INCOME TAX OFFICER 19(1)(1), , MUMBAI V. BADAMIDEVI TEJRAJ MUTHA, MUMBAI

ITA 2269/MUM/2025

AI Insights

The case involves an appeal by the Income Tax Department against the order of the Commissioner of Income-tax (Appeals) which had reduced the addition made by the Assessing Officer (AO) on account of bogus purchases from 100% to 12.5%. The assessee, Badamidevi Tejraj Mutha, was accused of making bogus purchases amounting to Rs. 2,39,19,729 from 13 hawala traders. The AO disallowed the entire amount of these purchases, while the CIT(A) reduced the addition based on precedents and the assessee's previous years' cases. The Revenue challenged this reduction, arguing that the CIT(A) ignored substantial evidence and legal precedents supporting a 100% addition for such fraudulent transactions. The ITAT, after hearing the Departmental Representative and noting the absence of the assessee's counsel, decided to remit the matter back to the AO for a fresh examination, emphasizing the need for a thorough factual re-examination in light of judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782282 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2025
• Other Referred Cases: M/s. N. K. Proteins Ltd. vs. Dy. CIT, Pr. Commissioner of Income-Tax vs. Kanak Impex (India) Ltd, M/s. Swetamber Steels Ltd. vs. Dy. CIT
• Laws Referred To: Income Tax Act, 1961, Maharashtra Value Added Tax Act, 2022
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Keywords: Set aside; Corroborative evidences; Unexplained expenditure; Bogus purchase; Onus to prove; Accommodation entries; Bogus
• Section: 142(1); 68; 133(6); 69C; 37

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI NARENDER KUMAR CHOUDHRY (JUDICIAL MEMBER) ITA No. 2269/MUM/2025 Assessment Year: 2011-12 ITO-19(1)(1), 501, 5th floor, Piramal Chamber Lalbaug, Parel, Mumbai-400012. Vs. Badamidevi Tejraj Mutha, 67, Dr. M.G. Mohimtura Marg, 3rd Kumbharwadalane, Mumbai-400 004. PAN NO. AHZPM 4942 M Appellant Respondent Assessee by : None Revenue by : Mr. Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 04/09/2025 Date of pronouncement : 29/10/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 06.01.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – 51, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: 1. Whether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, on account of total bogus purchases of Rs. 2,39,, 19,729/- from 13 hawala traders by ignoring the fact that the assessee has availed the Printed from counselvise.com accommodation entries for bogus purchases to inflate the expenses and thereby suppress the true profit ?\" 2.\" Whether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, on account of total bogus purchases of Rs. 2,39,19,729/ without appreciating the fact that the action of the assessing officer was based on the information received from Sales Tax Department through DGT (Inv.), Mumbal, that these 13 hawala traders were involved in providing only accommodation entries in the form of issuing bogus sales/purcha and the assessee was found to be one of the beneficiary who have obtained accommodation entries of alleged purchases of Rs. 2,39,19,729/ 3. Whether on the fact and circumstances of CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, by ignoring the fact that during the Re could neither produce the quantity tally of day to Sales, Stocka, Delivery Challans and corresponding values nor could produce the parties for verification, in provided by the Assessing Officer?\" 4. ⁠4. Whether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5%, by ignoring the fact that the assessee has availed accommodation entries, but failed to prove the genuineness & creditworthiness of th transaction and of parties also and the notices issued u/ on the given addresses, has been returned back with the remarks \" Non Known or Left, which proves that such transactions with all hawala traders were not a genuine one but were purportedly made?\" 5.\" Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition by ignoring that though there was no dispute that the bogus purchases were made and so act of infraction of law was committed in violation of sec Added Tax Act, 2022 and therefore, such expenses is not allowed as per express provisions u/s. 37 of the Act?\" 6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciati the Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. accommodation entries for bogus purchases to inflate the expenses and thereby suppress the true profit ?\" hether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, on account of total bogus purchases of Rs. 2,39,19,729/ without appreciating hat the action of the assessing officer was based on the information received from Sales Tax Department through DGT (Inv.), Mumbal, that these 13 hawala traders were involved in providing only accommodation entries in the form of issuing bogus sales/purchases/Loans, without actual delivery of goods and the assessee was found to be one of the beneficiary who have obtained accommodation entries of alleged purchases of Rs. 2,39,19,729/- from 13 such hawala traders?\" 3. Whether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, by ignoring the fact that during the Re-assessment Proceedings, the assessee could neither produce the quantity tally of day to day purchases, Sales, Stocka, Delivery Challans and corresponding values nor could produce the parties for verification, in-spite of opportunity provided by the Assessing Officer?\" . Whether on the fact and circumstances of the case, the Ld. has erred in restricting the addition to the extent upto 12.5%, by ignoring the fact that the assessee has availed accommodation entries, but failed to prove the genuineness & creditworthiness of th transaction and of parties also and the notices issued u/s 133 (6) of the Act, to verify the hawala traders on the given addresses, has been returned back with the remarks \" Non Known or Left, which proves that such transactions with all hawala traders were not a genuine one but were purportedly made?\" er on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition by ignoring that though there was no dispute that the bogus purchases were made and so act of infraction of law was committed in violation of section 74(1A) of the Maharashtra Value Added Tax Act, 2022 and therefore, such expenses is not allowed as per express provisions u/s. 37 of the Act?\" 6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the decision of the Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Badamidevi Tejraj Mutha 2 ITA No. 2269/MUM/2025 accommodation entries for bogus purchases to inflate the hether on the fact and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, on account of total bogus purchases of Rs. 2,39,19,729/ without appreciating hat the action of the assessing officer was based on the information received from Sales Tax Department through DGT (Inv.), Mumbal, that these 13 hawala traders were involved in providing only accommodation entries in the form of issuing ses/Loans, without actual delivery of goods and the assessee was found to be one of the beneficiary who have obtained accommodation entries of alleged purchases of Rs. the case, the Ld. CIT(A) has erred in restricting the addition to the extent upto 12.5% as against 100% addition made by the AO, by ignoring the assessment Proceedings, the assessee day purchases, Sales, Stocka, Delivery Challans and corresponding values nor spite of opportunity . Whether on the fact and circumstances of the case, the Ld. has erred in restricting the addition to the extent upto 12.5%, by ignoring the fact that the assessee has availed accommodation entries, but failed to prove the genuineness & creditworthiness of th transaction and of parties also and the s 133 (6) of the Act, to verify the hawala traders on the given addresses, has been returned back with the remarks \" Non Known or Left, which proves that such transactions with all hawala traders were not a genuine one but er on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition by ignoring that though there was no dispute that the bogus purchases were made and so act of infraction of law was tion 74(1A) of the Maharashtra Value Added Tax Act, 2022 and therefore, such expenses is not 6. Whether on the facts and circumstances of the case and in ng the decision of the Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Printed from counselvise.com Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, Dated. 16.01.2017, wherein Hon'ble Supreme Court has dismissed the appeal and held that once a findings of act has been given that e purchases shown on the basis of fictitious invoices and debited in the P & L account are established as bogus, then restricting the addition to a curtained percentage goes against the principles of section 68 and 69C of the Income 7. \" Whether on the facts and circumstances of the case and in law, the decision of Ld. CIT(A) is right, in view of the decision of the Hon'ble High Court Mumbai, in the case of Pr. Commissioner of Income-Tax Taxmann.com 283 (Bombay) Dated. 03.03.2025, wherein the decision of 100% addition made by AO has been allowed, by rejecting the ITAT's decision of estimating the profit rate @12.5% on bogus purchases and thereby impliedly grant deduction of such unexplained though the assessee failed to discharge its onus to prove the genuineness of alleged purchases and has offered no explanation of the sources of expenditure incurred on account of such purchases ?\" 8. \" Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is perverse in not considering the decision of the order of Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, SLP (CC) of 963/2017, Dated. 16.01.2017, which is on the similar issue of bogus purchases, which has been confirmed and was already the law of the land, when the Ld. CIT(A) has pronounced its order on 06.01.2025?\" 9. ⁠9. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that in the case of M/s. Swetamber Steels Ltd. (Supra), the Hon'ble ITAT Ahmadabad, had confirmed the disallowance of the bogus purchases, by stating that the purchases shown from respective parties were found non upheld by Hon'ble Gujrat High Court and also by the Hon'ble Supreme Court?\" 10. The appeal u/s. 253A of the Income filed, in view of Tax 77,80,554/-, which is above the prescribed limit mentioned in the CBDT's Circular F.No.279/Misc. 142/2007 No. 09/2024 dated. 17.09.2024 and this case also falls under one of the exceptions specified in paragraph 3.1(c) of the o CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, Dated. 16.01.2017, wherein Hon'ble Supreme Court has dismissed the appeal and held that once a findings of act has been given that e purchases shown on the basis of fictitious invoices and debited in the P & L account are established as bogus, then restricting the addition to a curtained percentage goes against the principles of section 68 and 69C of the Income-Tax Act, 1961?\" \" Whether on the facts and circumstances of the case and in law, the decision of Ld. CIT(A) is right, in view of the decision of the Hon'ble High Court Mumbai, in the case of Pr. Commissioner Tax-5, Mumbai Vs. Kanak Impex (India) Ltd ((2025)172 axmann.com 283 (Bombay) Dated. 03.03.2025, wherein the decision of 100% addition made by AO has been allowed, by rejecting the ITAT's decision of estimating the profit rate @12.5% on bogus purchases and thereby impliedly grant deduction of such unexplained expenditure incurred u/s. 69C of the Act, even though the assessee failed to discharge its onus to prove the genuineness of alleged purchases and has offered no explanation of the sources of expenditure incurred on account of such purchases ?\" r on the facts and circumstances of the case and in law, the Ld. CIT(A) is perverse in not considering the decision of the order of Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, SLP (CC) of 963/2017, Dated. 16.01.2017, which is on the similar issue of bogus purchases, which has been confirmed and was already the law of the land, when the Ld. CIT(A) has pronounced its order on 06.01.2025?\" . \"Whether on the facts and circumstances of the case and n law, the Ld. CIT(A) has erred in not appreciating the fact that in the case of M/s. Swetamber Steels Ltd. (Supra), the Hon'ble ITAT Ahmadabad, had confirmed the disallowance of the bogus purchases, by stating that the purchases shown from respective ies were found non-genuine and the decision of the ITAT was upheld by Hon'ble Gujrat High Court and also by the Hon'ble Supreme Court?\" 10. The appeal u/s. 253A of the Income-Tax Act 1961, is being filed, in view of Tax- Effect involved in the instant case , which is above the prescribed limit mentioned in the CBDT's Circular F.No.279/Misc. 142/2007-ITJ(Pt) amended vide No. 09/2024 dated. 17.09.2024 and this case also falls under one of the exceptions specified in paragraph 3.1(c) of the o CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is Badamidevi Tejraj Mutha 3 ITA No. 2269/MUM/2025 Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, Dated. 16.01.2017, wherein Hon'ble Supreme Court has dismissed the appeal and held that once a findings of act has been given that entire purchases shown on the basis of fictitious invoices and debited in the P & L account are established as bogus, then restricting the addition to a curtained percentage goes against the principles \" Whether on the facts and circumstances of the case and in law, the decision of Ld. CIT(A) is right, in view of the decision of the Hon'ble High Court Mumbai, in the case of Pr. Commissioner 5, Mumbai Vs. Kanak Impex (India) Ltd ((2025)172 axmann.com 283 (Bombay) Dated. 03.03.2025, wherein the decision of 100% addition made by AO has been allowed, by rejecting the ITAT's decision of estimating the profit rate @12.5% on bogus purchases and thereby impliedly grant deduction of expenditure incurred u/s. 69C of the Act, even though the assessee failed to discharge its onus to prove the genuineness of alleged purchases and has offered no explanation of the sources of expenditure incurred on account of r on the facts and circumstances of the case and in law, the Ld. CIT(A) is perverse in not considering the decision of the order of Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Vs. Dy. CIT (2016) 292 CTR (Guj.) 354, SLP (CC) of ated. 16.01.2017, which is on the similar issue of bogus purchases, which has been confirmed and was already the law of the land, when the Ld. CIT(A) has pronounced its order . \"Whether on the facts and circumstances of the case and n law, the Ld. CIT(A) has erred in not appreciating the fact that in the case of M/s. Swetamber Steels Ltd. (Supra), the Hon'ble ITAT Ahmadabad, had confirmed the disallowance of the bogus purchases, by stating that the purchases shown from respective genuine and the decision of the ITAT was upheld by Hon'ble Gujrat High Court and also by the Hon'ble Tax Act 1961, is being Effect involved in the instant case is Rs. , which is above the prescribed limit mentioned in the ITJ(Pt) amended vide No. 09/2024 dated. 17.09.2024 and this case also falls under one of the exceptions specified in paragraph 3.1(c) of the of the CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is Printed from counselvise.com stated that in cases involving \"Organized Tax Evasion\" including cases of accommodation entry of bogus purchases. 2. Briefly stated, the material facts giving rise to the present appeal are that the assessee, an individual, was engaged in the business of trading in ferrous and non proprietary concern styled as assessee filed her return of income on 30th September, 2011 declaring a total income of processed and selected for scrutiny under the provisions of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2.1 During the course of the scrutiny assessment, the Learned Assessing Officer (hereinafter “Ld. AO”) observed that the assessee had effected purchases from certain entities which had been identified by the Sales Tax Department, Government of Maharashtra, as being non issuing accommodation bills without actual delivery of goods. 2.2 The Ld. AO, in order to verify the genuineness of such purchases, issued notices under Section 133(6) of the Act to thirteen (13) of the said returned unserved with postal remarks such as “not known” or “left”. Consequently, the Ld. AO issued notice under Section 142(1) calling upon the assessee to substantiate the genuineness of the purchases by producing supporting evidences such as delivery challans, proof of stated that in cases involving \"Organized Tax Evasion\" including cases of accommodation entry of bogus purchases. Briefly stated, the material facts giving rise to the present that the assessee, an individual, was engaged in the business of trading in ferrous and non-ferrous metals through her proprietary concern styled as M/s. Rajendra Forge Industries assessee filed her return of income on 30th September, 2011 total income of ₹11,04,002/-. The said return was duly processed and selected for scrutiny under the provisions of the tax Act, 1961 (hereinafter referred to as “the Act”). During the course of the scrutiny assessment, the Learned Assessing Officer (hereinafter “Ld. AO”) observed that the assessee had effected purchases from certain entities which had been identified by the Sales Tax Department, Government of being non-genuine or hawala dealers engaged in issuing accommodation bills without actual delivery of goods. The Ld. AO, in order to verify the genuineness of such purchases, issued notices under Section 133(6) of the Act to thirteen (13) of the said parties. However, all such notices were returned unserved with postal remarks such as “not known” or “left”. Consequently, the Ld. AO issued notice under Section 142(1) calling upon the assessee to substantiate the genuineness of the purchases by producing the concerned parties and furnishing supporting evidences such as delivery challans, proof of Badamidevi Tejraj Mutha 4 ITA No. 2269/MUM/2025 stated that in cases involving \"Organized Tax Evasion\" including Briefly stated, the material facts giving rise to the present that the assessee, an individual, was engaged in the ferrous metals through her M/s. Rajendra Forge Industries. The assessee filed her return of income on 30th September, 2011 . The said return was duly processed and selected for scrutiny under the provisions of the tax Act, 1961 (hereinafter referred to as “the Act”). During the course of the scrutiny assessment, the Learned Assessing Officer (hereinafter “Ld. AO”) observed that the assessee had effected purchases from certain entities which had been identified by the Sales Tax Department, Government of dealers engaged in issuing accommodation bills without actual delivery of goods. The Ld. AO, in order to verify the genuineness of such purchases, issued notices under Section 133(6) of the Act to parties. However, all such notices were returned unserved with postal remarks such as “not known” or “left”. Consequently, the Ld. AO issued notice under Section 142(1) calling upon the assessee to substantiate the genuineness of the the concerned parties and furnishing supporting evidences such as delivery challans, proof of Printed from counselvise.com transportation, and payment details. informed the fact of observation made by the Sales Tax Department of the Maharashtra Government r 2.3 In response, the assessee produced copies of invoices, payment vouchers reflecting payments through banking channels, and delivery challans. Nonetheless, she failed to furnish proof of transportation of goods or payment of frei produce the suppliers for verification. The Ld. AO observed that while the sales corresponding to the impugned purchases were duly recorded and accepted, the failure to establish the identity, existence, and delivery of goods fro the purchases unverifiable. He therefore concluded that the assessee had merely procured accommodation bills to regularise purchases actually made from unaccounted sources. Accordingly, he disallowed the entire amount of purchases from the said parties. 3. On appeal, the Ld. CIT(A) AO that the assessee had failed to discharge the primary onus of proving the genuineness of the impugned purchases. However, taking into account the consistent view of the Co of the Tribunal in similar matters, including in the assessee’s own case for earlier years, the Ld. CIT(A) restricted the disallowance to 1.5% of the alleged bogus purchases, holding that the addit transportation, and payment details. The Assessing Officer also informed the fact of observation made by the Sales Tax Department of the Maharashtra Government regarding those parties. In response, the assessee produced copies of invoices, payment vouchers reflecting payments through banking channels, and delivery challans. Nonetheless, she failed to furnish proof of transportation of goods or payment of freight charges, nor could she produce the suppliers for verification. The Ld. AO observed that while the sales corresponding to the impugned purchases were duly recorded and accepted, the failure to establish the identity, existence, and delivery of goods from the said suppliers rendered the purchases unverifiable. He therefore concluded that the assessee had merely procured accommodation bills to regularise purchases actually made from unaccounted sources. Accordingly, he disallowed the entire amount of ₹2,39,19,729/ purchases from the said parties. Ld. CIT(A) concurred with the finding of the Ld. AO that the assessee had failed to discharge the primary onus of proving the genuineness of the impugned purchases. However, nto account the consistent view of the Co-ordinate Benches of the Tribunal in similar matters, including in the assessee’s own case for earlier years, the Ld. CIT(A) restricted the disallowance to 1.5% of the alleged bogus purchases, holding that the addit Badamidevi Tejraj Mutha 5 ITA No. 2269/MUM/2025 The Assessing Officer also informed the fact of observation made by the Sales Tax Department egarding those parties. In response, the assessee produced copies of invoices, payment vouchers reflecting payments through banking channels, and delivery challans. Nonetheless, she failed to furnish proof of ght charges, nor could she produce the suppliers for verification. The Ld. AO observed that while the sales corresponding to the impugned purchases were duly recorded and accepted, the failure to establish the identity, m the said suppliers rendered the purchases unverifiable. He therefore concluded that the assessee had merely procured accommodation bills to regularise purchases actually made from unaccounted sources. Accordingly, ,19,729/- representing concurred with the finding of the Ld. AO that the assessee had failed to discharge the primary onus of proving the genuineness of the impugned purchases. However, ordinate Benches of the Tribunal in similar matters, including in the assessee’s own case for earlier years, the Ld. CIT(A) restricted the disallowance to 1.5% of the alleged bogus purchases, holding that the addition of Printed from counselvise.com the entire purchase value would be excessive since the sales had not been doubted. 4. When the appeal was taken up for hearing before us, none appeared on behalf of the assessee despite due service of notice. It is also noticed from the record that had been adjourned on the written request of the Ld. Counsel for the assessee. In the present instance, there was neither appearance nor any application seeking adjournment. It is thus apparent that the assessee is not int the appeal was heard submissions advanced by the Learned Departmental Representative (Ld. DR). 5. The Ld. DR, in the course of his submissions, placed reliance on the judgment of the Hon’ble Bombay High Court in Kanak Impex (India) Ltd. wherein the Hon’ble Court has enunciated that where the assessee has failed to substantiate the genuineness of purchases from parties found to be non been accepted as genuine, a has obtained accommodation bills and that the goods were procured from undisclosed sources, i.e., the grey market. The value of such unrecorded procurement, being unexplained, constitutes an investment liable to be taxe down by the Hon’ble High Court in the aforesaid decision, it the entire purchase value would be excessive since the sales had When the appeal was taken up for hearing before us, none appeared on behalf of the assessee despite due service of notice. It is also noticed from the record that on earlier occasions, the matter had been adjourned on the written request of the Ld. Counsel for the assessee. In the present instance, there was neither appearance nor any application seeking adjournment. It is thus apparent that the assessee is not interested in pursuing the appeal. Accordingly, the appeal was heard ex parte qua the assessee, after hearing the submissions advanced by the Learned Departmental Representative The Ld. DR, in the course of his submissions, placed reliance judgment of the Hon’ble Bombay High Court in Kanak Impex (India) Ltd. [2025] 172 taxmann.com 283 (Bom), wherein the Hon’ble Court has enunciated that where the assessee has failed to substantiate the genuineness of purchases from parties found to be non-existent, yet the corresponding sales have been accepted as genuine, a presumption arises that the assessee has obtained accommodation bills and that the goods were procured from undisclosed sources, i.e., the grey market. The value of such unrecorded procurement, being unexplained, constitutes an investment liable to be taxed under the Act. Applying the ratio laid down by the Hon’ble High Court in the aforesaid decision, it Badamidevi Tejraj Mutha 6 ITA No. 2269/MUM/2025 the entire purchase value would be excessive since the sales had When the appeal was taken up for hearing before us, none appeared on behalf of the assessee despite due service of notice. It on earlier occasions, the matter had been adjourned on the written request of the Ld. Counsel for the assessee. In the present instance, there was neither appearance nor any application seeking adjournment. It is thus apparent that erested in pursuing the appeal. Accordingly, qua the assessee, after hearing the submissions advanced by the Learned Departmental Representative The Ld. DR, in the course of his submissions, placed reliance judgment of the Hon’ble Bombay High Court in PCIT v. [2025] 172 taxmann.com 283 (Bom), wherein the Hon’ble Court has enunciated that where the assessee has failed to substantiate the genuineness of purchases from existent, yet the corresponding sales have presumption arises that the assessee has obtained accommodation bills and that the goods were procured from undisclosed sources, i.e., the grey market. The value of such unrecorded procurement, being unexplained, constitutes an d under the Act. Applying the ratio laid down by the Hon’ble High Court in the aforesaid decision, it Printed from counselvise.com becomes evident that the restricted addition sustained by the Ld. CIT(A) at 1.5% of the purchases cannot be sustained without a proper factual re-examinat 5.1 We, therefore, set aside the findings of the Ld. CIT(A) on this issue and remit the matter back to the file of the Ld. Assessing Officer for a de novo adjudication in accordance with law and in the light of the principles laid down by the Hon’ble Bombay High Court in Kanak Impex (India) Ltd. (supra) due opportunity to substantiate her claim before the Assessing Officer.The grounds of appeal are merit accordingly allowed for statistical purposes. 6. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (NARENDER KUMAR CHOUDHRY JUDICIAL MEMBER Mumbai; Dated: 29/10/2025 Rahul Sharma, Sr. P.S. becomes evident that the restricted addition sustained by the Ld. CIT(A) at 1.5% of the purchases cannot be sustained without a examination in light of the law so declared. We, therefore, set aside the findings of the Ld. CIT(A) on this issue and remit the matter back to the file of the Ld. Assessing Officer for a de novo adjudication in accordance with law and in the ciples laid down by the Hon’ble Bombay High Court Kanak Impex (India) Ltd. (supra). The assessee shall be afforded due opportunity to substantiate her claim before the Assessing The grounds of appeal are merit accordingly allowed for In the result, the appeal of the Revenue is allowed for ounced in the open Court on 29/10/2025. Sd/- Sd/ (NARENDER KUMAR CHOUDHRY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Badamidevi Tejraj Mutha 7 ITA No. 2269/MUM/2025 becomes evident that the restricted addition sustained by the Ld. CIT(A) at 1.5% of the purchases cannot be sustained without a ion in light of the law so declared. We, therefore, set aside the findings of the Ld. CIT(A) on this issue and remit the matter back to the file of the Ld. Assessing Officer for a de novo adjudication in accordance with law and in the ciples laid down by the Hon’ble Bombay High Court . The assessee shall be afforded due opportunity to substantiate her claim before the Assessing The grounds of appeal are merit accordingly allowed for In the result, the appeal of the Revenue is allowed for /10/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Badamidevi Tejraj Mutha 8 ITA No. 2269/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "