AUTO VOGUE PRIVATE LIMITED,CHANDIGARH V. DCIT/ACIT(CEN)-1 CHD, CHANDIGARH

ITA 405/CHANDI/2025

AI Insights

The case involves M/s Auto Vogue Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon, confirming an addition made by the Assessing Officer during the assessment year 2018-19. The addition was based on an extrapolated figure from a document found during a survey, which listed payments to 35 employees deemed 'bogus' by the company's HR Manager. The Assessing Officer assumed similar payments were made throughout the year and added Rs.28,09,380 to the company's income. The Tribunal, referencing decisions from the Punjab & Haryana High Court and other cases, held that such extrapolation without corroborative evidence was unsustainable.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 828616 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Chandigarh
• Assessment Year: misc
• Appeal Filed On: 20-03-2025
• Other Referred Cases: Gurdip Cycle Industries vs. DCIT, VM Spinning Mills vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: NIKHIL GOYAL; ASHOK GOYAL LD. ARS
• Keywords: Bogus
• Section: 143(3); 69C; 133A

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं. / ITA No.405/CHANDI/2025 (िनधाŊरण वषŊ / Assessment Year: 2018-19) M/s Auto Vogue Private Limited H.No.50 Sector-28 Sector 19 Chandigarh - 160019 बनाम/ Vs. DCIT/ACIT(Central)-1 C.R. Building Sector – 17 Chandigarh - 160017 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AANCA-6705-A (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Sh. Nikhil Goyal (Advocate) & Sh. Ashok Goyal (CA) – Ld. ARs ŮȑथŎकीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) - Sr. DR सुनवाईकीतारीख/Date of Hearing : 13-01-2026 घोषणाकीतारीख /Date of Pronouncement : 15-01-2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018- 19 arises out of an order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] dated 29-01-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 29-09-2021. 2. The Ld. AR advanced arguments assailing extrapolation of figures as found recorded in document found during survey action. Printed from counselvise.com 2 The Ld. Sr. DR also advanced argument supporting the orders of lower authorities. Having heard rival submissions and upon perusal of case records, the appeal is disposed of as under. 3. From the assessment order, it emerges that the assessee was subjected to survey action u/s 133A on 22-08-2017 wherein list of 35 employees was found from the cabin of cashier of the assessee- company. These employees were shown to have been paid salary of Rs.2,54,115/- for the month of July, 2017. The HR Manager admitted that the list was list of bogus employees and it was not entered in the system. During assessment proceedings, the assessee was show- caused wherein the assessee opposed any such addition. In the light of recorded statements during survey, Ld. AO rejected the contentions of the assessee and proceeded to make the addition in the hands of the assessee. It was assumed by Ld. AO that similar expenditure would have been incurred by the assessee throughout the year and by extrapolating the figures as mentioned in this sheet, Ld. AO made addition of Rs.28,09,380/- (Rs.2,54,115x12 months) and finalized the assessment. 4. During first appeal, it was, inter-alia, argued by the assessee that the alleged excel sheet contained salary payment for a single month only and no evidence was found to establish that such payments continued for the rest of the year. It was further argued that no corroborative evidence was discovered to substantiate the alleged cash salary payments and the addition was on mere presumption. Printed from counselvise.com 3 However, the same stood rejected by Ld. CIT(A) and the assessment was confirmed. Aggrieved, the assessee is in further appeal before us. 5. From the facts, it is crystal clear that an excel sheet was found during survey which contained list of employees which were not entered into regular books of accounts. The assessee is shown to have made payment of Rs.2,54,115/- to these employees for the month of July, 2017. The same has also been admitted by the cashier and the HR manager in their respective statements as extracted by Ld. AO in the assessment order. However, there is no admission that similar payment was made for rest of the other months also. In our considered opinion, the survey addition has to be made strictly in accordance with the incriminating material only. The document found during the survey is the very foundation of the impugned addition. Unless corroboration was done by Ld. AO to support the extrapolation, no presumption could be made that similar payment was made by the assessee during the rest of the months also. The extrapolation is in contradiction to the decision of this Tribunal in Gurdip Cycle Industries vs. DCIT (165 Taxmann.com 299) which has been rendered, inter-alia, after considering the decision of Hon’ble Punjab & Haryana High Court in the case of VM Spinning Mills vs. CIT (16 Taxmann.com 199) as well as various other decisions holding the field. In these decisions, addition on the basis of extrapolation has been held to be unsustainable. Respectfully following the same, we direct Ld. AO to restrict the impugned addition to the extent of Printed from counselvise.com 4 Rs.2,54,115/- only. The same would be taxable u/s 69C r.w.s. 115BBE of the Act. No other ground has been urged in the appeal. 6. The appeal stand partly allowed. Order pronounced on 15th January, 2026. -Sd- -Sd- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 15-01-2026 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "