Bhagyesh A. Patel Vs ACIT (ITAT Mumbai)
Bogus Purchase Addition U/s 69C Deleted – Export Sales Stock Records Proved Genuineness – ITAT Mumbai
In this case, the AO reopened the assessment based on DGIT (Inv) information alleging that purchases from M/s Khushi Gems Pvt. Ltd. were accommodation entries linked to the Gautam Jain group. The AO treated purchases of ₹2.22 Cr as bogus & made addition u/s 69C, which was confirmed by CIT(A).
Before ITAT, the assessee demonstrated that purchases were supported by invoices, bank payments, stock register, ledger accounts & corresponding export documents including shipping bills. The books of account were never rejected & quantitative records were maintained. ITAT noted that without actual goods, export transactions & stock reconciliation were not possible
The Tribunal held that AO relied solely on investigation reports & third-party statements without conducting independent enquiry or bringing corroborative evidence. Since the assessee substantiated purchases through documentary evidence & exports, addition u/s 69C could not be sustained merely on presumption. Relying on coordinate bench ruling in Real Star, ITAT deleted the entire addition of ₹2.22 Cr & allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity ‘the Ld. CIT(A)], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2012-13, date of order 01.09.2025. The impugned order emanated from the order of the Ld. Assistant Commissioner of Income Tax-19(1), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 147 of the Act date of order 16.12.2019.
