आदेश / ORDER

PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the assessee is directed against the order dated 21.11.2025 passed by the Ld. Addl./JCIT(A), Office of Commissioner of Income Tax (Appeals),Panaji[hereinafter referred to as "CIT(A)"]under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]for Assessment Year 2011-12, arising out of the assessment order dated 20.02.2015 passed by the Income Tax Officer, Ward-3(2), Kalyan under section 143(3) r.w.s. 147 of the Act.

2. Brief facts of the case are that the assessee, an individual, was engaged in the business of manufacturing engineering goods under the proprietary concern styled as “Aircon Pneumatics”. The assessee filed return of income on 29.09.2011 declaring total income at Rs. 7,67,900/-. The return was processed under section 143(1) of the Act on 12.11.2011. Subsequently, information was received from the DGIT (Investigation), Pune vide letter dated 06.02.2013 stating that the Sales Tax Department, Maharashtra had unearthed a racket involving hawala dealers issuing bogus purchase bills without actual supply of goods and that the beneficiaries had availed accommodation entries and bogus tax credits. Based upon such information, the Assessing Officer observed that the assessee was one of the beneficiaries who had allegedly obtained bogus purchase bills from hawala dealers. The Assessing Officer noted that the assessee had shown purchases aggregating to Rs. 10,73,994/- from two parties, namely,

(i) Nimesh Steels Private Limited amounting to Rs. 4,32,935/- and

(ii) Naina Multitrade Private Limited amounting to Rs. 6,41,059/-.

3. According to the Assessing Officer, such purchases represented accommodation entries resulting in suppression of profits. Accordingly, the assessment was reopened by issuance of notice under section 148 dated 07.05.2013.

4. The Assessing Officer recorded that notices issued under sections 148 and 142(1) of the Act remained substantially uncomplied with and thereafter notices under sections 143(2) and 142(1) dated 05.12.2014 were again issued after transfer of jurisdiction. Since there was no proper compliance, the Assessing Officer issued intimation dated 23.01.2015 proposing to complete assessment ex parte under section 144 of the Act. In response thereto, Shri Mahesh Bhiwandikar, Chartered Accountant attended and explained the return filed. The Assessing Officer observed that the assessee had maintained regular books of account and furnished audit report in Form Nos. 3CB and 3CD. The assessee had disclosed sales of Rs. 1,28,72,548/- and purchases of Rs. 77,81,359/- with net profit rate of 7.74%.

5. During the reassessment proceedings, the Assessing Officer called upon the assessee to furnish copies of bills, transportation receipts, octroi receipts and other supporting evidences in respect of purchases made from the aforesaid two parties. The Assessing Officer further required the assessee to explain as to why the purchases amounting to Rs. 10,73,994/- should not be treated as unexplained expenditure under section 69C of the Act. In response, the assessee furnished copies of purchase bills and bank statements evidencing payments through banking channels. It was the contention of the assessee before the Assessing Officer that the purchases were duly recorded in books of account and corresponding payments had been made through account payee cheques.

6. The Assessing Officer, however, was not satisfied with the explanation furnished by the assessee. According to the Assessing Officer, the information received from the Sales Tax Department clearly established that the suppliers were non- genuine hawala dealers issuing accommodation bills without actual supply of goods. The Assessing Officer held that mere production of bills and bank statements was insufficient to prove genuineness of purchases. It was further observed that the assessee failed to furnish transportation receipts, lorry receipts, octroi receipts, delivery chall