ITAT Mumbai Dismisses Appeals for Non-Prosecution; Upholds Additions on Bogus Purchases and Unexplained Liabilities

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, dismissed the appeals filed by Darwin Platform Industries Ltd. for Assessment Years 2021–22 and 2022–23, upholding additions made by the Assessing Officer due to lack of prosecution and absence of supporting evidence.

The Tribunal noted that despite multiple notices issued through both electronic and physical modes, the assessee failed to appear before the Tribunal. A similar pattern of non-compliance was observed before the Commissioner of Income Tax (Appeals), where repeated opportunities were granted but remained unutilized. In view of continued non-response, the Tribunal proceeded ex parte and decided the appeals based on available material and submissions of the Revenue.

For Assessment Year 2021–22, the Assessing Officer had made an addition of ₹41.81 crore by estimating profit at 8% on alleged unaccounted sales. The addition was based on discrepancies between GST data and reported financials, along with failure of the assessee to substantiate the genuineness of purchases from suppliers whose GST registrations were inactive or non-compliant. The Tribunal observed that the assessee failed to produce any cogent evidence either before lower authorities or before it to rebut these findings.

For Assessment Year 2022–23, the Assessing Officer treated trade payables and advances to related parties as unexplained income under Section 69A, resulting in an addition of ₹129.10 crore. The finding was based on inconsistencies in financial statements, mismatch between bank transactions and reported sales, and absence of party-wise details. The Tribunal noted that the assessee failed to discharge the burden of proof to establish genuineness of such liabilities.

Given the absence of representation and failure to substantiate claims, the Tribunal found no reason to interfere with the findings of the lower authorities. Accordingly, both appeals were dismissed and the additions sustained in entirety.