No Seized Documents Supporting Findings of AO: ITAT Mumbai Deletes Estimated Additions on alleged [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted additions made on account of alleged accommodation entries and circular trading, holding that no further income could be estimated in the absence of any incriminating material.

The dispute arose from a search conducted in April 2018 in the Vinod Jatia group and related entities, after which assessments for multiple years ranging from 2013-14 to 2017-18 were reopened under Section 153A. The Assessing Officer alleged that the assessee was engaged in providing bogus back-to-back purchase and sale entries to various group companies. Further, additional income was estimated at 7% of the total turnover.

In first appeal, the Commissioner (Appeals) partly allowed relief by restricting the addition to 0.5% of sales. On further appeal, the matter arrived before ITAT.

The Tribunal observed that the entire case of the Revenue was based on presumptions and general allegations without any seized material, documentary evidence, or statements indicating unaccounted cash. It was noted that even during the search proceedings, there was no evidence of cash trail, diaries, loose sheets, or identification of any payer.

The Tribunal placed reliance on a coordinate bench decision in M/s Duli Trade Commodities Pvt. Ltd., wherein similar additions based on estimated commission income were deleted. It was held that where profits from alleged circular transactions were already reflected in the audited books and gross profit margins were in line with industry standards, no further estimation of income was justified.

Rejecting the approach adopted by both the Assessing Officer and the Commissioner (Appeals), the Tribunal held that even the reduced estimation of 0.5% lacked legal and factual basis, especially when no incriminating material was found during the search.

Accordingly, the Tribunal deleted the additions and allowed the appeals filed by the assessee for all the assessment years.

The order was pronounced by the Bench comprising Sandeep Gosain (Judicial Member) and Girish Agrawal (Accountant Member) on 06 January, 2026.