ITO 19.3.1, , MUMBAI V. MEHTA SURESH UKHCHAND HUF, MUMBAI

ITA 1390/MUM/2025

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), which had reduced the addition made for bogus purchases from 100% to 5% of the total amount of Rs. 62,55,960. The assessee, Mehta Suresh Ukhchand HUF, was accused of making bogus purchases from seven fictitious concerns, which were found to be involved only in providing bogus bills/invoices. The Revenue challenged the CIT(A)'s decision, arguing that the reduction was unjustified given the evidence of bogus transactions. The tribunal, however, found that the CIT(A)'s decision was consistent with previous rulings in similar cases involving the same assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825161 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2025
• Other Referred Cases: PCIT vs. Drisha Impex (P.) Ltd., PCIT vs. Kanak Impex (India) Ltd., M/s. N. K. Proteins Ltd. Vs. Dy. CIT, M/s. Swetamber Steels Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAN KOSURI
• Assessee Lawyers: RIDHISHA JAIN
• Keywords: Set aside; Additional evidence; Bogus purchase; Tax effect; Accommodation entries; Competent authority; Bogus
• Section: 148; 144; 142(1); 68; 69C; 37

Judgement Text

" आयकर अपीलीय अिधकरण याय पीठ मुंबई म\u0015। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.1390/Mum/2025 (Assessment Year: 2009-10) ITO 19.3.1, 405, 4th Floor, Piramal Chambers, Parel, Mumbai-400012 Vs. Mehta Suresh Ukhchand HUF, 21/23, 1st Pathan Street, 4th Kumbharwada Mumbai-400004 PAN: AAAHM6719E Revenue-अपीलाथ\u0007 / Appellant : Assessee- \b यथ\u0007 / Respondent Assessee by : Ms Ridhisha Jain Revenue by : Shri Annavaran Kosuri, Sr. AR Date of Hearing : 23.12.2025 Date of Pronouncement : 29.12.2025 O R D E R Per Arun Khodpia, AM: The captioned appeal is filed by the Revenue, against the order of Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short “ld. CIT(A)”] dated 17.12.2024 for the AY 2009-10, which in turn arises from the assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 (the Act) dated 23.03.2015, passed by ITO- 19(3)(4), Mumbai. Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 2 2. The grounds of appeal raised by the assessee in the present appeal reads as under: “1. Whether on the facts and circumstances of the case und in law, the 141. CIT(A) has erred in restricting the addition to 5% as against 100% addition of Rs. 62,55,960/- made u/s 69C of the Income-Tax Act 1961, on account of bogus purchases from Seven fictitious concerns, who were involved in providing only bogus bills/invoices for the alleged purchases purportedly made by the assessee? 2. Whether on the facts and circumstances of the case and in law, the Dd. CITIA) has erred in restricting the addition to 5% as against 100% addition of Rs. 62,55,960/- made on account of bogus purchases from Seven fictitious concerns, without appreciating the fact that action of AO was based on the information/reports received from the DGIT(Inv. Mumbai, subsequently through VAT Authorities that hawala traders were indulged in providing only accommodation entries in the form of issuing bogus Sales/Purchases Büls without supplying any goods and the assessee was found to be one of the beneficiaries who have obtained accommodation entries of bogus purchases to inflate it's expenses and thereby suppress it's true profit ?\" 3. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the AO has passed the Ex-parte Order u/s 144 of the Income-Tax Act as the assessee failed to complied to the notices and also neither produce quantity tally of day to day purchases/Sales/Stocks and corresponding values, Delivery Challans, lorry receipts etc. nor could prove the genuineness of alleged transactions and creditworthiness of parties for verification, in spite of opportunities provided by the Assessing Officer? 4. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in admitting the new evidences which the assessee has failed to produced before the AO, during the Re-assessment Proceedings, without asking Remand Report from the Assessing Officer, as prescribed in Rule 46A of the Income-Tax Act? 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition to 5% as against 100% addition of Rs. 62,55,960/ on account of bogus purchases from Seven fictitious concerns, by not justified in estimating the income of bogus purchases on the basis of comparing of the bogus purchases with the purchases in the regular books of accounts, ignoring the fact of procuring bogus invoices leads to the unverified inflation of purchase price by the assessee which cannot be compared with the regular GP of the books of accounts?\" 6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the element of reasons for procuring of bogus invoices, when it is observed that the GP on these bogus invoices are almost matching with the GP as per genuine invoices and therefore such estimation of income out of bogus purchases with the GP as per regular books of accounts is not justified?\" Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 3 7. Whether on the facts and circumstances of the case and in law, the Ld. CITYA) has erred in appreciating the fact 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?\" 8. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating the decision of the Hon'ble Supreme Court in the case of M/s. N. K. Proteins Ltd. Vs. Dy. CIT (2016) 292 CTR (Gul) 354, Dated. 16.01.2017, wherein Hon'ble Supreme Court has 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 certain percentage goes against the principles of section 68 and 690 of the Income-Tax Act, 1961 and when the purchases mode are from bogus suppliers or concerns, the entire purchases are liable to disallowed ?\" 9. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is perverse in not considering that 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 has been confirmed, thus failed to appreciate that is was already the law of the land, when the Ld. CIT(A) has pronounced it's order on 17.12.2024?\" 10. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred not appreciating the appreciating the decision in the case of M/s. Swetamber Steels Ltd. (Supra), the Hon'ble ITAT, Ahmadabad, wherein had confirmed the disallowance of the bogus purchases had conformed, by stating that the purchases shown from respective parties were found non-genuine and the decision of the IMAT was upheld by Hon'ble Gujrat High Court and also by the Hon'ble Supreme Court in SLP (CC) of 963/2017, Dated. 16.01.2017? 11. The appeal u/s. 253 of the Income-Tax Act, 1961 before the Hon'ble ITAT, is being filed, in view of Tax Effect involved in the instant case is Rs. 38,32,720/-, which is above the prescribed limit prescribed 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 thet exceptions specified in paragraph 3.1(c) of the CBDT's Circular No. Circular No.05/2024 Dated. 15.03.2024. 12. The appellant cruves, leave to amend or alter any grounds or add a new ground which may be necessary. A copy of the CIT(A)'s order was received on 17.12.2024 in this office of PCIT- 19, Mumbai. The last date of filling an appeal is 28.02.2025. The appeal should be filed IMMEDIATELY” Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 4 3. The concise facts of the case are that, the assessee filed its return of income on 19.09.2009 for the assessment year 2009-10, declaring total income of Rs. 1,93,770/- and the return of assessee had been processed u/s. 143(1) of the Act. Subsequently, the DGIT (investigation) vide letter dated 26.12.2013 had communicated the information received from VAT /Sales Tax Department, according to which the assessee is involved in taking accommodation entries in the form of bogus purchases from following parties. Sr. No. Name of the Party Amount 1 Jinkushal Metal Corporation 2799960 2 Shree Manibhadra Metal Corporation 1801705 3 Navkar Impex 200626 4 Prerna Steel 4514 5 Gururaj Enterprises 1118933 6 Daksha Enterprises 330222 Total 62,55,960 4. Consequently, the case of assessee was reopened, thus, notice u/s.148 was issued on 07.04.2014, further notice u/s. 143(2) were issued, however, the assessee failed to attend or furnish any response to the said notices. The final opportunity to rebut was granted on 09.03.2015, however, the assessee again failed to attend and substantiate. Considering the non-compliance by the assessee, the assessment was completed under the provisions of section 144 of the Act and the bogus purchases as per information received for Rs. 62,55,960/- was added to the income of assessee on account of suspicious purchases. Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 5 5. Aggrieved with the aforesaid addition / assessment order the assessee preferred an appeal before the first appellate authority, wherein the issue is discussed at length by the Ld. CIT(A) and I had partly allowed the appeal of assessee by restricting the addition to 5% of such bogus purchases which comes to Rs. 3,12,798/-. 6. Being dissatisfied with the substantial relief granted to the assessee, the revenue has challenged the decision of Ld. CIT(A) by way of an appeal before us. 7. At the outset, Ld. Senior DR (Sr. DR) representing the revenue submitted that the assessee was complete non-responsive before the Ld. AO, have not furnished any explanation regarding the bogus purchases, therefore, alleged purchases made remain suspicious, the addition made by the by the Ld. AO, thus, was justified, qualify to be sustained. The Ld. DR further places his reliance on the following judgments by hon’ble Mumbai High Court. 1) PCIT vs. Drisha Impex (P.) Ltd. (2025) 173 taxmann.com 571 (Bombay) 2) PCIT vs. Kanak Impex (India) Ltd. (2025) 172 taxmann.com 283 (Bombay) Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 6 8. Per contra the authorised representative of the assessee (in short “Ld.AR”) submitted that the assessee during the assessment stage had furnished its submissions before the A.O but he had not taken them on record and passed an ex-parte order u/s.144, making the addition of entire alleged purchases. The details were, thus, furnished before the Ld. CIT(A) under Rule 46A of the Act for admission as additional evidences, which were filed before the Ld. AO also but not taken on record. Further, it is submitted by the Ld.AR that the Ld. CIT(A) has rightly adjudicated the issue following the decision of ITAT Mumbai, in ITA No. 1403 and 1408/Mum/2019 for the assessment year 2010- 11 and 2011-12 in assessee’s own case on identical facts, wherein the coordinate bench of ITAT Mumbai has restricted the disallowance only for 5% of alleged purchases. The Ld. CIT(A) appreciated the facts and the decision of ITAT Mumbai, accordingly following the said decisions in assessee’s own case has restricted the addition at 5% of the bogus purchases. The Ld. CIT(A) has passed a reasonable and justified order, supported with decision of ITAT in assessee’s own case, the same accordingly deserves to be upheld. 9. We have considered the rival submissions and perused the material available on record and any cases related above by the assessee and the revenue. Admittedly, the identical issue was made by ITAT in assessee’s own case which was followed by the Ld. CIT(A) and has observed as under: Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 7 “5. Observations, findings and decision of merit: 5.1 I have examined the facts of the case, the assessment order, and carefully considered the appellant’s submission. The Assessing Officer (hereinafter referred to as the AO) passed the assessment order u/s 147 r. w. s. 144 of the Income Tax Act, 1961(referred to as the Act). The AO in his order added Rs. 62,55,960/- being Bogus purchases. In order to contest the additions made by the AO, the appellant has filed this appeal. The facts of the case and the appellant’s submission have been outlined in this order, so there’s no need to reiterate them to avoid duplication. 5.2 The appellant has taken the main issue of appeal through ground No.3 is regarding addition of Rs. 62,55,960/- by treating the genuine purchases as nongenuine purchases u/s. 69C of the IT Act. It is observed from the assessment order that information received from Sales tax Department through DGIT(In), Mumbai that the assessee has shown purchases of Rs.62,55,960/- from some parties whose name are reproduced in the assessment order in para-2, during the financial year relevant to assessment year 2009-10. During the course of investigation, the sales tax department has found that the said concern were not doing genuine business of purchases and sales and merely indulge in providing accommodation bills. Accordingly, after recording reasons for reopening the case and getting prior approval of the competent authority, notice u/s 148 of the Act was issued on 30.03.2019requiring the assessee to e-file his return of income within 30 days. However, the assessee did not filed return against the said notice u/s 148 of the Act. Thereafter, notice u/s 142(1) was issued number of times which remained uncompiled, are matter of record. Thus, the ld AO had issued a show cause notice before passing the assessment order which was also not complied with. Thus, the ld AO had no option than to assess the income of the appellant as per information available on record. It is observed from the assessment order that the Sales Tax department conducted investigation and found that the said concern were not doing genuine business of purchases and sales and merely indulge in providing accommodation bills. Since, It not one of case but thousand of assessees were involved with such activities to therefore, the ld AO based on the investigation of another department concluded that the amount of purchases made from the alleged Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 8 hawala dealers is nothing but bogus purchase and treated as bogus purchase made by the assessee and added to the total income of the assessee. 5.3 During the appellate proceeding the appellant has submitted before me that he had furnished all the details called for by the ld AO but he had not taken them on record and passed an ex-parte order u/s 144 of the Act making an addition of entire purchase. Before me the appellant has filed an application under Rule 46A of the I.T. Rule 1962 for admission of additional evidence that was filed before the ld AO who has not taken them on record. 5.4 Since the impugned assessment order were passed ex-parte u/s 144 of the Act for non-compliance from assessee’s side and required details as the same was not available with the ld AO as evident from the impugned assessment order. Therefore, in the interest of fairness and justice, it was necessary to set aside the assessment order made under section 144 of the Act, given the totality of facts. However, the appellant has submitted inter alia that – “it is pertinent to bring to Your Honour's attention that in appellant's own case for AY 2010-11 & 2011-12 in ITA NO. 1403&1408/Mum/2019 on identical facts the Hon'ble ITAT has restricted the addition only to the extent of 5% of the alleged purchases. Therefore, if Your Honour has to make addition, then following the order of the Hon'ble ITAT in assessee's own case, it is submitted that only 5% of purchases could be upheld by Your Honour.” 5.5 I have considered the above submission and also perused the hon’ble ITAT’s order in the appellant own case for AY 2010-11 & 2011-12 in ITA NO. 1403&1408/Mum/2019 dated 1.6.2020. Since, the fact and circumstance of the present case are same, therefore, relying upon said judgment, I restricted the addition to 5% of such bogus purchase of Rs.62,55,960/- which comes to Rs.3,12,798/-. Thus, the appellant gets a relief of Rs.59,43,162/-. The ground of appeal is, thus, partly allowed.” Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 9 10. So far as the reliance of revenue is concern on the decisions of Hon’ble Mumbai High Court in the case of PCIT vs. Drisha Impex (P.) Ltd.(supra) and PCIT vs. Kanak Impex (India) Ltd. (supra.), we find that the facts of present case are different than the facts of the cases referred to. In present case assessee claims to furnished submissions and evidence before the AO, but Ld. AO had not taken on record, such submissions and evidence are thereafter furnished before the Ld. CIT(A), who examined the same and concluded that the facts are identical to the facts of assessee’s own case for AY 2010-11 & 2011-12 in ITA No. 1403 and 1408/Mum/2019, whereas in the case of PCIT vs. Drisha Impex (P.) Ltd.(supra) and PCIT vs. Kanak Impex (India) Ltd. (supra.) the assessee therein was failed to prove the genuineness of purchases and express inability to furnish purchase confirmations. In present case on the contrary assessee submitted primary evidence to discharge the burden on it, further under similar facts the cases are decided by ITAT Mumbai in assessee’s own case as well as in other cases, which in absence of any deviating fact brought to our notice can not be decided differently. We thus concur with the decision of Ld. CIT(A) in restricting the addition for 5% of the alleged bogus purchases. The decision of Ld. CIT(A) is thus sustained and need not be interfered with. 11. In result the appeal of revenue stands dismissed, in terms of our aforesaid observations. Printed from counselvise.com ITA No. 1390/Mum/2025 Mehta Suresh Ukhchand HUF 10 Order pronounced in the open court on 29-12-2025. Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) Judicial Member Accountant Member Mumbai, Dated : 29-12-2025. Poonam Mirashi Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "