Case Law Details
Mahavir Agro Industries Vs ITO (ITAT Surat)
The Surat Bench of the ITAT partly allowed the assessee’s appeal for AY 2012-13 in a case involving alleged bogus purchases of ₹48.53 lakh from three concerns controlled by an alleged accommodation entry provider.
On the jurisdictional issue, the Tribunal rejected the assessee’s challenge to reopening under section 148, holding that the Assessing Officer had acted on specific information from the Investigation Wing, examined the material including statements, recorded detailed reasons, and obtained proper approvals. The plea of lack of cross-examination and “borrowed satisfaction” was therefore dismissed.
On merits, the ITAT noted that although the alleged entry provider had stated that no goods were actually supplied and the assessee failed to produce evidence of physical movement of goods, the sales, turnover (₹15 crore), and quantitative details were accepted by the Revenue. In such circumstances, the Tribunal held that the entire purchase amount could not be added. Following settled jurisprudence, it restricted the addition to the profit element embedded in the alleged bogus purchases, which was estimated at 5% of the purchase value, over and above the regular profits already disclosed.
Accordingly, the appeal was partly allowed, sustaining reopening but granting substantial relief on quantum by limiting the addition to 5% of the impugned purchases
FULL TEXT OF THE ORDER OF ITAT SURAT
This is an appeal filed against the order dated 31-07-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2012-13
2. With regard to the additional ground taken up before us regarding reopening was that the assessee was not given the statement and was not given opportunity to cross examine Shri Narendrakumar Narayandas Agrawal. Besides this the Ld. AR also submitted that the reopening was based only on DDIT (Investigation) Information. The notice u/s 148 of the Act was issued on 29.03.2019 without doing proper inquiry by the Assessing Officer as per Ld. AR. We find that all these contentions does not sustain for the reason that there was sufficient information received by the AO and after going through the said information and also that of the statement alongwith other material the Assessing Officer with proper approvals and after recording the reasons, has issued notice under Section 148 of the Act. There is no procedural or legal lapse on part of the Assessing Officer while issuing the notice under Section 148 of the Act. The case laws submitted by the Ld. AR are not be applicable in the present case as the Assessing Officer has recorded the detailed reasons. Hence, additional grounds are dismissed.
3. As regards merits of the case, the assessee has allegedly made bogus purchase of Rs.48,53,545 from three parties named Shyam Baba Trading Co., Balaji Agro Tradelink and Sai Baba Trading Company which were operated by Narendrakumar Narayanlal Agrawal (an accommodation entry provider). Shri Narendrakumar Narayanlal Agrawal also stated in his statement that the assessee was one of the beneficiaries of the accommodation entries and he never delivered any goods to the assessee. The assessee has given details of payment for purchase but has not given any other relevant documents relevant to the actual goods movement and delivery by the said parties either before the Assessing Officer or before the CIT(A). However, the revenue has accepted the sale of the assessee and the quantitative details are not disputed therefore, the entire addition cannot sustain. The assessee had turnover of Rs. 15 crores and the bogus bills were alleged to be of Rs. 48 lakhs. Keeping in view the entire facts of the case and the established jurisprudence, we deem it fit to determine the profit to the extent of 5% of the purchases made by the assessee over and above the regular profits disclosed. The appeal of the assessee is partly allowed.
4. In the result, the appeal of the assessee is partly allowed.
The order is pronounced in the open Court on 21.01.2026
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