TaxTMI 
TaxTMI 
2026 (2) TMI 1087
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....fidavit. In the said affidavit, the assessee has stated that the assessee had preferred an appeal before the learned CIT(A) on 18.04.2013 and that the appeal remained pending for more than eleven years. According to the assessee, the appeal was finally disposed of by order dated 17.09.2024. The assessee has deposed that he did not receive any hard copy of the appellate order and that though the order was delivered electronically through email, the same was inadvertently delivered to the spam folder and, therefore, he remained unaware of the passing of the order. It has been further averred that only in the middle of November 2025, while casually checking his emails, he noticed the appellate order in the spam folder. Upon coming to know of the order, he immediately contacted his earlier Chartered Accountant and thereafter approached another firm of Chartered Accountants for independent advice, pursuant to which he filed the present appeal without further delay on 21.11.2025. The assessee has stated that the delay has occurred due to lack of knowledge of the passing of the order and not on account of any deliberate or intentional act on his part. It has been prayed that the delay of ....
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....information available on the website of the Maharashtra Sales Tax Department, wherein the above parties were stated to be listed as hawala dealers issuing accommodation entries. 8. According to the Assessing Officer, the assessee failed to produce the said parties, failed to furnish transport receipts or proof of delivery of goods and failed to establish actual transfer of ownership of goods. It was observed that mere payment through banking channels would not, by itself, establish genuineness of the purchases. On this basis, the Assessing Officer treated purchases of Rs. 34,08,966/- as non-genuine and added the same to the total income. 9. The Assessing Officer also disallowed commission expenses of Rs. 14,18,330/- holding that the assessee had failed to establish business expediency and genuineness of the payments. Accordingly, the assessment was completed under section 143(3) at a total income of Rs. 59,19,533/- as against returned income of Rs. 10,92,237/- 10. Aggrieved, the assessee preferred an appeal before the CIT(A). Before the appellate authority, the assessee reiterated that all purchases were duly recorded in the books of account, quantitative details were main....
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....on with respect to the subsequent sale of goods, the purchases of which have been alleged to be non-genuine. Therefore, the sustained addition of bogus purchases would be tantamount to a dual addition which is not permissible. 4. On the facts and circumstances of the case, and in law, the Ld. CIT (A) erred in sustaining disallowance of Rs. 14,18,330 towards commission expenses paid by concluding that there was no business expediency, despite the appellant furnishing confirmations, TDS details and the nature of services rendered. 5. On the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in disregarding the appellant evidence regarding rendering of services by the commission agents and further failed to appreciate that the addition has been made by the AO without establishing that the payments were bogus and not incurred wholly and exclusively for the purpose of business. 6. The appellant reserves the right to add, amend, alter and/or withdraw any of the above grounds at the time of hearing. 13. The learned Authorised Representative(AR) reiterated the factual background of the case and invited our attention to the factual paper book ....
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....in the bank statements. There is no finding that the sales corresponding to the purchases were bogus. In fact, the sales have been accepted and the gross profit declared by the assessee has not been disturbed. It was argued that when sales are accepted and quantitative records are maintained, the entire purchases cannot be disallowed, as that would amount to taxing gross receipts without allowing the corresponding cost. 18. Without prejudice to the primary contention that the purchases are genuine and duly supported by documentary evidences, the learned AR submitted an alternative argument. It was contended that even if the parties in whose cases notices issued under section 133(6) were returned unserved are treated as non-responsive or not traceable, the entire purchases from such parties cannot be disallowed. The learned AR submitted that the assessee has disclosed a gross profit rate of approximately 6.5% during the year, which has not been disturbed by the Assessing Officer. The sales corresponding to the purchases have been accepted and no defect has been pointed out in the quantitative details or stock records. In such circumstances, at the highest, only the profit element....
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....Assessing Officer has specifically observed that the assessee remained silent on the finding of the postal authorities that the parties were not available at the addresses furnished by the assessee. It was further submitted that notices issued under section 133(6) to the concerned parties were either returned unserved or remained uncomplied with. According to the learned DR, the Assessing Officer has categorically recorded that the existence of the parties was not proved at all and that the purchases were not verifiable. The assessee failed to produce the parties despite being given specific opportunity and did not file transport receipts or proof of delivery of goods. The Assessing Officer has also noted that the assessee, who is best placed to explain the affairs of his own business, did not furnish complete and verifiable details on crucial aspects such as transportation and delivery of goods. 21. The learned DR further submitted that the issue of bogus purchases is no longer res integra and that several judicial pronouncements of the Hon'ble Jurisdictional High Court have upheld addition of the entire amount of purchases in cases where the assessee has failed to establish th....
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....uch cannot be treated as wholly non-existent. The business of the assessee is not in dispute. The sales have been accepted. It would be incongruous to hold that sales have been effected without any corresponding purchases. When the turnover is accepted and quantitative details are maintained, disallowance of the entire purchase amount would result in taxing gross receipts without allowing the cost of goods sold, which would distort the true profits of the business. 27. The addition, therefore, has to be restricted to the possible profit element embedded in such purchases. In cases where purchases are held to be not fully verifiable but the corresponding sales are accepted, the consistent approach is to estimate the profit attributable to possible inflation of purchase price or suppression of profit and not to disallow the entire amount. 28. The learned DR has relied upon certain judicial precedents of the Hon'ble Jurisdictional High Court wherein full addition has been upheld. However, on a careful consideration, we find that those decisions turn on their own peculiar facts where either the purchases were found to be completely sham, the books of account were rejected, or the....