Empower India Limited Vs ACIT (ITAT Mumbai)
Demonetization Cash Deposit Addition Deleted Because Withdrawals Were Supported by Bank Records; ITAT Remands Commission Income Calculation Because AO Used Incorrect Turnover Figure; Bogus Turnover Assessment Upheld but ITAT Grants Relief Through Telescoping of Declared Income; ITAT Says Gross Profit Cannot Be Allowed Separately When Entire Business Transactions Are Held Bogus
The appeal before the Income Tax Appellate Tribunal was filed by Empower India Limited against the order of the Commissioner of Income Tax (Appeals)-48, Mumbai, dated 08.08.2025 for Assessment Year 2017-18.
The assessee had originally filed its return declaring total income of Rs. 24,68,980/-. The case was selected for scrutiny and notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961 were issued. The Assessing Officer (AO) stated that the assessee-company belonged to the group of Shri Shirish C. Shah, in whose case a search under Section 132 had earlier been conducted. According to the AO, the search had revealed that the group was engaged in providing bogus accommodation entries such as long-term capital gains, share capital with huge premium, turnover entries, and loans through several controlled entities, including the assessee-company.
Referring to the assessee’s transactions, the AO held that the company was not engaged in genuine business activities during the relevant year but was involved in circular transactions. The AO therefore treated the turnover and investments as bogus and assessed commission income at 1% on sales made to non-group entities amounting to Rs. 61.37 crore and fresh investments of Rs. 4.49 crore. Accordingly, commission income of Rs. 65.87 lakh was added.
