allow it to be raised when it is necessary to consider that question in order to correctly assessee the tax liability of the assessee. The inability of the learned A to take into consideration this important piece of legal proposition was also not called for and the assessee at this juncture also craves to raise this legal objection as an additional ground of appeal for all the assessment Balaji Bullions And Commodities India Private Limited 19 ITA No. 3755 & 3915/MUM/2025 “1. That the Ld. CITI(A) has erred in law and on facts of the case by making addition estimated @ 0.5% on sales/purchase enhancing above the reasons ncing the addition without having jurisdiction on a t in the body of the assessment order or raised in the appellate 3. The Ld. CIT(A) erred in enhancing the addition without issuing specific notice u/s 251 of the Act. The power of enhancement u/s 251 (2) of the Act restricted the subject matter shall not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement. But in our hanced without following the said settled provision, hence 4. All of the above grounds of appeal are without prejudice and notwithstanding 5. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the 6. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, thus may be granted The Appellant as per rule 11 of ITAT take additional ground for instant appeal ITAT rule 11 the assessee take Addition Ground:- Additional Grounds of appeal being raised by the assessee before the Ld. At this juncture, the assessee craves to raise some additional grounds of appeal which were not raised while filing the appeals before the Ld. CIT (A). The Hon'ble National Thermal Power Co. Ltd. Vs. CIT (1998) has held that it is open to the assessee to raise the points of law even before the tribunal which was not raised earlier. A Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities ng a bearing on the tax liability of the assessee and where the tribunal is only required to consider a question of law arising from the facts, it is necessary to consider that question in order The inability of the learned A to take into consideration this important piece of legal proposition was also not called for and the assessee at this juncture also craves to ground of appeal for all the assessment Printed from counselvise.com GROUND-1 The CIT reopening of the assessment by issuing of notice u/s 148 of the Act was illegal and bad in law. GROUND-2 The CIT (A) ought to have held that the AO has erred in law and on facts in making fishing and roving and permitted in reassessment proceedings. GROUND-3 That the Ld. A.O. erred in law and on the facts of the case by appreciating facts of the case in order to reopening of the assessment fairly and judiciously which is incorrect and unjustified. GROUND-4 Whether the transaction amount not pertaining the relevant assessment years on basis the recoded region not v total proceeding liable to be quashed. GROUND-5 Without specific defect in the F.Y. rejected book of accounts u/s 145(3) of the Act estimated income unjustified and the appellant order liable to be quashed.” 6. We have considered rival submissions of the parties and perused relevant material on record including paper book filed by the assessee containing pages 1 lies in the findings of the Investigation Wing during survey conducted on various entities to verify cash deposits during the demonetization period. The trail of these deposits led to the discovery of a sophisticated network of paper concerns managed by Shri Manoj Punamiya. It is the case of the Revenue tha substantial purchases from tho without actual delivery of goods from them accommodation entries. Given the assessee’s failure to sub the genuineness of tho Assessing Officer (AO) was constrained to treat the same as unexplained expenditure. Balaji Bullions And Commodities India Private ITA No. 1 The CIT (A) has erred in law and on facts in not holding that the reopening of the assessment by issuing of notice u/s 148 of the Act was illegal and (A) ought to have held that the AO has erred in law and on facts in making fishing and roving and in passing the order impugned, permitted in reassessment proceedings. 3 That the Ld. A.O. erred in law and on the facts of the case by appreciating facts of the case in order to reopening of the assessment fairly and judiciously which is incorrect and unjustified. 4 Whether the transaction amount not pertaining the relevant assessment years on basis the recoded region not valid addition with vevged recorded region total proceeding liable to be quashed. 5 Without specific defect in the F.Y. rejected book of accounts u/s 145(3) of the Act estimated income unjustified and the appellant order liable to be We have considered rival submissions of the parties and perused relevant material on record including paper book filed by the assessee containing pages 1-269. The genesis of the present dispute lies in the findings of the Investigation Wing during survey conducted on various entities to verify cash deposits during the demonetization period. The trail of these deposits led to the discovery of a sophisticated network of paper concerns managed by Shri Manoj Punamiya. It is the case of the Revenue that the assessee recorde substantial purchases from those concerns in its books of account without actual delivery of goods from them accommodation entries. Given the assessee’s failure to sub the genuineness of those transactions during the assessment, the Assessing Officer (AO) was constrained to treat the same as unexplained expenditure. Balaji Bullions And Commodities India Private Limited 20 ITA No. 3755 & 3915/MUM/2025 (A) has erred in law and on facts in not holding that the reopening of the assessment by issuing of notice u/s 148 of the Act was illegal and (A) ought to have held that the AO has erred in law and on facts in passing the order impugned, which is not 3 That the Ld. A.O. erred in law and on the facts of the case by not appreciating facts of the case in order to reopening of the assessment fairly and 4 Whether the transaction amount not pertaining the relevant assessment alid addition with vevged recorded region 5 Without specific defect in the F.Y. rejected book of accounts u/s 145(3) of the Act estimated income unjustified and the appellant order liable to be We have considered rival submissions of the parties and perused relevant material on record including paper book filed by the The genesis of the present dispute lies in the findings of the Investigation Wing during survey actions conducted on various entities to verify cash deposits during the demonetization period. The trail of these deposits led to the discovery of a sophisticated network of paper concerns managed by Shri Manoj t the assessee recorded in its books of account without actual delivery of goods from them and facilitate accommodation entries. Given the assessee’s failure to substantiate ring the assessment, the Assessing Officer (AO) was constrained to treat the same as Printed from counselvise.com 6.1 While the learned CIT(A) concurred with the finding that the purchases were not verifiable in view of absence of physical business activity at the suppliers' premises and the use of dummy directors, but he nevertheless deleted the addition under Section 69C, holding the provision to be inapplicable where transactions are recorded in the books. We find ourselves unable to subscribe to this narr interpretation. In our considered view, once a purchase is found to be non-genuine, the primary onus shifts to the assessee to demonstrate how the corresponding sales were effected without the actual receipt of goods from the declared sources. 6.2 The inescapable inference in such \"accommodation entry\" scenarios is that the assessee likely procured goods from the \"grey market\" in cash. Since the source of such unaccounted cash remains unexplained, the expenditure constitutes a classic case of unexplained outgoings. Therefore, the invocation of Section 69C is not only permissible but justified. Consequently, the action of the learned CIT(A) in discarding the substantive addition in favor of a mere estimation of commission income lacks a sound legal and factual foundation. 6.3 Regarding the assessee’s grievance that the Ld. CIT(A)’s estimation of commission income amounted to an unauthorized \"enhancement\" of income, we find this argument to be misplaced. The Ld. CIT(A) did not discover a \"new source\" of inco Balaji Bullions And Commodities India Private ITA No. While the learned CIT(A) concurred with the finding that the purchases were not verifiable in view of absence of physical business at the suppliers' premises and the use of dummy directors, but he nevertheless deleted the addition under Section 69C, holding the provision to be inapplicable where transactions are recorded in the books. We find ourselves unable to subscribe to this narr interpretation. In our considered view, once a purchase is found to be genuine, the primary onus shifts to the assessee to demonstrate how the corresponding sales were effected without the actual receipt of goods from the declared sources. nescapable inference in such \"accommodation entry\" scenarios is that the assessee likely procured goods from the \"grey market\" in cash. Since the source of such unaccounted cash remains unexplained, the expenditure constitutes a classic case of outgoings. Therefore, the invocation of Section 69C is not only permissible but justified. Consequently, the action of the learned CIT(A) in discarding the substantive addition in favor of a mere estimation of commission income lacks a sound legal and Regarding the assessee’s grievance that the Ld. CIT(A)’s estimation of commission income amounted to an unauthorized \"enhancement\" of income, we find this argument to be misplaced. The Ld. CIT(A) did not discover a \"new source\" of inco Balaji Bullions And Commodities India Private Limited 21 ITA No. 3755 & 3915/MUM/2025 While the learned CIT(A) concurred with the finding that the purchases were not verifiable in view of absence of physical business at the suppliers' premises and the use of dummy directors, but he nevertheless deleted the addition under Section 69C, holding the provision to be inapplicable where transactions are recorded in the books. We find ourselves unable to subscribe to this narrow interpretation. In our considered view, once a purchase is found to be genuine, the primary onus shifts to the assessee to demonstrate how the corresponding sales were effected without the actual receipt nescapable inference in such \"accommodation entry\" scenarios is that the assessee likely procured goods from the \"grey market\" in cash. Since the source of such unaccounted cash remains unexplained, the expenditure constitutes a classic case of outgoings. Therefore, the invocation of Section 69C is not only permissible but justified. Consequently, the action of the learned CIT(A) in discarding the substantive addition in favor of a mere estimation of commission income lacks a sound legal and Regarding the assessee’s grievance that the Ld. CIT(A)’s estimation of commission income amounted to an unauthorized \"enhancement\" of income, we find this argument to be misplaced. The Ld. CIT(A) did not discover a \"new source\" of income; rather, he Printed from counselvise.com merely modified the quantification of the addition arising from the same source, namely, the bogus purchase transactions. However, as we have upheld the principle that the onus to prove the genuineness of the underlying expenditure remains w the assessee has miserably failed to discharge, the question of the validity of invoking of section 145(3) and becomes academic. 6.4 In view of the foregoing, assessee does not appear to be assessee failed in submitting documentary evidences and also failed to produced those parties , therefore justice, we deem it appropriate to assessee to substantiate its claim by way of documentary evidence and if required so by the ld AO AO for cross examination by the ld Assessing officer verification of their identity, creditworthiness, and the transactions. Accordingly, we set aside the order of ld CIT(A) and restore the issue in dispute fresh adjudication in accordance with the law, after affording the assessee a reasonable with our observation above in the light of the principles enunciated by the Hon’ble jurisdictional High Court of Bombay in Kanak Impex Pvt. Ltd Balaji Bullions And Commodities India Private ITA No. merely modified the quantification of the addition arising from the same source, namely, the bogus purchase transactions. However, as we have upheld the principle that the onus to prove the genuineness of the underlying expenditure remains with the assessee, a burden the assessee has miserably failed to discharge, the question of the invoking of section 145(3) and commission estimation In view of the foregoing, prima facie the purchases of the ot appear to be genuine but before the AO the assessee failed in submitting documentary evidences and also failed to produced those parties , therefore in the interest of substantial justice, we deem it appropriate to provide one more opportunity to the sessee to substantiate its claim by way of documentary evidence by the ld AO, shall produce those parties before the AO for cross examination by the ld Assessing officer verification of their identity, creditworthiness, and the genuineness of Accordingly, we set aside the order of ld CIT(A) and in dispute to the file of the Assessing Officer for in accordance with the law, after affording the assessee a reasonable opportunity to be heard, without influencing with our observation above. The AO is directed to examine the matter in the light of the principles enunciated by the Hon’ble jurisdictional High Court of Bombay in decision dated March 3, 2025 anak Impex Pvt. Ltd in ITA No. 791/2021. The Hon’ble court in Balaji Bullions And Commodities India Private Limited 22 ITA No. 3755 & 3915/MUM/2025 merely modified the quantification of the addition arising from the same source, namely, the bogus purchase transactions. However, as we have upheld the principle that the onus to prove the genuineness ith the assessee, a burden the assessee has miserably failed to discharge, the question of the commission estimation prima facie the purchases of the before the AO the assessee failed in submitting documentary evidences and also failed in the interest of substantial provide one more opportunity to the sessee to substantiate its claim by way of documentary evidence , shall produce those parties before the AO for cross examination by the ld Assessing officer in order to the genuineness of Accordingly, we set aside the order of ld CIT(A) and to the file of the Assessing Officer for in accordance with the law, after affording the opportunity to be heard, without influencing . The AO is directed to examine the matter in the light of the principles enunciated by the Hon’ble jurisdictional March 3, 2025, in the case of The Hon’ble court in Printed from counselvise.com said case ruled that when the assessee fails to prove the source and genuineness, the entire expenditure must be disallowed (Section 69C) rather than just estimating a profit rate. The Special L (SLP) filed by the assessee before Hon’ble Supreme court against this judgment has also been dismissed. 7. The assessee has assailed the validity of the reassessment proceedings initiated under sections 147/148 of the Act. We have carefully considered the rival submissions and examined the reasons recorded by the Assessing Officer. 7.1 The reopening of the assessment is founded upon specific information received from the Investigation Wing indicating that the assessee had entered into transa to the ‘Punamiya’ group, which were allegedly engaged in providing accommodation entries. The reasons recorded demonstrate that the Assessing Officer took examined the nature of belief that income chargeable to tax had escaped assessment. 7.2 The expression “reason to believe” postulates the existence of tangible material having a rational connection with the formation of belief regarding escapement of income. The belief must be that of a reasonable person based on relevant material; it cannot be arbitrary, mechanical, or based on mere suspicion. Balaji Bullions And Commodities India Private ITA No. said case ruled that when the assessee fails to prove the source and genuineness, the entire expenditure must be disallowed (Section 69C) rather than just estimating a profit rate. The Special L (SLP) filed by the assessee before Hon’ble Supreme court against this judgment has also been dismissed. The assessee has assailed the validity of the reassessment proceedings initiated under sections 147/148 of the Act. We have considered the rival submissions and examined the reasons recorded by the Assessing Officer. The reopening of the assessment is founded upon specific information received from the Investigation Wing indicating that the assessee had entered into transactions with certain entities belonging group, which were allegedly engaged in providing accommodation entries. The reasons recorded demonstrate that the Assessing Officer took cognizance of the investigation inputs, examined the nature of the transactions, and formed a prima facie belief that income chargeable to tax had escaped assessment. The expression “reason to believe” postulates the existence of tangible material having a rational connection with the formation of g escapement of income. The belief must be that of a reasonable person based on relevant material; it cannot be arbitrary, mechanical, or based on mere suspicion. Balaji Bullions And Commodities India Private Limited 23 ITA No. 3755 & 3915/MUM/2025 said case ruled that when the assessee fails to prove the source and genuineness, the entire expenditure must be disallowed (Section 69C) rather than just estimating a profit rate. The Special Leave Petition (SLP) filed by the assessee before Hon’ble Supreme court against this The assessee has assailed the validity of the reassessment proceedings initiated under sections 147/148 of the Act. We have considered the rival submissions and examined the reasons The reopening of the assessment is founded upon specific information received from the Investigation Wing indicating that the ctions with certain entities belonging group, which were allegedly engaged in providing accommodation entries. The reasons recorded demonstrate that the of the investigation inputs, the transactions, and formed a prima facie belief that income chargeable to tax had escaped assessment. The expression “reason to believe” postulates the existence of tangible material having a rational connection with the formation of g escapement of income. The belief must be that of a reasonable person based on relevant material; it cannot be arbitrary, Printed from counselvise.com 7.3 In the present case, the original return of income was processed under section 143(1) of section 143(1) does not amount to an assessment in the strict sense, and therefore, the doctrine of “change of opinion” has limited application in such circumstances. In any event, even otherwise, there is nothing on record to suggest that the issue forming the basis of reopening had been previously examined or consciously adjudicated. The reassessment proceedings, therefore, cannot be invalidated on the ground of change of opinion. 7.4 The material referred to characterised as vague or non The information emanating from the Investigation Wing constitutes fresh, external, and tangible material. The link between such material and the formation of belief is clearly discernible from the reasons recorded. The law does not mandate that the escapement of income be conclusively established at the stage of reopening; a prima facie nexus suffices. We are satisfied that the requirement of a live and rational nexus between the material and the belief stands fulfilled. 7.5 The contention that the reopening is vitiated by “borrowed satisfaction” also merits rejection. While the initial trigger for reopening originated from the Investigation Wing, the reas recorded reveal that the Assessing Officer did not act mechanically upon such information. The Assessing Officer independently applied Balaji Bullions And Commodities India Private ITA No. In the present case, the original return of income was processed under section 143(1) of the Act. It is trite law that section 143(1) does not amount to an assessment in the strict sense, and therefore, the doctrine of “change of opinion” has limited application in such circumstances. In any event, even otherwise, hing on record to suggest that the issue forming the basis of reopening had been previously examined or consciously adjudicated. The reassessment proceedings, therefore, cannot be invalidated on the ground of change of opinion. The material referred to in the recorded reasons cannot be characterised as vague or non-specific or roving or fishing enquiry The information emanating from the Investigation Wing constitutes fresh, external, and tangible material. The link between such material on of belief is clearly discernible from the reasons recorded. The law does not mandate that the escapement of income be conclusively established at the stage of reopening; a prima facie nexus suffices. We are satisfied that the requirement of a live and ational nexus between the material and the belief stands fulfilled. The contention that the reopening is vitiated by “borrowed satisfaction” also merits rejection. While the initial trigger for reopening originated from the Investigation Wing, the reas recorded reveal that the Assessing Officer did not act mechanically upon such information. The Assessing Officer independently applied Balaji Bullions And Commodities India Private Limited 24 ITA No. 3755 & 3915/MUM/2025 In the present case, the original return of income was processed the Act. It is trite law that intimation under section 143(1) does not amount to an assessment in the strict sense, and therefore, the doctrine of “change of opinion” has limited application in such circumstances. In any event, even otherwise, hing on record to suggest that the issue forming the basis of reopening had been previously examined or consciously adjudicated. The reassessment proceedings, therefore, cannot be in the recorded reasons cannot be or roving or fishing enquiry. The information emanating from the Investigation Wing constitutes fresh, external, and tangible material. The link between such material on of belief is clearly discernible from the reasons recorded. The law does not mandate that the escapement of income be conclusively established at the stage of reopening; a prima facie nexus suffices. We are satisfied that the requirement of a live and ational nexus between the material and the belief stands fulfilled. The contention that the reopening is vitiated by “borrowed satisfaction” also merits rejection. While the initial trigger for reopening originated from the Investigation Wing, the reasons recorded reveal that the Assessing Officer did not act mechanically upon such information. The Assessing Officer independently applied Printed from counselvise.com his mind to the material, examined the transactional details, and recorded his reason to believe. 7.6 It is equally well reassessment, the sufficiency or adequacy of the material is not to be scrutinised. The enquiry is confined to examining whether there existed relevant material on the basis of which a reasonable be could have been formed. In the facts before us, the existence of such material is beyond dispute. 7.7 Before us, the learned counsel for the assessee has reiterated substantially the same objections which were urged before the learned CIT(A). Upon ind in the conclusion of the learned CIT(A) that the reassessment proceedings were validly initiated. 7.8 Accordingly, we hold that the assumption of jurisdiction under section 147 of the Act is legally sustainable. the assessee challenging the validity of reassessment are dismissed. 8. In result, the appeal of the assessee is dismi appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Balaji Bullions And Commodities India Private ITA No. his mind to the material, examined the transactional details, and reason to believe. well-settled that at the stage of testing the validity of reassessment, the sufficiency or adequacy of the material is not to be scrutinised. The enquiry is confined to examining whether there existed relevant material on the basis of which a reasonable be could have been formed. In the facts before us, the existence of such material is beyond dispute. Before us, the learned counsel for the assessee has reiterated substantially the same objections which were urged before the learned CIT(A). Upon independent consideration, we find no infirmity in the conclusion of the learned CIT(A) that the reassessment proceedings were validly initiated. Accordingly, we hold that the assumption of jurisdiction under section 147 of the Act is legally sustainable. The grounds raised by the assessee challenging the validity of reassessment are dismissed. , the appeal of the assessee is dismissed whereas the evenue is allowed for statistical purposes. ronounced in the open Court on 23/02/2026. Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Balaji Bullions And Commodities India Private Limited 25 ITA No. 3755 & 3915/MUM/2025 his mind to the material, examined the transactional details, and settled that at the stage of testing the validity of reassessment, the sufficiency or adequacy of the material is not to be scrutinised. The enquiry is confined to examining whether there existed relevant material on the basis of which a reasonable belief could have been formed. In the facts before us, the existence of such Before us, the learned counsel for the assessee has reiterated substantially the same objections which were urged before the ependent consideration, we find no infirmity in the conclusion of the learned CIT(A) that the reassessment Accordingly, we hold that the assumption of jurisdiction under The grounds raised by the assessee challenging the validity of reassessment are dismissed. ssed whereas the evenue is allowed for statistical purposes. /02/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Mumbai; Dated: 23/02/2026 M. RanganathVittal , Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Balaji Bullions And Commodities India Private ITA No. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Balaji Bullions And Commodities India Private Limited 26 ITA No. 3755 & 3915/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "