Dwijs Overseas LLP Vs ITO (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal dismissed the assessee’s appeal against the order dated 18.06.2025 passed by the National Faceless Appeal Centre, Delhi, for Assessment Year 2022-23. The assessee, an LLP engaged in trading rough and polished diamonds, had filed its return of income on 31.12.2022 declaring total income of Rs.5,98,140/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 was issued on 01.06.2023. The Assessing Officer issued several statutory notices and communications seeking details concerning, inter alia, quantitative particulars of goods traded, substantial creditors vis-à-vis purchases, purchases from non-filers or lower-return filers, high liabilities compared with income and compliance with ICDS, but the assessee furnished only partial details in response to the show-cause notice under section 144. The assessment was completed under section 143(3) read with section 144B, resulting in an addition of Rs.10,74,83,565/- by estimating net profit at 2% of turnover of Rs.540,40,88,078/- and an addition of Rs.1,76,25,85,811.65/- under section 69A, treating the corresponding sales to M/s Sharnam Jewels LLP as accommodation entries. The CIT(A) dismissed the appeal, observing that the assessee had not effectively controverted the Assessing Officer’s findings or substantiated the entries reflected in its books with supporting evidence. Before the Tribunal also, no one appeared on behalf of the assessee and no adjournment was sought, resulting in the appeal being heard ex parte qua the assessee. The Tribunal found that despite repeated opportunities, the assessee failed to furnish requisite primary evidence substantiating the nature of its purchases, sales, creditors and other relevant trading particulars. Although a sales register was produced, the corresponding transactions were not supported by adequate transaction-wise documentary evidence. The Tribunal therefore found no basis to interfere with the Assessing Officer’s estimation of net profit at 2%, particularly as the assessee had not produced material demonstrating that the estimated result was contrary to facts or that the disclosed profit was supported by complete and verifiable books and underlying records. Regarding the Rs.1,76,25,85,811.65/- addition under section 69A, the Tribunal held that mere entries in the books or sales register could not, by themselves, establish the genuineness of the disputed transactions in the absence of primary and corroborative evidence. Finding no material warranting disturbance of the concurrent factual findings of the Assessing Officer and CIT(A), the Tribunal upheld both additions and dismissed the assessee’s appeal.
