BALJIT SINGH NARULA,DELHI V. ACIT, CENTRAL CIRCLE- 3, DELHI

ITA 1358/DEL/2025

AI Insights

The case involves multiple appeals by both the assessee, Baljit Singh Narula, and the revenue concerning the assessment years 2014-15, 2015-16, and 2018-19. The core issue was the estimation of gross profit on certain purchases made by the assessee, which were found to be linked to accommodation entries during a survey. The Assessing Officer had disallowed a significant amount of purchases, which the assessee contested, providing evidence of actual transactions and sales. The Commissioner of Income Tax (Appeals) had partially upheld the Assessing Officer's decision but reduced the addition to gross profit and commission expenditure. Both parties appealed against this decision, leading to the Tribunal's final ruling, which adjusted the gross profit percentage applied to the disputed purchases.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839262 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 04-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: SHANTANU JAIN; MAKING
• Keywords: Business income; Bogus purchase; Accommodation entries; Bogus
• Section: 147; 69C

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA Nos.1358, 1357 and 1356/Del/2025 (AYs:2014-15, 2015-16 and 2018-19) Baljit Singh Narula, 49, Shankar Market, Connaught Place, Delhi Vs. ACIT, Central Circle-3, Delhi (Appellant) (Respondent) PAN:AAWPS7872C ITA Nos.1845, 2062 and 2063/Del/2025 (AYs: 2014-15, 2015-16 and 2018-19) ACIT, Central Circle-3, Delhi Vs. Baljit Singh Narula, 49, Shankar Market, Connaught Place, Delhi (Appellant) (Respondent) PAN: AAWPS7872C Assessee by : Shri Shantanu Jain, Adv Ms. Jahanavi Khanna, Adv Revenue by: Shri Om Parkash, Sr. DR Date of Hearing 29/01/2026 Date of pronouncement 20/02/2026 O R D E R PER M. BALAGANESH, A. M.: 1. The appeals in ITA No.1358, 1357, 1356/Del/2023 filed by the assessee and ITA Nos. 1845, 2062 and 2063/Del/2025 for AYs 2014-15, 2015-16 and 2018-19, arises out of the order of the ld Commissioner of Income Tax (Appeals)-23, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal dated 08.01.2025 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 27.05.2023 by the Assessing Officer, DCIT, Central Circle-3, New Printed from counselvise.com ITA Nos. 1358, 1357 and 1356/Del/2025 ITA Nos. 1845, 2062 and 2063/Del/2025 Baljit Singh Narula Page | 2 Delhi (hereinafter referred to as ‘ld. AO’).Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. 2. The only effective issue to be decided in these appeals is as to whether the revenue was justified in estimating the gross profit on account of certain purchases made by the assessee at a particular percentage in the facts and circumstances of the instant case. With the consent of both the parties, the case of the assessee for AY 2014-15 is taken as the lead case and the decision rendered thereon shall apply with equal force for other assessment years also except with variance in figures. 3. We have heard the rival submissions and perused the materials available on record. The return of income for AY 2014-15 declaring total income of Rs. 7,11,310/-. The assessee is a proprietor of Narula Paneer Store and is engaged in the business of trading of paneer products. The ld AO noted that information from Insight Portal revealed that a survey action was conducted at M/s. Sarvroopey Vyapar Pvt. Ltd, M/s. Shashi Sales and Marketing Pvt. Ltd, Astral Food Pvt. Ltd and Rabik Exports. During the survey and post- investigation, it was found that during the period of demonetization, Smt. Rani Sharma and Sh. Yashpal Gupta were involved in proving accommodation entries of sale and purchase bills to various beneficiaries from many paper entities. During the year under consideration, the assessee Sh. Baljit Singh Narula has received accommodation entries in the nature of fictitious/bogus purchase bills from companies controlled by Sh. Yash Pal Gupta, in lieu of commission for the purpose of maintaining books of accounts. The same was confirmed by Sh. Baljit Singh Narula and his son Sh. Balbir Singh during a survey action Printed from counselvise.com ITA Nos. 1358, 1357 and 1356/Del/2025 ITA Nos. 1845, 2062 and 2063/Del/2025 Baljit Singh Narula Page | 3 which was conducted on Narula Paneer Store and Navbharat Paneer Store. This was a consequential survey to the survey conducted at G-10, Padma Tower-II, Rajender Place, New Delhi i.e. office premises of Sh. Yash Pal Gupta in the case of Rabik Exports Ltd., Sashi Sales & Marketing Pvt. Ltd. and Astral Foods Pvt. Ltd. on 27.04.2018. The ld AO noted that assessee confirmed in his statement on 28.06.2018 that Narula Paneer Store and Nav Bharat Paneer have taken bogus bills from Astral Food Pvt. Ltd, AHY Food Products Pvt. Ltd and High Label Marketing Pvt. Ltd in lieu of commission. The ld AO noted that payments were made by the assessee to these parties by account payee cheques/ RTGS through regular banking channels and the allegation is that the cash was used to be paid back to Narula Paneer Store and Nav Bharat Paneer. The ld AO noted that the assessee had made purchase form these parties for various years as under:- S. No. Entity of Sh. Yashpal Gupta Period / Amount of purchase 1 AHY Food Products Pvt. Ltd. 01.03.2014 to 01.07.2016 Rs. 8,27,10,473/- 2 Astral Foods Pvt. Ltd. 13.02.2016 to 12.04.2018 Rs. 7,94.86,752/- 3 High Label Marketing Pvt. Ltd. 01.07.2015 to 08.07.2016 Rs. 3.04.03,365/- Total Rs.19,26,99,590/- 4. Out of these purchases, a sum of Rs. 86,25,000/- from AHY Food Products Pvt. Ltd pertain to AY 2014-15 which was sought to be disallowed by the ld AO in entirety. Printed from counselvise.com ITA Nos. 1358, 1357 and 1356/Del/2025 ITA Nos. 1845, 2062 and 2063/Del/2025 Baljit Singh Narula Page | 4 5. The assessee before the ld CIT(A) filed written submissions by stating that actual purchase from AHY Food Products Pvt. Ltd for AY 2014- 15 was only Rs. 41,47,614/- and not Rs. 86,25,000/- as mentioned by the ld AO. The assessee placed on record the complete purchase book and party-wise purchases for AY 2014-15. The assessee has made total purchase of Rs. 5,59,44,641/- during the year under consideration. The assessee also submitted that he had made total sales of Rs. 6,25,53,531/- out of purchases made. The assessee enclosed the sample purchase bills and sample sale bills together with confirmation from the suppliers and customers. The assessee enclosed complete bank statements evidencing the payment made to the suppliers for purchases and payments received from customers for the sales. The assessee also enclosed the stock register showing the complete purchase and sales made by him. It was also submitted that the purchase made from the disputed suppliers i.e. AHY Food Products Pvt. Ltd had indeed been reflected in the stock register as goods inward and correspondingly the sales have been made by the assessee to 3rd party and to that extent, quantity is reduced from the stock register. The sales made by the assessee are not doubted by the revenue. Without making the purchases there cannot be any sales. Admittedly both purchase as well as sales were duly recorded and accounted in the books of account of the assessee and source for making payments for the purchase are drawn from the regular books of account maintained by the assessee. Since, the sales are not doubted, only the profit element embedded in value of purchase could be brought to tax. This argument was appreciated by the ld CIT(A) and accordingly, the ld CIT(A) estimated gross profit @16% of the disputed value of purchases i.e. Rs. 41,47,614/- from AHY Food Products Pvt. Ltd and restricted the gross profit addition to Rs. 6,63,618/-. The ld CIT(A) also restricted the corresponding commission Printed from counselvise.com ITA Nos. 1358, 1357 and 1356/Del/2025 ITA Nos. 1845, 2062 and 2063/Del/2025 Baljit Singh Narula Page | 5 expenditure u/s 69C of the Act to the correct figure of purchase @2% and restricted the addition to Rs. 82,952/-. 6. Aggrieved by this order, the assessee as well as the revenue are in appeal before us. It is not in dispute that the assessee had made purchase from AHY Food Products Pvt. Ltd and it could not be substantiated beyond reasonable doubt but at the same time it is a fact that goods have been purchased by the assessee and it had entered the assessee premises and corresponding sales have been made. It is not in dispute that sales made by the assessee are not doubted by the revenue. Hence, the only presumption that could be drawn is that the assessee could have made purchases from the grey market in order to have some savings in indirect taxes. Hence, only the profit element could be brought to tax on the value of disputed purchase which has been rightly been done by the ld CIT(A). However, the short point that arose for consideration is as to whether the profit percentage adopted by the ld CIT(A) is justified in the facts and circumstances of the case or not. The ld AR before us placed on record the gross profit chart and gross profit ratio for AYs 2012-13 to 2023-24. It is pertinent to note that this chart is also reproduced at pages 14-15 of the ld CIT(A) for AY 2014-15. The average gross profit worked out to 10.45%. There is not much gap between the average gross profit as per the chart and gross profit declared by the assessee in the return. However, the issue is bringing to tax the gains derived by the assessee by making purchase in the grey market where he could have had benefit of savings in indirect taxes. Hence, in our considered opinion, adoption of gross profit of 12.5% for all the years under consideration would meet the ends of justice. The ld AO is directed to adopt gross profit @12.5% on the disputed purchase (correct value thereon) and from that reduce the gross profit percentage already disclosed by the assessee in the return. With Printed from counselvise.com ITA Nos. 1358, 1357 and 1356/Del/2025 ITA Nos. 1845, 2062 and 2063/Del/2025 Baljit Singh Narula Page | 6 these observations, grounds raised by the assessee are partly allowed and grounds raised by the revenue are dismissed. 7. We find on perusal of the files that assessee had raised certain additional grounds on 22.10.2025. No arguments were advanced by the ld AR before us with regard to the same and hence, the same are not even admitted. 8. In the result, the appeals of the assessee are partly allowed and appeals of the revenue are dismissed. Order pronounced in the open court on 20/02/2026. -Sd/- -Sd/- (C. N. PRASAD) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20/02/2026 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "