Maharashtra Corporation Limited Vs ITO (ITAT Mumbai)
Bogus Purchases—Full 69C Disallowance Set Aside: ITAT Mumbai Restricts Addition to 6% Despite Kanak Impex
The Mumbai ITAT (A-Bench) partly allowed the assessee’s appeal for AY 2017-18, holding that a 100% disallowance of alleged bogus purchases under Section 69C was not sustainable on the facts. While the AO and CIT(A) had added the entire ₹10.23 crore based largely on a director’s statement (sale-in-transit) and reliance on Kanak Impex, the Tribunal found that documentary evidence remained uncontroverted—purchase invoices, banking-channel payments, one-to-one purchase-sales reconciliation, and GST Form 2A—with no corroborative investigation (no VAT findings, cash trail, or hawala linkage).
Distinguishing Kanak Impex on facts (absence of incriminating material foundational to full 69C rigour), the ITAT held this was neither a case for complete deletion nor for full disallowance. To address possible opacity/profit suppression inherent in sale-in-transit transactions, the Tribunal restricted the addition to 6% of the impugned purchases, deleting 94% and directing recomputation accordingly. Delay in filing the appeal was condoned; the reassessment ground was not pressed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order dated 17.10.2024 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] for Assessment Year 2017–18, whereby the CIT(A) dismissed the assessee’s appeal and confirmed the addition made by the Assessing Officer under section 69C of the Income-tax Act, 1961[hereinafter referred to as “the Act”] as per his order dated 29.03.2022 passed under section 147 read with section 144B of the Act.
