ITAT Upholds Deletion Of ₹25.55-Crore Income Tax Addition On Everest Food Over Alleged Bogus Purchases

The Mumbai Bench of the Income Tax Appellate Tribunal has recently upheld the deletion of a Rs 25.55 crore income tax addition against Everest Food Products Pvt. Ltd., a Mumbai-based company that manufactures and sells masala and spices under the popular “Everest” brand.

A bench of Judicial Member Kavitha Rajagopal and Accountant Member Vikram Singh Yadav dismissed the revenue's appeal, agreeing with the Commissioner (Appeals) that purchases cannot be treated as non-genuine solely because suppliers failed to file income tax returns.

The appellate authority had observed that “non filing of income tax return by a supplier is a reason to further investigate the transaction, this reason alone is not sufficient to disallow the expenses and treat the same as non genuine”, a view the tribunal found no reason to interfere with.

Everest Food Products had reported purchases of raw materials from four suppliers during the 2021–22 assessment year.

During scrutiny, the assessing officer flagged these suppliers as non-filers or entities with doubtful tax profiles and treated purchases worth Rs 55.55 crore as non-genuine. Instead of disallowing the entire amount, the officer estimated profit at 46% on these purchases and added Rs 25.55 crore to the company's income.

Before the Commissioner (Appeals), the company said the purchases were genuine and fully supported by records. It produced invoices, goods receipt notes, e-way bills, transport documents, bank statements showing payments, and screenshots from the income tax portal.

It also pointed out that the purchases were in line with its manufacturing activity, its books were audited, and GST credits had been allowed. Accepting this explanation, the Commissioner deleted the addition, leading the revenue to approach the tribunal.

Dismissing the appeal, the ITAT noted that the tax department had not disproved the documents produced by the company or carried out any independent inquiry into the suppliers.

It also recorded that the suppliers were not identified as accommodation entry providers and that the company's audited books and corresponding sales had been accepted.

The tribunal further noted that Everest had shown that three out of the four suppliers had, in fact, filed their income tax returns, contrary to the assessing officer's assumption. On these facts, the tribunal held that the Rs 25.55 crore addition was unsustainable and dismissed the revenue's appeal.

Case Title: ACIT Vs. Everest Food Products Pvt. Ltd.

Citation: 2026 LLBiz ITAT(MUM) 5

Case Number: ITA No.3988/Mum/2025 A.Y. 2021-2022

For Revenue: Ritesh Misra, CIT DR

For Assessee: Paresh Shaparia, CA