IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1076 of 2024 ==========================================================

THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 Versus MANISH AGARWAL ==========================================================

Appearance:

KARAN G SANGHANI, SENIOR STANDING COUNSEL for the Appellant(s)

No. 1 ==========================================================

CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA and HONOURABLE MR. JUSTICE PRANAV TRIVEDI Date : 02/12/2025

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1 At the outset, learned Senior Standing Counsel Mr.Karan Sanghani for the appellant, has fairly admitted that the issue is squarely covered in view of the order dated 27.02.2024 passed in Tax Appeal No. 105 of 2024 in case of the present respondent.

2 The brief facts leading to filing of the present tax appeal are as under:

2.1 In this case, the assessee filed his return of income for Assessment Year 2009-10 on 01.08.2009, declaring total income at Rs.2,17,400/-. The return of income of the assessee was processed under section 143(1) of the Income Tax Act, 1961 (for short “the Act”) accepting returned income. Further, the assessment proceedings in this case were completed under section 143(3) of the Act on 25.06.2011 assessing total income of Rs.2,47,960/-. Subsequently, information was made available from the Director of Income Tax (Inv.), Mumbai, and it was found that various entities of Shri Bhanwarlal Jain Group had given accommodation entries of bogus purchases to the assessee during the year under consideration.

2.2 Thus, assessment order under section 143(3) read with section 147 of the Act was passed on 27.10.2016 assessing total income at Rs.4,34,60,350/- after making addition of Rs.4,32,12,386/- being 25% of the total bogus purchases of Rs.17,28,49,544/- on account of bogus purchases as accommodation entry of purchases.

2.3 Being aggrieved with the assessment order, assessee preferred appeal before the Commissioner of Income Tax (Appeals), who vide order dated 08.12.2023, restricted the addition of the bogus purchases to 6% of such purchases relying on the decision of the Income Tax Appellate Tribunal in the assessee’s own case.

3 In the present tax appeal, the following substantial questions of law are pressed:

“(a) Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT has justified in dismissing the appeal of the revenue against the decision of the Ld CIT(A) in restricting addition @6% of the bogus purchases against the addition made by the AO at the rate of 25% of bogus purchases amounting to Rs.4,32,12,386/-, ignoring the fact that these purchases are sham transactions fabricated through bogus paper concerns of Bhanwarlal Jain Group companies which were engaged in providing accommodation entries?

(b) Whether, on the facts and in the circumstances of the case and in law, the Hon’ble ITAT has justified in dismissing the appeal of the Revenue, relying upon the decision of Co-ordinate Bench in the case of Pankaj J Chaudhary in ITA No. 1379/AHD/2017?

(c) Whether, on the facts and circumstances of the case and in law, the Hon’ble ITAT is correct in not considering that the amount claimed as payment to hawala dealers was in effect suppression of profits by obtaining bogus purchase bills which was liable to be added to the income of the Assessee?

XXX XXX XXX (e) Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT is justified in restricting the addition to 6% of the bogus purchases against the addition made of 25% of bogus purchases amounting to Rs.4,32,12,386/- by the Assessee from the entry provider and has not appreciated that the assessee has not established the genuineness of expenditure in the form of purchase either the AO or before the Ld CIT(A) as the said purchases have been established by the Investigation Wing, Mumbai as sham transactions?

4 On similar substantial questions of law, which was filed by the appellant Department bein