IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP &

MS PADMAVATHY S, AM I.T.A. No. 5774/Mum/2025 (Assessment Year: 2011-12)

Anil Jagdishchandra Ahuja, CIT(Appeals)/NFAC, 1406, Tower C, Ashok Towers, Delhi.

Dr. S. S. Road, Parel East, Vs.

Mumbai-400012.

PAN: AABPA1016B Assessee) : Revenue)

I.T.A. No. 5852/Mum/2025 (Assessment Year: 2011-12)

ACIT-20(1), Anil Jagdishchandra Ahuja, Room No. 305, 3^rd Floor, 1406, Tower C, Ashok Towers, Piramal Chambers, Parel, Vs. Dr. S. S. Road, Parel East, Mumbai-400012. Mumbai-400012.

PAN: AABPA1016B Assessee) : Revenue)

Assessee by : Shri Vimal Punmiya, AR Revenue by : Shri Surendra Mohan, Sr.-DR Date of Hearing : 20.11.2025 Date of Pronouncement : 03.12.2025 O R D E R Per Padmavathy S, AM:

These cross appeals by the assessee and the revenue are against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 23.07.2025 for Assessment Year (AY) 2011-12.

2. The assessee is an individual carrying on a business of trading and installation of Air Control and Pollution Control Equipments. The assessee filed the return of income for AY 2011-12 on 06.09.2012 declaring total income of Rs. 50,59,060/-. The AO received information from Sales Tax Department through DGIT(Inv.), Mumbai that the assessee is a beneficiary of bougs purchase from the following parties:

(i) Bhagyalaxmi Steel Industries - Rs. 21,84,925/- (ii) Vijay Trading Company - Rs.29,80,596/-

3. The AO called on the assessee to furnish relevant details in this regard. The AO also issued a notice u/s. 133(6) to the parties. The assessee furnished the details such as bills, bank statements, delivery challans, etc. before the AO. The AO however, did not accept the submissions of the assessee and proceeded to treat the entire purchases as bogus. Aggrieved the assessee filed further appeal before the CIT(A). The CIT(A) restricted the addition to 10% of the alleged bogus purchases by placing reliance on the decision of the Co-ordinate Bench in the case of Leelaben Kantilal Parekh vs. ITO (ITA No. 2926/Mum/2023). The CIT(A) further held the AO has not doubted the sales declared by the assessee and therefore it would not be correct to add the entire purchases as bogus. Both the assessee and the revenue are in appeal against the order of the CIT(A).

4. The ld. AR submitted that the assessee has discharged the onus by submitting all the relevant details before the AO to prove the genuineness of the purchases. The ld. AR further submitted that the GP ratio of the assessee for the earlier year and the subsequent year are in line with the GP declared by the assessee for the year under consideration and therefore the 100% of the purchases is treated as bogus, it would result in unexpected GP which is not correct. The ld. AR argued that the assessee has discharged the onus of proving the genuineness of the by submitting various documentary evidences then no addition could be sustained without recording any finding with regard to the documents submitted by the assessee.

5. The ld. DR on the other hand argued that the CIT(A) no correct in restricting the addition based on the findings of the Tribunal in another case without examining whether the facts are identical or not. The ld. DR further argued that the CIT(A) having accepted the fact that the purchases are bogus should not have restricted the addition on the ground that the AO has not rejected the sales. The ld. DR placed reliance on the decision of the Jurisdictional High Court in the case of PCIT vs. Kanak Impex (India) Ltd. [2025] 172 taxmann.com 283 (Bom.) to submit that the Hon'ble High Court has held that when the purchases are admittedly non- genuine then there is no question of restricting the addition to the GP ratio since the assessee has not explained the source for 100% of the non-genuine purchases.

Accordingly, the ld. DR submitted that the