TaxTMI 
TaxTMI 
2026 (5) TMI 413
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....w failed to appreciate that the assessee had furnished comprehensive evidencial details of suppliers (name, address, PAN, GST details, invoices, bank payments, confirmation of statement of Accounts, Trade Licence of supplier etc.) in support of genuineness of purchases. 3. That the learned CIT(A), NFAC in confirming the addition on account of purported bogus purchases for non compliance of GSTR by suppliers which could have a bearing on the ITC claimed by the Assessee but the entire purchase cannot be consideded (considered) as bogus purchase when comprehensive details of purchases supported with evidence was provided to the authorities. 4. That the learned CIT(A), NFAC erred in confirming the addition on account of bogus purchases, ignoring that the corresponding sales were accepted and payments were made through banking channels, which is contrary to settled judicial precedents. 5. That the disallowance of the entire purchase amount is not justified, and a reasonable Gross Profit (GP) rate should be applied on the sales corresponding to the disputed purchases, in Vine with the commercial realities and judicial decisions 6. That, the appellant c....
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.... was selected for scrutiny u/s 147 of the Act. The Ld. AO/NFAC issued notice u/s 142(1) of the Act and the assessee submitted all the documents viz. copy of purchase bills, payment certificates issued by the banks, bank statements and confirmation letter as received from the said creditor. The Ld. AO treated the alleged purchases as bogus and disallowed and added to the total income of the assessee for the year under consideration. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 04.11.2025, dismissed the appeal of the assessee as per his findings as under: "6. Ground wise Findings and Decision of the appellate authority Ground No. 1 - Validity of Reassessment Proceedings The appellant contends that the AO initiated proceedings merely based on information from the Investigation Wing without independent application of mind or tangible material linking escapement of income to the appellant. Finding: Perusal of the records shows that the information from the Investigation Wing was specific and credible, indicating that the appellant was a direct beneficiary of accommodation entrie....
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....n-operational during the relevant period, proving that actual movement of goods could not be established. iv) No evidence of actual delivery: Apart from self-generated invoices and bank payments, no delivery challans, weighment slips, or transport receipts were produced to substantiate physical receipt of goods. It is settled law that mere payment by cheque or existence of invoice is not sufficient to prove genuineness of a transaction unless the supplier's identity, capacity, and genuineness of transaction are established. (Refer. CIT v. Precision Finance Pvt. Ltd. 208 ITR 465 (Cal), N.K. Proteins Ltd. v. DCIT 292 CTR 354 (SC)). The appellant's reliance on Vaman International Pvt. Ltd. and Mohammad Haji Adam & Co. is distinguishable. In those cases, the purchases were partly proved through stock reconciliation and sales linkage, whereas in the present case, the supplier has been conclusively found to be a non-existent accommodation entry provider. No independent corroborative evidence of actual delivery or consumption has been demonstrated. The plea that goods were utilized in government contracts remains unsubstantiated, as no work orde....
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....wards interest income discrepancy is also upheld. 9. Result The appeal is dismissed in toto. The assessment order u/s 147 r.w.s. 143(3) dated 10.03.2023 is confirmed." 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made have been examined. It was contended by the Ld. AR that the assessee had shown gross profit rate of 6.87% and net profit rate of 4.58%. the Ld. AR was agreeable to extra profit of 6% on the alleged bogus purchases over and above that shown in the return of income. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld in view of the decisions relied upon by the Ld. CIT(A). 6. We have considered the facts of the case, the submissions made and the documents filed and have also gone through the assessment order as well as the appeal order. The Ld. AO verified the purchases by issuing notice u/s 133(6) of the Act. The Ld. CIT(A) upheld the addition. 7. Hon'ble Bombay High Court in the case of Principal Commissioner of Income-tax vs. Drisha Impex (P.) Ltd. [2025] 173 taxmann.com 571 (Bombay)[07-....
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.... If that be so and the purchases have been recorded in books of account by accommodation entry, then same gets automatically reflected in the books of account. In the instant case, since the purchases are recorded by accommodation entry in the books of account and sales have not been disputed, the Commissioner (Appeals) was not justified in estimating the profit, when the basis of addition was not low profit. [Para 19] ■ The Tribunal also misdirected itself by approaching the issue with the erroneous belief that it was estimating profit. In fact, the issue before the Tribunal was whether the Commissioner (Appeals) was justified in not confirming entire purchase additions. Therefore, to that extent, the Tribunal too misdirected itself by approaching the issue solely based on estimating profit. [Para 20] ■ It is viewed that both the Appellate Authorities ought to have appreciated that the issue before them was whether the assessee had proved the purchases of which the claim for deduction was made. The assessee, having failed to discharge its onus on this issue before all three authorities, it is viewed that the additions made in the assessment order by t....
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....GIT (Inv.)/Sales Tax Department, reopened the case on the ground that the purchases made by the respondent-assessee are from hawala operator. Therefore, the details of sundry debtors and creditors filed in the original assessment proceedings do not absolve the respondent-assessee from proving the source of the purchases in the course of the re-assessment proceedings. On the contrary, on account of reasons for which case was reopened, the onus was more to prove purchases which respondent-assessee has totally failed. [Para 28] ■ The re-assessment proceedings were initiated for this very reason that the purchases which were accepted in the original assessment proceedings are non-genuine after the passing of the assessment order. The respondent-assessee chose not to attend the re-assessment proceedings even though the notices were sent to the respondent-assessee by post, email and affixture. The CIT(A) has given a finding that the address of the petitioner mentioned in the assessment order and in Form No.35, which is an appeal filed by the respondent-assessee, is same and the respondent-assessee intentionally did not accept notice sent by post. The CIT(A) has also given ....
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.... justified in making an addition of the said amount and the Appellate Authorities were not justified in estimating the profit rate and thereby impliedly grant deduction of such unexplained expenditure which is contrary to the express provision of section 69C. [Para 38] ■ In the instant case, the assessee has not appeared in the reassessment proceedings to discharge its onus on proving purchase transactions under consideration. Before the Commissioner (Appeals) for the first time, scanty details of sundry debtors, creditors and stocks were given. The Commissioner (Appeals) gave a finding of the assessee's involvement in bogus transaction. Therefore, the finding of the Assessing Officer on the genuineness of the purchases was confirmed by the Commissioner (Appeals). Before the Tribunal, the assessee has not canvassed any submission on the genuineness of the purchases but only pleaded for an estimation of a certain percentage of such bogus purchases to be added. Therefore, before all three authorities, the assessee has not proved the genuineness of the purchases, which inter alia include the source of making the payment for such purchases. In the light of these fact....