Pratap Thakraji Solanki Vs ITO (ITAT Mumbai)
Only Profit on Bogus Purchases Taxable– Full 69C Addition Deleted, ITAT Restricts Addition to GP Rate of 11.54%; No Cross-Examination, No 100% Disallowance – ITAT Grants Partial Relief to Assessee
Assessee, a proprietor of M/s Honesty Tube Industries, filed appeal against the order of CIT(A), NFAC, dated 04.08.2025 confirming an addition of ₹32,75,050 u/s 69C as unexplained expenditure, treating his purchases from M/s Bristal Tube Industries as bogus.
The case was reopened u/s 147 based on information from the Directorate General of GST Intelligence (DGGI) that Assessee had taken accommodation entries of ₹32.75 lakh. Despite multiple notices, Assessee made only partial compliance. AO concluded that the purchases were fictitious, mainly because Assessee claimed that the goods—steel tubes weighing several tonnes—were transported from Ahmedabad to Mumbai by handcart, which was implausible. The purchases were therefore treated as bogus, & the amount was added u/s 69C.
Before the Tribunal, Assessee contended that AO had wrongly assumed inter-state transportation from Ahmedabad. The supplier, though based in Ahmedabad, maintained a godown in Mumbai, barely 500 metres from Assessee’s premises, from where delivery was made by handcart. Delivery challans, GST returns, purchase bills, & bank payment proofs were furnished.
