PINKAL DILIP BHANSALI ,MUMBAI V. INCOME TAX OFFICER 19(2)(4), MUMBAI

ITA 1701/MUM/2025

AI Insights

The case involves Pinkal Dilip Bhansali, the appellant, who contested the additions made to his income tax assessment for the year 2011-12. The additions were based on allegations that he had made bogus purchases from M/s Nazar Impex Pvt. Ltd., a company involved in providing accommodation entries. The Assessing Officer reopened the assessment under section 148 of the Income Tax Act, 1961, after receiving information from the Investigation Wing about the dubious nature of the transactions. The Tribunal dismissed the appeal, agreeing with the lower authorities that the purchases were not genuine and the reassessment was valid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 823082 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2025
• Other Referred Cases: Kanak Impex Pvt. Ltd. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA MAHAJAN
• Assessee Lawyers: SAPNESH D SHETH VIRTUALLY
• Keywords: Business income; Reassessment proceedings; Corroborative evidences; Unexplained expenditure; Bogus purchase; Onus to prove; Principle of natural justice; Search and seizure; Accommodation entries; Assessment record; Tangible material; Borrowed satisfaction; Bogus
• Section: 148; 271(1)(c); 132; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) ITA No. 1701/MUM/2025 Assessment Year: 2011-12 Pinkal Dilip Bhansali, 23/B, Shakti Sadan, Grant Road, Mumbai-400007. Vs. Income-tax Officer-19(2)(5), Jurisdiction Income Tax Officer 19(2)(4), Piramal Chamber, Lalbaug, Mumbai—400012. PAN NO. AOBPB 1100 K Appellant Respondent Assessee by : Mr. Sapnesh D Sheth (Virtually Present) Revenue by : Mr. Virabhadra Mahajan, Sr. DR (Virtually Present) Date of Hearing : 15/10/2025 Date of pronouncement : 23/12/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 19.09.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax Printed from counselvise.com (Appeals), NFAC has erred in confirming the action of assessing officer in reopening the assessment by issuing notice u/s 148 of the I.T. Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Co (Appeals), NAFC has erred in confirming the action of assessing officer in making addition of Rs. 2,24,75,072/ under section 69C of the | T Act as unexplained expenditure. 3. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income tax (Appeals) may please be deleted. 2. At the outset, the learned counsel for the assessee invited our attention to the delay of 101 days in filing the present appeal, as noted by the Registry. It was CIT(A) was not communicated to the assessee through the registered primary or secondary e assessee remained unaware of the passing of the appellate order and came to know of it only upo Income-tax Portal to verify the status of the proceedings after a considerable lapse of time. It was thus contended that the delay was neither deliberate nor attributable to any lack of diligence, but occurred for bona fide and 2.1 We have considered the rival submissions on the issue of condonation of delay. In our considered view, the assessee has placed on record a reasonable and satisfactory explanation constituting sufficient cause for the delay in fili delay being unintentional and supported by bona fide ITA No. 1701/MUM/2025 (Appeals), NFAC has erred in confirming the action of assessing officer in reopening the assessment by issuing notice u/s 148 of the I.T. Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NAFC has erred in confirming the action of assessing officer in making addition of Rs. 2,24,75,072/ under section 69C of the | T Act as unexplained expenditure. It is therefore prayed that above addition made by sing officer and confirmed by Commissioner of Income tax (Appeals) may please be deleted. 2. At the outset, the learned counsel for the assessee invited our attention to the delay of 101 days in filing the present appeal, as noted by the Registry. It was submitted that the order of the learned CIT(A) was not communicated to the assessee through the registered primary or secondary e-mail address. As a result, the assessee remained unaware of the passing of the appellate order and came to know of it only upon subsequently accessing the tax Portal to verify the status of the proceedings after a considerable lapse of time. It was thus contended that the delay was neither deliberate nor attributable to any lack of diligence, but occurred for bona fide and unavoidable reasons. We have considered the rival submissions on the issue of condonation of delay. In our considered view, the assessee has placed on record a reasonable and satisfactory explanation constituting sufficient cause for the delay in filing the appeal. The delay being unintentional and supported by bona fide Pinkal Dilip Bhansali 2 ITA No. 1701/MUM/2025 (Appeals), NFAC has erred in confirming the action of assessing officer in reopening the assessment by issuing 2. On the facts and circumstances of the case as well as law mmissioner of Income Tax (Appeals), NAFC has erred in confirming the action of assessing officer in making addition of Rs. 2,24,75,072/- under section 69C of the | T Act as unexplained expenditure. It is therefore prayed that above addition made by sing officer and confirmed by Commissioner of Income- 2. At the outset, the learned counsel for the assessee invited our attention to the delay of 101 days in filing the present appeal, as submitted that the order of the learned CIT(A) was not communicated to the assessee through the mail address. As a result, the assessee remained unaware of the passing of the appellate order n subsequently accessing the tax Portal to verify the status of the proceedings after a considerable lapse of time. It was thus contended that the delay was neither deliberate nor attributable to any lack of diligence, but We have considered the rival submissions on the issue of condonation of delay. In our considered view, the assessee has placed on record a reasonable and satisfactory explanation ng the appeal. The delay being unintentional and supported by bona fide Printed from counselvise.com circumstances, the same is condoned. Consequently, the appeal is admitted for adjudication on merits. 2.2 Briefly stated, t its return of income for the relevant assessment year on 27.09.2011 declaring a total income of was received from the Director General of Income (Investigation), Mumbai, that the assessee had allege accommodation purchase bills amounting to M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand Jain group. The said group was subjected to search an operations on 03.10.2013, wherein it was unearthed that several concerns under their control were engaged in providing accommodation entries through paper entities without any actual business activity. 2.3 On the basis of this information, the Ass recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Income-tax Act, 1961 and served upon the assessee. Despite issuance of statutory notices, the assessee f respond. Ultimately, a show cause notice dated 01.12.2018 was issued, to which the assessee replied on 18.12.2018, asserting that ITA No. 1701/MUM/2025 circumstances, the same is condoned. Consequently, the appeal is admitted for adjudication on merits. y stated, the facts of the case are that the its return of income for the relevant assessment year on 27.09.2011 declaring a total income of ₹1,83,630/-. Subsequently, information was received from the Director General of Income (Investigation), Mumbai, that the assessee had allege accommodation purchase bills amounting to ₹2,24,75,072/ M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand Jain group. The said group was subjected to search an operations on 03.10.2013, wherein it was unearthed that several concerns under their control were engaged in providing accommodation entries through paper entities without any actual On the basis of this information, the Ass recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section tax Act, 1961 and served upon the assessee. Despite issuance of statutory notices, the assessee f respond. Ultimately, a show cause notice dated 01.12.2018 was issued, to which the assessee replied on 18.12.2018, asserting that Pinkal Dilip Bhansali 3 ITA No. 1701/MUM/2025 circumstances, the same is condoned. Consequently, the appeal is facts of the case are that the assessee filed its return of income for the relevant assessment year on 27.09.2011 . Subsequently, information was received from the Director General of Income-tax (Investigation), Mumbai, that the assessee had allegedly obtained 2,24,75,072/- from M/s Nazar Impex Pvt. Ltd., a concern stated to be controlled and operated by the Rajendra Jain / Sanjay Choudhary / Dharmichand Jain group. The said group was subjected to search and survey operations on 03.10.2013, wherein it was unearthed that several concerns under their control were engaged in providing accommodation entries through paper entities without any actual On the basis of this information, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section tax Act, 1961 and served upon the assessee. Despite issuance of statutory notices, the assessee failed to respond. Ultimately, a show cause notice dated 01.12.2018 was issued, to which the assessee replied on 18.12.2018, asserting that Printed from counselvise.com the purchases were genuine and furnishing copies of invoices and bank statements. 2.4 Thereafter, the Assessing Offi copies of statements of Shri Sanjay Kailashchand Choudhary, Director of M/s Nazar Impex Pvt. Ltd., recorded during survey proceedings on 03.10.2013 and 10.01.2014, wherein he categorically admitted that his concerns were engage providing accommodation entries and did not carry on any real trading in diamonds. No rebuttal or explanation was furnished by the assessee to these statements. Consequently, the Assessing Officer completed the reassessment by treating the impugn purchases as unexplained expenditure under section 69C and added the entire amount of income. 2.5 The Assessing Officer noted that during the search and survey action conducted by the Investigation Wing, it was conclusiv established that the concerns controlled by the Jain/Choudhary group were mere paper entities. The so proprietors were found to be name business operations. Statements recorded under oath revealed that these entities neither maintained nor dealt in any physical stock of diamonds and were only issuing accommodation bills in lieu of commission. ITA No. 1701/MUM/2025 the purchases were genuine and furnishing copies of invoices and Thereafter, the Assessing Officer supplied to the assessee copies of statements of Shri Sanjay Kailashchand Choudhary, Director of M/s Nazar Impex Pvt. Ltd., recorded during survey proceedings on 03.10.2013 and 10.01.2014, wherein he categorically admitted that his concerns were engage providing accommodation entries and did not carry on any real trading in diamonds. No rebuttal or explanation was furnished by the assessee to these statements. Consequently, the Assessing Officer completed the reassessment by treating the impugn purchases as unexplained expenditure under section 69C and added the entire amount of ₹2,24,75,072/- to the assessee’s The Assessing Officer noted that during the search and survey action conducted by the Investigation Wing, it was conclusiv established that the concerns controlled by the Jain/Choudhary group were mere paper entities. The so-called directors and proprietors were found to be name-lenders with no control over business operations. Statements recorded under oath revealed that these entities neither maintained nor dealt in any physical stock of diamonds and were only issuing accommodation bills in lieu of Pinkal Dilip Bhansali 4 ITA No. 1701/MUM/2025 the purchases were genuine and furnishing copies of invoices and cer supplied to the assessee copies of statements of Shri Sanjay Kailashchand Choudhary, Director of M/s Nazar Impex Pvt. Ltd., recorded during survey proceedings on 03.10.2013 and 10.01.2014, wherein he categorically admitted that his concerns were engaged only in providing accommodation entries and did not carry on any real trading in diamonds. No rebuttal or explanation was furnished by the assessee to these statements. Consequently, the Assessing Officer completed the reassessment by treating the impugned purchases as unexplained expenditure under section 69C and to the assessee’s The Assessing Officer noted that during the search and survey action conducted by the Investigation Wing, it was conclusively established that the concerns controlled by the Jain/Choudhary called directors and lenders with no control over business operations. Statements recorded under oath revealed that these entities neither maintained nor dealt in any physical stock of diamonds and were only issuing accommodation bills in lieu of Printed from counselvise.com 2.6 In particular, Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., admitted that the company was en shopping” and that no physical stock of diamonds was ever held by it. The detailed modus operandi explained in his statements demonstrated that the entire business was confined to maintaining books of accounts without any corresponding movem 2.7 The Assessing Officer further observed that, despite opportunity, the assessee failed to produce any evidence of actual delivery of diamonds such as delivery challans, transport documents, stock registers, or inward registers. Mere produc invoices and bank statements was held to be insufficient to establish the genuineness of the transactions, particularly in the face of overwhelming incriminating material gathered during search and survey proceedings. 2.8 The Assessing Officer also circumstances and human probabilities clearly indicated that the transactions were sham and designed to inflate purchases and suppress taxable income. Reliance was placed on the principle that apparent transactions must be tested surrounding facts and conduct of parties. 2.9 It was emphasized that the burden to prove the genuineness of expenditure claimed squarely lies upon the assessee. Where the suppliers themselves admit on oath that they are merely provi ITA No. 1701/MUM/2025 In particular, Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., admitted that the company was en shopping” and that no physical stock of diamonds was ever held by it. The detailed modus operandi explained in his statements demonstrated that the entire business was confined to maintaining books of accounts without any corresponding movem The Assessing Officer further observed that, despite opportunity, the assessee failed to produce any evidence of actual delivery of diamonds such as delivery challans, transport documents, stock registers, or inward registers. Mere produc invoices and bank statements was held to be insufficient to establish the genuineness of the transactions, particularly in the face of overwhelming incriminating material gathered during search and survey proceedings. The Assessing Officer also held that the surrounding circumstances and human probabilities clearly indicated that the transactions were sham and designed to inflate purchases and suppress taxable income. Reliance was placed on the principle that apparent transactions must be tested against the reality of surrounding facts and conduct of parties. It was emphasized that the burden to prove the genuineness of expenditure claimed squarely lies upon the assessee. Where the suppliers themselves admit on oath that they are merely provi Pinkal Dilip Bhansali 5 ITA No. 1701/MUM/2025 In particular, Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., admitted that the company was engaged in “bill shopping” and that no physical stock of diamonds was ever held by it. The detailed modus operandi explained in his statements demonstrated that the entire business was confined to maintaining books of accounts without any corresponding movement of goods. The Assessing Officer further observed that, despite opportunity, the assessee failed to produce any evidence of actual delivery of diamonds such as delivery challans, transport documents, stock registers, or inward registers. Mere production of invoices and bank statements was held to be insufficient to establish the genuineness of the transactions, particularly in the face of overwhelming incriminating material gathered during search held that the surrounding circumstances and human probabilities clearly indicated that the transactions were sham and designed to inflate purchases and suppress taxable income. Reliance was placed on the principle that against the reality of It was emphasized that the burden to prove the genuineness of expenditure claimed squarely lies upon the assessee. Where the suppliers themselves admit on oath that they are merely providing Printed from counselvise.com accommodation entries and no actual goods are traded, the assessee cannot discharge its onus merely by producing self documents such as invoices and bank statements. 2.10 The Assessing Officer observed that banking channels, though relevant, are not conclusive proof of genuineness when the surrounding facts establish a façade. The absence of stock, absence of movement of goods, categorical admissions by the suppliers, and failure of the assessee to rebut such evidence cumulatively demolish the claim of genuine purchases. 2.11 The principle laid down by the Hon’ble Supreme Court in McDowell & Co. Ltd. v. CIT colourable devices cannot be part of legitimate tax planning and that transactions structured only to evade tax must be disregarded. 2.12 Reliance was also placed on the decision of the Hon’ble Gujarat High Court in Hon’ble Supreme Court, wherein it was held that once purchases are found to be bogus, the entire amount is liable to be disallowed and there is no justification for restricting the disallowance to a percentage thereof. 2.13 On a cumulative consideration of the material on record, the Assessing Officer held that: ITA No. 1701/MUM/2025 accommodation entries and no actual goods are traded, the assessee cannot discharge its onus merely by producing self documents such as invoices and bank statements. The Assessing Officer observed that banking channels, though re not conclusive proof of genuineness when the surrounding facts establish a façade. The absence of stock, absence of movement of goods, categorical admissions by the suppliers, and failure of the assessee to rebut such evidence cumulatively claim of genuine purchases. The principle laid down by the Hon’ble Supreme Court in McDowell & Co. Ltd. v. CIT (154 ITR 148) was invoked to hold that colourable devices cannot be part of legitimate tax planning and that transactions structured only to evade tax must be disregarded. Reliance was also placed on the decision of the Hon’ble Gujarat High Court in N.K. Proteins Ltd. v. DCIT, affirmed by the Hon’ble Supreme Court, wherein it was held that once purchases are found to be bogus, the entire amount is liable to be disallowed and there is no justification for restricting the disallowance to a On a cumulative consideration of the material on record, the Assessing Officer held that: Pinkal Dilip Bhansali 6 ITA No. 1701/MUM/2025 accommodation entries and no actual goods are traded, the assessee cannot discharge its onus merely by producing self-serving The Assessing Officer observed that banking channels, though re not conclusive proof of genuineness when the surrounding facts establish a façade. The absence of stock, absence of movement of goods, categorical admissions by the suppliers, and failure of the assessee to rebut such evidence cumulatively The principle laid down by the Hon’ble Supreme Court in (154 ITR 148) was invoked to hold that colourable devices cannot be part of legitimate tax planning and that transactions structured only to evade tax must be disregarded. Reliance was also placed on the decision of the Hon’ble , affirmed by the Hon’ble Supreme Court, wherein it was held that once purchases are found to be bogus, the entire amount is liable to be disallowed and there is no justification for restricting the disallowance to a On a cumulative consideration of the material on record, the Printed from counselvise.com 1. M/s Nazar Impex Pvt. Ltd. was a paper concern engaged exclusively in providing accommodation entries. 2. There was no actual delivery or movement of diamonds 3. The assessee failed to discharge its burden of proving the genuineness of the purchases. 4. The claim of purchases was contrary to human probabilities and surrounding circumstances. 2.14 Accordingly, the purchases amounting to treated as unexplained expenditure under section 69C of the Act. The books of account were rejected under section 145(3). The addition was made in full, and penalty proceedings under section 271(1)(c) were initiated separately. 3. On further appeal, the Ld. CIT(A) r challenging the validity of the reassessment observing as under: “7.1 The appellant has challenged the reopening of the assessment u/s 148 of the act. The appellant filed the return of income on 27.09.2011 for the AY 2011 Rs.1,83,630. The AO received information from the Investigation wing that the group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain and this was unearthed during the search action u/s 132 of the act on 03.10.2013. In his statement, ShriRajendra Jain admitted that the group controll accommodation entry and the appellant was one of the beneficiaries. The AO based on this information reopened the assessment and issued notice u/s 148 of the act dated 30.03.2018 for which the appellant did not file any Assessing Officer reopened the assessment based on the information received from the Investigation Wing and the appellant had made bogus purchases from one of the parties viz., M/s Nararimpex P Ltd. There is the clear information and factual ITA No. 1701/MUM/2025 M/s Nazar Impex Pvt. Ltd. was a paper concern engaged exclusively in providing accommodation entries. There was no actual delivery or movement of diamonds The assessee failed to discharge its burden of proving the genuineness of the purchases. The claim of purchases was contrary to human probabilities and surrounding circumstances. Accordingly, the purchases amounting to ₹2,24,75,072/ unexplained expenditure under section 69C of the Act. The books of account were rejected under section 145(3). The addition was made in full, and penalty proceedings under section 271(1)(c) were initiated separately. On further appeal, the Ld. CIT(A) rejected the ground challenging the validity of the reassessment observing as under: 7.1 The appellant has challenged the reopening of the assessment u/s 148 of the act. The appellant filed the return of income on 27.09.2011 for the AY 2011-12 declaring income of Rs.1,83,630. The AO received information from the Investigation wing that the appellant availed accommodation entry from the group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain and this was unearthed during the search action u/s 132 of the act on 03.10.2013. In his statement, ShriRajendra Jain admitted that the group controlled by him was indulging in providing accommodation entry and the appellant was one of the beneficiaries. The AO based on this information reopened the assessment and issued notice u/s 148 of the act dated 30.03.2018 for which the appellant did not file any response. The Assessing Officer reopened the assessment based on the information received from the Investigation Wing and the appellant had made bogus purchases from one of the parties viz., M/s Nararimpex P Ltd. There is the clear information and factual Pinkal Dilip Bhansali 7 ITA No. 1701/MUM/2025 M/s Nazar Impex Pvt. Ltd. was a paper concern engaged exclusively in providing accommodation entries. There was no actual delivery or movement of diamonds. The assessee failed to discharge its burden of proving the The claim of purchases was contrary to human probabilities 2,24,75,072/- were unexplained expenditure under section 69C of the Act. The books of account were rejected under section 145(3). The addition was made in full, and penalty proceedings under section ejected the ground challenging the validity of the reassessment observing as under: 7.1 The appellant has challenged the reopening of the assessment u/s 148 of the act. The appellant filed the return of 12 declaring income of Rs.1,83,630. The AO received information from the Investigation appellant availed accommodation entry from the group ShriRajendra Jain/ Sanjay Chudary/ Dharmichand Jain and this was unearthed during the search action u/s 132 of the act on 03.10.2013. In his statement, ShriRajendra Jain admitted ed by him was indulging in providing accommodation entry and the appellant was one of the beneficiaries. The AO based on this information reopened the assessment and issued notice u/s 148 of the act dated response. The Assessing Officer reopened the assessment based on the information received from the Investigation Wing and the appellant had made bogus purchases from one of the parties viz., M/s Nararimpex P Ltd. There is the clear information and factual Printed from counselvise.com finding that certain information was received by the Ld. A.O. and this was absolutely authentic based on statements recorded by the Investigation Wing during search and seizure operation of the Sanjay Choudhury Group, Mumbai. The appellant only filed submissions on 18.12.2018 stating that the transaction was genuine. The above facts shows that the case was reopened as per the act and the appellant did not file the return of income in response to the notice u/s 148 of the act and did not raise objection for reopening before the AO. The ground challenging the reopening lacks merit and it is dismissed. 3.1 As far as merit of the addition is concerned, the Ld. CIT(A) rejected the contention of the assessee observing as under: “7.2 A perusal of the record would engaged in the business of trading of diamond jewellery. The accounts were duly audited. The assessee has filed its return of income on the strength of those accounts. When the Id. Assessing Officer has confronted the assessee with regard to certain purchases made from M/s. NazarImpex (P) Ltd. in A.Y. 2011 audited balance report, the complete stock tally of the copy of the stock register exhibiting opening stock, purchase, sales and closing stock. The assessee thereafter filed purchase bills issued by M/s. NazarImpex (P) Ltd. in the respective year. The assessee has made the payments banking channel. The seller of the diamonds was having PAN, VAT, TIN and CST no. Those details were submitted by the assessee to the Id. Assessing Officer during the course of assessment proceedings. The Investigation Wing conducte detailed enquiry and held that the company M/s NazarImpex P Ltd. was providing accommodation entries in respect of purchase of diamonds. It was also proved that at the time of search in the premises, there was no evidence of stock of diamond and it was also accepted by Sanjay Choudary that there was no physical stock of diamonds and it was engaged in providing bogus bills for purchases and they were earning commission income for providing accommodation entries to the assessees and there was no actual sale In this regard, it is pertinent to mention that in the statement recorded under Sec.132(4), the director of the company had admitted the rate of commission received by him for raising bogus bills and he had also stated that the beneficiaries were ITA No. 1701/MUM/2025 finding that certain information was received by the Ld. A.O. and this was absolutely authentic based on statements recorded by the Investigation Wing during search and seizure operation of the Sanjay Choudhury Group, Mumbai. The appellant only filed issions on 18.12.2018 stating that the transaction was genuine. The above facts shows that the case was reopened as per the act and the appellant did not file the return of income in response to the notice u/s 148 of the act and did not raise reopening before the AO. The ground challenging the reopening lacks merit and it is dismissed.” As far as merit of the addition is concerned, the Ld. CIT(A) rejected the contention of the assessee observing as under: 7.2 A perusal of the record would suggest that the assessee is engaged in the business of trading of diamond jewellery. The accounts were duly audited. The assessee has filed its return of income on the strength of those accounts. When the Id. Assessing Officer has confronted the assessee for explaining its position with regard to certain purchases made from M/s. NazarImpex (P) Ltd. in A.Y. 2011-12, the assessee has submitted copy of the audited balance-sheet, Profit & Loss A/c. along with auditor's report, the complete stock tally of the ornaments. It has also filed copy of the stock register exhibiting opening stock, purchase, sales and closing stock. The assessee thereafter filed purchase bills issued by M/s. NazarImpex (P) Ltd. in the respective year. The assessee has made the payments to its suppliers through banking channel. The seller of the diamonds was having PAN, VAT, TIN and CST no. Those details were submitted by the assessee to the Id. Assessing Officer during the course of assessment proceedings. The Investigation Wing conducte detailed enquiry and held that the company M/s NazarImpex P Ltd. was providing accommodation entries in respect of purchase of diamonds. It was also proved that at the time of search in the premises, there was no evidence of stock of diamond and it was lso accepted by Sanjay Choudary that there was no physical stock of diamonds and it was engaged in providing bogus bills for purchases and they were earning commission income for providing accommodation entries to the assessees and there was no actual sale. In this regard, it is pertinent to mention that in the statement recorded under Sec.132(4), the director of the company had admitted the rate of commission received by him for raising bogus bills and he had also stated that the beneficiaries were Pinkal Dilip Bhansali 8 ITA No. 1701/MUM/2025 finding that certain information was received by the Ld. A.O. and this was absolutely authentic based on statements recorded by the Investigation Wing during search and seizure operation of the Sanjay Choudhury Group, Mumbai. The appellant only filed issions on 18.12.2018 stating that the transaction was genuine. The above facts shows that the case was reopened as per the act and the appellant did not file the return of income in response to the notice u/s 148 of the act and did not raise reopening before the AO. The ground challenging the As far as merit of the addition is concerned, the Ld. CIT(A) rejected the contention of the assessee observing as under: suggest that the assessee is engaged in the business of trading of diamond jewellery. The accounts were duly audited. The assessee has filed its return of income on the strength of those accounts. When the Id. Assessing for explaining its position with regard to certain purchases made from M/s. NazarImpex (P) 12, the assessee has submitted copy of the sheet, Profit & Loss A/c. along with auditor's ornaments. It has also filed copy of the stock register exhibiting opening stock, purchase, sales and closing stock. The assessee thereafter filed purchase bills issued by M/s. NazarImpex (P) Ltd. in the respective year. to its suppliers through banking channel. The seller of the diamonds was having PAN, VAT, TIN and CST no. Those details were submitted by the assessee to the Id. Assessing Officer during the course of assessment proceedings. The Investigation Wing conducted detailed enquiry and held that the company M/s NazarImpex P Ltd. was providing accommodation entries in respect of purchase of diamonds. It was also proved that at the time of search in the premises, there was no evidence of stock of diamond and it was lso accepted by Sanjay Choudary that there was no physical stock of diamonds and it was engaged in providing bogus bills for purchases and they were earning commission income for providing accommodation entries to the assessees and there was In this regard, it is pertinent to mention that in the statement recorded under Sec.132(4), the director of the company had admitted the rate of commission received by him for raising bogus bills and he had also stated that the beneficiaries were Printed from counselvise.com already identified and only commission income was earned by the company and the corresponding sales for supplying diamonds were bogus sales. The financial statement of the appellant has been examined. Firstly, the stock details as per the audit report annexed wit appeal papers have been carefully verified which shows: Opening stock Purchases Sales Closing Stock Appellant has admitted the purchases at Rs.6,45,32,192 and the sales at Rs.6,06,45,589 and the Rs.9,49,612 and the closing stock was admitted at 48,36,215. Further, it could be seen from the commission and brokerage were stated to be Rs.5,00,870 and there is no other significant expenditu loss account as all other expenses were regular sundry expenses totaling Rs. 1,53,671. Thus, it could be seen from the total sales turnover of Rs.6 crores, the expenditure incurred excluding purchases is abysmal. In the balance s shown at Rs.1,04,90,112 whereas sundry debtors at Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in the capital account and the opening capital account is Rs.96,909. Thus, there are omission and the accounts are not it is also stated that the accounts are audited by a Chartered Accountant. When the capital introduced is Rs,96,900 and the profit is not even Rs.2,95,070, how appellant was able to lend loan of Rs.8,49,501. The point for consideration is how appellant was able to purchase diamond in the month of April for Rs.24 lakhs without any underlying security to pay the sum and the sales during the month was stated to be Rs.12 lakhs. Thus, Rs.12 lakhs stood as sundry credit in the month of April 10. Further the rate per carat in respect of Shubhi Gems was Rs.3305 per carat and the appellant purchased 259.90CTS. Whereas on 06.04.2010, appellant purchased 36 CTS from one Satyarth Exports and the rate per carat is Rs.13,311. The difference between the r Rs.10,000 per carat approximately. It is to be seen whether the rate per carat would vary according to the standard/purity of the gem to the extent of 300%. Further the payment for the purchases made in the month of Apri month of June 2010. Thus, the transactions involved in the appellant's case gives rise to the suspicion whether any prudent business man would sell the valuable item like diamond with a credit period of more than 3 month ITA No. 1701/MUM/2025 identified and only commission income was earned by the company and the corresponding sales for supplying diamonds were bogus sales. The financial statement of the appellant has been examined. Firstly, the stock details as per the audit report annexed wit appeal papers have been carefully verified which shows: Opening stock NIL Purchases 3009.10 carats 2783.59 carats Closing Stock 225.51 carats Appellant has admitted the purchases at Rs.6,45,32,192 and the sales at Rs.6,06,45,589 and the gross profit was admitted at Rs.9,49,612 and the closing stock was admitted at 48,36,215. Further, it could be seen from the administrative expenditure, the commission and brokerage were stated to be Rs.5,00,870 and there is no other significant expenditure found in the profit and loss account as all other expenses were regular sundry expenses totaling Rs. 1,53,671. Thus, it could be seen from the total sales turnover of Rs.6 crores, the expenditure incurred excluding purchases is abysmal. In the balance sheet, sundry creditors is shown at Rs.1,04,90,112 whereas sundry debtors at Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in the capital account and the opening capital account is Rs.96,909. Thus, there are omission and the accounts are not accurate and it is also stated that the accounts are audited by a Chartered Accountant. When the capital introduced is Rs,96,900 and the profit is not even Rs.2,95,070, how appellant was able to lend loan of Rs.8,49,501. The point for consideration is how appellant was able to purchase diamond in the month of April for Rs.24 lakhs without any underlying security to pay the sum and the sales during the month was stated to be Rs.12 lakhs. Thus, Rs.12 lakhs stood as sundry credit in the month of April 10. Further the rate per carat in respect of Shubhi Gems was Rs.3305 per carat and the appellant purchased 259.90CTS. Whereas on 06.04.2010, appellant purchased 36 CTS from one Satyarth Exports and the rate per carat is Rs.13,311. The difference between the rate on 02.04.2010 and 06.04.2010 is Rs.10,000 per carat approximately. It is to be seen whether the rate per carat would vary according to the standard/purity of the gem to the extent of 300%. Further the payment for the purchases made in the month of April and May 2010 starts only from the month of June 2010. Thus, the transactions involved in the appellant's case gives rise to the suspicion whether any prudent business man would sell the valuable item like diamond with a credit period of more than 3 months to the appellant, that too Pinkal Dilip Bhansali 9 ITA No. 1701/MUM/2025 identified and only commission income was earned by the company and the corresponding sales for supplying The financial statement of the appellant has been examined. Firstly, the stock details as per the audit report annexed with the appeal papers have been carefully verified which shows: Appellant has admitted the purchases at Rs.6,45,32,192 and the gross profit was admitted at Rs.9,49,612 and the closing stock was admitted at 48,36,215. administrative expenditure, the commission and brokerage were stated to be Rs.5,00,870 and re found in the profit and loss account as all other expenses were regular sundry expenses totaling Rs. 1,53,671. Thus, it could be seen from the total sales turnover of Rs.6 crores, the expenditure incurred excluding heet, sundry creditors is shown at Rs.1,04,90,112 whereas sundry debtors at Rs.41,05,621. The net profit of Rs.2,95,070 is not added back in the capital account and the opening capital account is Rs.96,909. accurate and it is also stated that the accounts are audited by a Chartered Accountant. When the capital introduced is Rs,96,900 and the profit is not even Rs.2,95,070, how appellant was able to lend loan of Rs.8,49,501. The point for consideration is how the appellant was able to purchase diamond in the month of April for Rs.24 lakhs without any underlying security to pay the sum and the sales during the month was stated to be Rs.12 lakhs. Thus, Rs.12 lakhs stood as sundry credit in the month of April 10. Further the rate per carat in respect of Shubhi Gems was Rs.3305 per carat and the appellant purchased 259.90CTS. Whereas on 06.04.2010, appellant purchased 36 CTS from one Satyarth Exports and the rate per carat is Rs.13,311. The ate on 02.04.2010 and 06.04.2010 is Rs.10,000 per carat approximately. It is to be seen whether the rate per carat would vary according to the standard/purity of the gem to the extent of 300%. Further the payment for the purchases l and May 2010 starts only from the month of June 2010. Thus, the transactions involved in the appellant's case gives rise to the suspicion whether any prudent business man would sell the valuable item like diamond with a s to the appellant, that too Printed from counselvise.com when the appellant just started its business with an abysmal amount of Rs.96,000 as capital. In the month of May, as per the stock register, appellant has purchased diamonds from NazarImpex Ltd.and the total cost during the mon Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased is 1010 carats and in the month of July 2010, there was a purchase from NazarImpex which is Rs.42.00 lakhs and the quantity purchased is 247.10 carats. In the month of March 2011, there were no purchases and there were only sales and after 1st February there were no purchases according to the stock register and there were only sales. Further the said payment of Rs.2.20 crores was paid from July 2010 to March 2011. The sundry credit creditor would allow such a waiting period to settle the dues in this line of business. It is seen from the bank account of SBI, the entries start from 10.06.2010 and there is a deposit transfer from Bank of India to the extent of Rs.6,00,000 and on 06.07.2010 there is a transfer from Indian Overseas Bank for a sum of Rs.79,69,639. Not only in this month and even in other months also there were transfers for IOB Ahmedabad. Appellant stated that the current accounts operated by him as SBI and Indus Ind Bank. Hence, the details of these deposit transfers from other bank accounts were not provided. Since the financial statement provided by the appellant does not project the source for making initial investment to do such a business and considering the volume of transactions which is nearly Rs.6 crores, this gives rise to the suspicion whether there were actual movement of stock in respect of the above items which were purchased from M/s NazarImpex P Ltd. as the appellant made carats ofdiamond and the transactions really took place. Thus, after comparing the stock register and the bank statement furnished by the appellant, the fact that emerges from the statement is, the impugned payment was alleged seller several days after the date on which the appellant has claimed to have made the purchase. Thus, such a happening is very unlikely because no seller would sell goods to an unknown buyer on credit, and therefore it milita tenets of commercial transactions and the seller(s) may wait for one month for payment from an unknown buyer. Further the major expenditure in the profit and loss account is only commission which is Rs.5,00,870. The Investigation Report in the case of M/s Nazarimpex P Ltd. is vital as the enquiries carried out by the Wing and statement recorded at the time of search brought on record, the company was not doing real ITA No. 1701/MUM/2025 when the appellant just started its business with an abysmal amount of Rs.96,000 as capital. In the month of May, as per the stock register, appellant has purchased diamonds from NazarImpex Ltd.and the total cost during the month of May from Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased is 1010 carats and in the month of July 2010, there was a purchase from NazarImpex which is Rs.42.00 lakhs and the quantity purchased is 247.10 carats. In the month of March there were no purchases and there were only sales and after 1st February there were no purchases according to the stock register and there were only sales. Further the said payment of Rs.2.20 crores was paid from July 2010 to March 2011. The sundry creditor shows a sum of Rs.1.02 crores. No creditor would allow such a waiting period to settle the dues in this line of business. It is seen from the bank account of SBI, the entries start from 10.06.2010 and there is a deposit transfer from Bank of India to e extent of Rs.6,00,000 and on 06.07.2010 there is a transfer from Indian Overseas Bank for a sum of Rs.79,69,639. Not only in this month and even in other months also there were transfers for IOB Ahmedabad. Appellant stated that the current accounts ted by him as SBI and Indus Ind Bank. Hence, the details of these deposit transfers from other bank accounts were not provided. Since the financial statement provided by the appellant does not project the source for making initial investment to do usiness and considering the volume of transactions which is nearly Rs.6 crores, this gives rise to the suspicion whether there were actual movement of stock in respect of the above items which were purchased from M/s NazarImpex P Ltd. as the appellant made maximum purchases of nearly 1256.18 carats ofdiamond and the transactions really took place. Thus, after comparing the stock register and the bank statement furnished by the appellant, the fact that emerges from the statement is, the impugned payment was made in favour of the alleged seller several days after the date on which the appellant has claimed to have made the purchase. Thus, such a happening is very unlikely because no seller would sell goods to an unknown buyer on credit, and therefore it militates against basic tenets of commercial transactions and the seller(s) may wait for one month for payment from an unknown buyer. Further the major expenditure in the profit and loss account is only commission which is Rs.5,00,870. The Investigation Report n the case of M/s Nazarimpex P Ltd. is vital as the enquiries carried out by the Wing and statement recorded at the time of search brought on record, the company was not doing real Pinkal Dilip Bhansali 10 ITA No. 1701/MUM/2025 when the appellant just started its business with an abysmal amount of Rs.96,000 as capital. In the month of May, as per the stock register, appellant has purchased diamonds from th of May from Nazarlmpex alone is Rs.1,82,95,012 and the quantity purchased is 1010 carats and in the month of July 2010, there was a purchase from NazarImpex which is Rs.42.00 lakhs and the quantity purchased is 247.10 carats. In the month of March there were no purchases and there were only sales and after 1st February there were no purchases according to the stock register and there were only sales. Further the said payment of Rs.2.20 crores was paid from July 2010 to March or shows a sum of Rs.1.02 crores. No creditor would allow such a waiting period to settle the dues in It is seen from the bank account of SBI, the entries start from 10.06.2010 and there is a deposit transfer from Bank of India to e extent of Rs.6,00,000 and on 06.07.2010 there is a transfer from Indian Overseas Bank for a sum of Rs.79,69,639. Not only in this month and even in other months also there were transfers for IOB Ahmedabad. Appellant stated that the current accounts ted by him as SBI and Indus Ind Bank. Hence, the details of these deposit transfers from other bank accounts were not provided. Since the financial statement provided by the appellant does not project the source for making initial investment to do usiness and considering the volume of transactions which is nearly Rs.6 crores, this gives rise to the suspicion whether there were actual movement of stock in respect of the above items which were purchased from M/s NazarImpex P Ltd. maximum purchases of nearly 1256.18 carats ofdiamond and the transactions really took place. Thus, after comparing the stock register and the bank statement furnished by the appellant, the fact that emerges from the made in favour of the alleged seller several days after the date on which the appellant has claimed to have made the purchase. Thus, such a happening is very unlikely because no seller would sell goods to an tes against basic tenets of commercial transactions and the seller(s) may wait for Further the major expenditure in the profit and loss account is only commission which is Rs.5,00,870. The Investigation Report n the case of M/s Nazarimpex P Ltd. is vital as the enquiries carried out by the Wing and statement recorded at the time of search brought on record, the company was not doing real Printed from counselvise.com business and it is an accommodation entry provider and the modus operandi w Considering the transactions in the books of accounts and after examining the availability of funds to incur such expenditure, the Assessing Officer's action in treating the transaction with M/s NazarImpex Ltd. purchases is upheld. The grounds raised on this issue are \"Dismissed\".” 4. Before us, the learned counsel for the assessee filed a Paper Book comprising pages 1 to 42, containing, inter alia, copies of purchase bills, confirmation letters, stock registers, audit report and bank statements evidencing payments made through account payee cheques. 4.1The learned counsel submitted that the Assessing Officer erred in making a 100% addition of purchases as bogus, despite the assessee having produced complete documentary evidence. It was contended that the assessee furnished purchase bills, confirmations, quantitative stock details reflecting opening stock, purchases, sales and closing stock, as as bank statements showing payments through banking channels. It was further submitted that the supplier, M/s Nazar Impex Pvt. Ltd., was duly registered and possessed PAN, VAT, TIN and CST numbers. 4.2 It was submitted that complete quantitative detai audit report for the year under consideration. argued that once the sales effected by the assessee were accepted as genuine, the corresponding purchases could not be disallowed in ITA No. 1701/MUM/2025 business and it is an accommodation entry provider and the modus operandi was clearly explained in the assessment order. Considering the transactions in the books of accounts and after examining the availability of funds to incur such expenditure, the Assessing Officer's action in treating the transaction with M/s NazarImpex Ltd. amounting to Rs.2,24,75,072as bogus purchases is upheld. The grounds raised on this issue are ” Before us, the learned counsel for the assessee filed a Paper Book comprising pages 1 to 42, containing, inter alia, copies of onfirmation letters, stock registers, audit report and bank statements evidencing payments made through account The learned counsel submitted that the Assessing Officer erred in making a 100% addition of ₹2,24,75,072/- by treating the purchases as bogus, despite the assessee having produced complete documentary evidence. It was contended that the assessee furnished purchase bills, confirmations, quantitative stock details reflecting opening stock, purchases, sales and closing stock, as as bank statements showing payments through banking channels. It was further submitted that the supplier, M/s Nazar Impex Pvt. Ltd., was duly registered and possessed PAN, VAT, TIN and CST It was submitted that complete quantitative detai audit report for the year under consideration. The learned counsel argued that once the sales effected by the assessee were accepted as genuine, the corresponding purchases could not be disallowed in Pinkal Dilip Bhansali 11 ITA No. 1701/MUM/2025 business and it is an accommodation entry provider and the as clearly explained in the assessment order. Considering the transactions in the books of accounts and after examining the availability of funds to incur such expenditure, the Assessing Officer's action in treating the transaction with M/s amounting to Rs.2,24,75,072as bogus purchases is upheld. The grounds raised on this issue are Before us, the learned counsel for the assessee filed a Paper Book comprising pages 1 to 42, containing, inter alia, copies of onfirmation letters, stock registers, audit report and bank statements evidencing payments made through account- The learned counsel submitted that the Assessing Officer erred by treating the purchases as bogus, despite the assessee having produced complete documentary evidence. It was contended that the assessee furnished purchase bills, confirmations, quantitative stock details reflecting opening stock, purchases, sales and closing stock, as well as bank statements showing payments through banking channels. It was further submitted that the supplier, M/s Nazar Impex Pvt. Ltd., was duly registered and possessed PAN, VAT, TIN and CST It was submitted that complete quantitative details was given The learned counsel argued that once the sales effected by the assessee were accepted as genuine, the corresponding purchases could not be disallowed in Printed from counselvise.com entirety, as this would lead to an illogica trading account unworkable. It was submitted that the assessee had purchased 1,256.18 carats of diamonds and, if such purchases were treated as bogus, the stock position would turn negative, which was neither alleged nor demonstrate Officer. 4.3 It was further contended that the Assessing Officer relied exclusively on third- survey proceedings without granting the assessee an opportunity of cross-examination, thereby violat justice. It was also argued that there was no material to establish that the assessee paid any commission or that unaccounted cash was routed back to the assessee. The learned counsel sought to distinguish the decision of the Kanak Impex Pvt. Ltd. facts of the present case were materially different and, therefore, the said decision was not applicable. 4.4 Per contra, the learned Departmental Representative supported the orders of the lower authorities and pointed out certain deficiencies or contradiction in the signature of the Director of M/s Nazar Impex Ltd. on the sales bills as well as statement recorded on 05.10.2013 vis of the assessee in the books of M/s Nazar Impex Pvt. Ltd. ITA No. 1701/MUM/2025 entirety, as this would lead to an illogical result and render the trading account unworkable. It was submitted that the assessee had purchased 1,256.18 carats of diamonds and, if such purchases were treated as bogus, the stock position would turn negative, which was neither alleged nor demonstrated by the Assessing It was further contended that the Assessing Officer relied -party statements recorded during search and survey proceedings without granting the assessee an opportunity of examination, thereby violating the principles of natural justice. It was also argued that there was no material to establish that the assessee paid any commission or that unaccounted cash was routed back to the assessee. The learned counsel sought to distinguish the decision of the Hon’ble Bombay High Court in Kanak Impex Pvt. Ltd. (172 taxmann.com 283), submitting that the facts of the present case were materially different and, therefore, the said decision was not applicable. Per contra, the learned Departmental Representative supported the orders of the lower authorities and pointed out certain deficiencies or contradiction in the signature of the Director of M/s Nazar Impex Ltd. on the sales bills as well as statement recorded on 05.10.2013 vis-a-vis confirmation of the ledger of the assessee in the books of M/s Nazar Impex Pvt. Ltd. Pinkal Dilip Bhansali 12 ITA No. 1701/MUM/2025 l result and render the trading account unworkable. It was submitted that the assessee had purchased 1,256.18 carats of diamonds and, if such purchases were treated as bogus, the stock position would turn negative, d by the Assessing It was further contended that the Assessing Officer relied party statements recorded during search and survey proceedings without granting the assessee an opportunity of ing the principles of natural justice. It was also argued that there was no material to establish that the assessee paid any commission or that unaccounted cash was routed back to the assessee. The learned counsel sought to Hon’ble Bombay High Court in (172 taxmann.com 283), submitting that the facts of the present case were materially different and, therefore, the Per contra, the learned Departmental Representative supported the orders of the lower authorities and pointed out certain deficiencies or contradiction in the signature of the Director of M/s Nazar Impex Ltd. on the sales bills as well as statement vis confirmation of the ledger account of the assessee in the books of M/s Nazar Impex Pvt. Ltd. It was Printed from counselvise.com submitted that on verification of the Paper Book and the assessment records, the following discrepancies were noticed: (i) The signature of Shri Sanjay Choudhary, Director of M/s Nazar Impex Pvt. Ltd., appearing on the statement recorded on 05.10.2013, materially differs from the signature appearing on the sales bills (PB: 10 (ii) The signature on the confirmation of the ledger account of the assessee in the book also differs from the signature on the sworn statement. Further, the said confirmation is undated. (iii) The Assessing Officer rejected the books of account under section 145(3), and the learned CIT(A) recorded specific findings regarding discrepancies in the capital account, loans and advances, sundry creditors and sundry debtors, which remained unexplained by the assessee. (iv) No cogent details of corresponding sales, with supporting evidence, were furnished before the Assess 4.5 In view of the above infirmities and relying upon the judgment of the Hon’ble Bombay High Court in the learned Departmental Representative submitted that the addition made by the Assessing Officer and sustain deserves to be upheld. ITA No. 1701/MUM/2025 submitted that on verification of the Paper Book and the assessment records, the following discrepancies were noticed: The signature of Shri Sanjay Choudhary, Director of M/s Impex Pvt. Ltd., appearing on the statement recorded on 05.10.2013, materially differs from the signature appearing on (PB: 10-12) produced by the assessee. The signature on the confirmation of the ledger account of the assessee in the books of M/s Nazar Impex Pvt. Ltd. also differs from the signature on the sworn statement. Further, the said confirmation is undated. The Assessing Officer rejected the books of account under section 145(3), and the learned CIT(A) recorded specific ndings regarding discrepancies in the capital account, loans and advances, sundry creditors and sundry debtors, which remained unexplained by the assessee. No cogent details of corresponding sales, with supporting evidence, were furnished before the Assessing Officer. In view of the above infirmities and relying upon the judgment of the Hon’ble Bombay High Court in Kanak Impex Pvt. Ltd. the learned Departmental Representative submitted that the addition made by the Assessing Officer and sustained by the CIT(A) deserves to be upheld. Pinkal Dilip Bhansali 13 ITA No. 1701/MUM/2025 submitted that on verification of the Paper Book and the assessment records, the following discrepancies were noticed: The signature of Shri Sanjay Choudhary, Director of M/s Impex Pvt. Ltd., appearing on the statement recorded on 05.10.2013, materially differs from the signature appearing on produced by the assessee. The signature on the confirmation of the ledger account of the s of M/s Nazar Impex Pvt. Ltd. ( PB: 9) also differs from the signature on the sworn statement. The Assessing Officer rejected the books of account under section 145(3), and the learned CIT(A) recorded specific ndings regarding discrepancies in the capital account, loans and advances, sundry creditors and sundry debtors, which No cogent details of corresponding sales, with supporting ing Officer. In view of the above infirmities and relying upon the judgment Kanak Impex Pvt. Ltd. (supra), the learned Departmental Representative submitted that the ed by the CIT(A) Printed from counselvise.com 5. We have heard rival submissions of the parties and perused the relevant materials on record. 5.1 The case of the Assessing Officer is that the assessee obtained accommodation purchase entries from M/s Nazar Impex This conclusion is founded upon extensive material unearthed during search and survey operations conducted in the cases of concerns controlled and managed by Shri Rajendra Jain and Shri Sanjay Choudhary. The Investigation Wing recorded categoric findings that such concerns had no genuine business activity: no physical stock of diamonds was found, the so unaware of the nature of business, no books of account were available at the registered premises, and the concerns existe merely on paper. These facts, taken cumulatively, clearly established that the entities were engaged solely in issuing accommodation bills against commission and not in actual trading of diamonds. 5.2 During the course of assessment proceedings, the Asse Officer furnished to the assessee copies of statements recorded from the key persons of the supplier concern. Despite being afforded such opportunity, the assessee neither sought cross the deponents nor furnished any rebuttal to the in material. The silence of the assessee in the face of such adverse evidence assumes significance. ITA No. 1701/MUM/2025 We have heard rival submissions of the parties and perused the relevant materials on record. The case of the Assessing Officer is that the assessee obtained accommodation purchase entries from M/s Nazar Impex This conclusion is founded upon extensive material unearthed during search and survey operations conducted in the cases of concerns controlled and managed by Shri Rajendra Jain and Shri Sanjay Choudhary. The Investigation Wing recorded categoric findings that such concerns had no genuine business activity: no physical stock of diamonds was found, the so-called directors were unaware of the nature of business, no books of account were available at the registered premises, and the concerns existe merely on paper. These facts, taken cumulatively, clearly established that the entities were engaged solely in issuing accommodation bills against commission and not in actual trading During the course of assessment proceedings, the Asse Officer furnished to the assessee copies of statements recorded from the key persons of the supplier concern. Despite being afforded such opportunity, the assessee neither sought cross the deponents nor furnished any rebuttal to the in material. The silence of the assessee in the face of such adverse evidence assumes significance. Pinkal Dilip Bhansali 14 ITA No. 1701/MUM/2025 We have heard rival submissions of the parties and perused The case of the Assessing Officer is that the assessee obtained accommodation purchase entries from M/s Nazar Impex Pvt. Ltd. This conclusion is founded upon extensive material unearthed during search and survey operations conducted in the cases of concerns controlled and managed by Shri Rajendra Jain and Shri Sanjay Choudhary. The Investigation Wing recorded categorical findings that such concerns had no genuine business activity: no called directors were unaware of the nature of business, no books of account were available at the registered premises, and the concerns existed merely on paper. These facts, taken cumulatively, clearly established that the entities were engaged solely in issuing accommodation bills against commission and not in actual trading During the course of assessment proceedings, the Assessing Officer furnished to the assessee copies of statements recorded from the key persons of the supplier concern. Despite being afforded such opportunity, the assessee neither sought cross-examination of the deponents nor furnished any rebuttal to the incriminating material. The silence of the assessee in the face of such adverse Printed from counselvise.com 5.3 Before us, the learned Departmental Representative further pointed out discrepancies in the signatures appearing on the confirmation letters, p during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. These discrepancies were not satisfactorily explained by the assessee. Significantly, the assessee also failed to produce the Director or authorised r either before the Assessing Officer or before the first appellate authority to substantiate the genuineness of the transactions. 5.4 In such circumstances, the claim that the purchases were genuine remains unsubst assessee on bank statements, ledger accounts, and invoices cannot, by itself, discharge the burden of proof. These documents merely constitute a paper trail maintained to comply with statutory formalities. When overwhel search and survey proceedings establishing that the supplier was a paper concern engaged in accommodation entries, such documentary evidence loses its probative value. The apparent must yield to the real, particularly whe human probabilities and surrounding circumstances. 5.5 We therefore find no infirmity in the conclusion drawn by the Assessing Officer, as affirmed by the learned CIT(A), that the impugned purchases from M/s Nazar Impex Pvt. L genuine. The addition made on this count is accordingly upheld. ITA No. 1701/MUM/2025 Before us, the learned Departmental Representative further pointed out discrepancies in the signatures appearing on the confirmation letters, purchase bills, and statements recorded during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. These discrepancies were not satisfactorily explained by the assessee. Significantly, the assessee also failed to produce the Director or authorised representative of M/s Nazar Impex Pvt. Ltd. either before the Assessing Officer or before the first appellate authority to substantiate the genuineness of the transactions. In such circumstances, the claim that the purchases were genuine remains unsubstantiated. The reliance placed by the assessee on bank statements, ledger accounts, and invoices cannot, by itself, discharge the burden of proof. These documents merely constitute a paper trail maintained to comply with statutory formalities. When overwhelming adverse material emerges from search and survey proceedings establishing that the supplier was a paper concern engaged in accommodation entries, such documentary evidence loses its probative value. The apparent must yield to the real, particularly when tested on the touchstone of human probabilities and surrounding circumstances. We therefore find no infirmity in the conclusion drawn by the Assessing Officer, as affirmed by the learned CIT(A), that the impugned purchases from M/s Nazar Impex Pvt. L genuine. The addition made on this count is accordingly upheld. Pinkal Dilip Bhansali 15 ITA No. 1701/MUM/2025 Before us, the learned Departmental Representative further pointed out discrepancies in the signatures appearing on the urchase bills, and statements recorded during survey proceedings in the case of M/s Nazar Impex Pvt. Ltd. These discrepancies were not satisfactorily explained by the assessee. Significantly, the assessee also failed to produce the epresentative of M/s Nazar Impex Pvt. Ltd. either before the Assessing Officer or before the first appellate authority to substantiate the genuineness of the transactions. In such circumstances, the claim that the purchases were antiated. The reliance placed by the assessee on bank statements, ledger accounts, and invoices cannot, by itself, discharge the burden of proof. These documents merely constitute a paper trail maintained to comply with statutory ming adverse material emerges from search and survey proceedings establishing that the supplier was a paper concern engaged in accommodation entries, such documentary evidence loses its probative value. The apparent must n tested on the touchstone of human probabilities and surrounding circumstances. We therefore find no infirmity in the conclusion drawn by the Assessing Officer, as affirmed by the learned CIT(A), that the impugned purchases from M/s Nazar Impex Pvt. Ltd. were non- genuine. The addition made on this count is accordingly upheld. Printed from counselvise.com 5.6 Ground No. 2 raised by the assessee, challenging the addition on merits, is dismissed. 6. With regard to the objection to the validity of the reassessment proceedings, the learned counsel for the assessee contended that the reopening was based on borrowed satisfaction, lacked independent application of mind, and that the reasons recorded were vague and did not establish a live nexus with the assessee. 6.1 We have considered the submissions and examined the reasons recorded for reopening. It is evident that the Assessing Officer initiated reassessment proceedings on the basis of specific and credible information received from the Investigation Wing of the Department. The information clearly identified the assessee as a beneficiary of an accommodation purchase entry amounting to ₹2,24,75,072/- from M/s Nazar Impex Pvt. Ltd. The reasons recorded explicitly refer to this transaction and the material forming the basis of the belief that income chargeable to tax had escaped assessment. 6.2 The formation of belief is thus founded on tangible material and bears a direct nexus with the assessee. The reopening cannot, therefore, be characterised as vague or based on me satisfaction. At this stage, the sufficiency or correctness of the material is not open to judicial scrutiny; what is required is ITA No. 1701/MUM/2025 Ground No. 2 raised by the assessee, challenging the addition on merits, is dismissed. With regard to the objection to the validity of the reassessment arned counsel for the assessee contended that the reopening was based on borrowed satisfaction, lacked independent application of mind, and that the reasons recorded were vague and did not establish a live nexus with the assessee. We have considered the submissions and examined the reasons recorded for reopening. It is evident that the Assessing Officer initiated reassessment proceedings on the basis of specific and credible information received from the Investigation Wing of the partment. The information clearly identified the assessee as a beneficiary of an accommodation purchase entry amounting to from M/s Nazar Impex Pvt. Ltd. The reasons recorded explicitly refer to this transaction and the material forming basis of the belief that income chargeable to tax had escaped The formation of belief is thus founded on tangible material and bears a direct nexus with the assessee. The reopening cannot, therefore, be characterised as vague or based on me satisfaction. At this stage, the sufficiency or correctness of the material is not open to judicial scrutiny; what is required is Pinkal Dilip Bhansali 16 ITA No. 1701/MUM/2025 Ground No. 2 raised by the assessee, challenging the addition With regard to the objection to the validity of the reassessment arned counsel for the assessee contended that the reopening was based on borrowed satisfaction, lacked independent application of mind, and that the reasons recorded were vague and did not establish a live nexus with the assessee. We have considered the submissions and examined the reasons recorded for reopening. It is evident that the Assessing Officer initiated reassessment proceedings on the basis of specific and credible information received from the Investigation Wing of the partment. The information clearly identified the assessee as a beneficiary of an accommodation purchase entry amounting to from M/s Nazar Impex Pvt. Ltd. The reasons recorded explicitly refer to this transaction and the material forming basis of the belief that income chargeable to tax had escaped The formation of belief is thus founded on tangible material and bears a direct nexus with the assessee. The reopening cannot, therefore, be characterised as vague or based on mere borrowed satisfaction. At this stage, the sufficiency or correctness of the material is not open to judicial scrutiny; what is required is Printed from counselvise.com existence of relevant material, which is clearly present in the instant case. 6.3 Accordingly, all objections rais the validity of the reassessment proceedings are rejected. 6.4 Accordingly, the ground No. 1 of the appeal of the assessee is also rejected. 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the Sd/- (ANIKESH BANERJEE JUDICIAL MEMBER Mumbai; Dated: 23/12/2025 Rahul Sharma, 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// ITA No. 1701/MUM/2025 existence of relevant material, which is clearly present in the Accordingly, all objections raised by the assessee challenging the validity of the reassessment proceedings are rejected. Accordingly, the ground No. 1 of the appeal of the assessee is In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 23/12/2025. - Sd/ (ANIKESH BANERJEE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Pinkal Dilip Bhansali 17 ITA No. 1701/MUM/2025 existence of relevant material, which is clearly present in the ed by the assessee challenging the validity of the reassessment proceedings are rejected. Accordingly, the ground No. 1 of the appeal of the assessee is In the result, the appeal of the assessee is dismissed. /12/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "