IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER &

SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER

1. ITA No. 8001/Mum/2025 (Assessment Year: 2010-11)

ACIT 19(3) R. N. Gems, Room No. 513, 5th Floor, Fw-9020, Bharat Piramal Chamber, Parel, Vs. Diamond Bourse, Mumbai-400 012 Bandra Kurla Complex, Bandra(E), Mumbai-400 051 PAN/GIR No. AAFFR8018N (Applicant) (Respondent)

2. C.O. No. 2/Mum/2026 (Assessment Year: 2010-11)

R. N. Gems, ACIT 19(3)

Fw-9020, Bharat Room No. 513, 5^th Diamond Bourse, Vs. Floor, Piramal Bandra Kurla Complex, Chamber, Parel, Bandra(E), Mumbai- Mumbai-400 012

400 051 PAN/GIR No. AAFFR8018N (Applicant) (Respondent)

Revenue by Shri Annavaram Kosuri, Ld. DR Assessee by Shri K. A. Vaidyalingam, Ld. AR Date of Hearing 20.04.2026 Date of Pronouncement 05.05.2026 आदेश / ORDER PER BENCH:

The present appeal filed by the Revenue, along with the Cross Objection filed by the assessee, is directed against the order dated 24.09.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "the CIT(A)"], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act"], arising out of the assessment order dated 30.12.2017 passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Act for the Assessment Year 2010–11. Both the appeal of the Revenue and the Cross Objection of the assessee are heard together and are being disposed of by this consolidated order for the sake of convenience and brevity.

Facts of the Case

2. Briefly stated, the facts of the case as emanating from the assessment order are that the assessee is a firm engaged in the business of diamonds and follows mercantile system of accounting. The assessee filed its return of income for the year under consideration on 28.09.2010 declaring total income of Rs. 40,67,452/-, which was initially processed under section 143(1) of the Act. Subsequently, the case was reopened under section 147 of the Act after recording reasons and obtaining prior approval, and notice under section 148 dated 30.03.2017 was issued and served upon the assessee.

3. The Assessing Officer recorded that a search and survey action carried out by the DGIT (Investigation), Mumbai in the case of Shri Rajendra Jain Group on 03.10.2013 revealed that the said group was engaged in providing accommodation entries through a network of benami concerns in the nature of bogus purchase bills, unsecured loans and advances. On the basis of information received from the Investigation Wing, it was alleged that the assessee had obtained accommodation entries in the form of bogus purchases from one such concern, namely M/s.

Kangan, amounting to Rs. 57,51,338/-.

4. During the reassessment proceedings, the assessee was confronted with the information and was required to substantiate the genuineness of the impugned purchases. The Assessing Officer also referred to statements recorded during search proceedings of Shri Rajendra Jain and other persons, wherein it was stated that various concerns operated by him were dummy entities engaged in issuing bogus bills without actual delivery of goods.

5. The Assessing Officer, relying upon the investigation findings, the alleged modus operandi of the Rajendra Jain Group and the statements recorded under section 132(4), concluded that the purchases shown by the assessee from M/s. Kangan were non-genuine accommodation entries. Accordingly, the entire amount of Rs. 57,51,338/- was treated as bogus purchases and added to the total income of the assessee. Penalty proceedings under section 271(1)(c) were also initiated separately.

6. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The facts as recorded by the learned CIT(A) reveal that the assessee reiterated that it is engaged in the business of diamonds and had made purchases in the ordinary course of business which were duly supported by tax invoices