Advanced Computers and Mobiles India Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai Restricts Ad-hoc Commission Addition in Alleged Bogus Billing Case; Suspicion Cannot Replace Evidence
The Mumbai ITAT partly allowed the assessee’s appeal in a reassessment case involving allegations of issuing bogus invoices for passing fraudulent GST input tax credit. The Assessing Officer, relying mainly on third-party information from GST authorities and statements recorded in the case of another entity, had made an ad-hoc addition of ₹30.43 crore by estimating commission income at 2% of total sales and purchases aggregating to over ₹1,500 crore. The CIT(A) upheld the addition.
The Tribunal observed that the AO had carried out no independent investigation and had not rejected the books of account. The assessee had furnished extensive documentary evidence substantiating purchases and sales, all transactions were through banking channels, and no concrete finding was brought on record to establish the exact modus operandi, quantum of bogus transactions, or actual commission earned. The ITAT reiterated that additions cannot be sustained merely on suspicion or unverified third-party information, relying on settled Supreme Court precedents.
However, considering the allegations and to safeguard against possible revenue leakage, the Tribunal held that some estimation was justified. It therefore restricted the addition to 1% of sales only, instead of 2% on both sales and purchases. The AO was also directed to dispose of the assessee’s pending rectification application under section 154 regarding computation of income. Consequently, the appeal was partly allowed
FULL TEXT OF THE ORDER OF ITAT MUMBAI
