INCOME TAX OFFICER, NEW DELHI V. AR ENTERPRISES, DELHI

ITA 4565/DEL/2025

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the Ld. Commissioner of Income Tax (Appeals) which had allowed the appeal of A R Enterprises, a partnership firm engaged in trading S.S. Steel goods. The Revenue challenged the deletion of an addition of INR 2,03,83,595 made by the Assessing Officer, which was based on the claim that the liabilities recorded as sundry creditors were bogus. The Tribunal examined the evidence and the remand report submitted by the Assessing Officer, which acknowledged regular transactions with the creditors during the year under appeal. The Tribunal concluded that the creditors were genuine and the liabilities were not unexplained, thus dismissing the Revenue's appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839206 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 24-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: AVDESH BHATNAGAR
• Keywords: Business income; Additional evidence; Bogus
• Section: 143(3); 142(1); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “B” BENCH: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4565/Del/2025 [Assessment Year : 2015-16] ITO Room No.2014, E-2 Block, 20th Floor, Civic Center, New Delhi vs A R Enterprises 1079, Ground Floor, Mukherjee Nagar, New Delhi-110009. PAN-AAIFA9588R APPELLANT RESPONDENT Revenue by Shri Rajesh Kumar Dhanesta, Sr.DR Assessee by Shri Avdesh Bhatnagar, Adv. Date of Hearing 22.12.2025 Date of Pronouncement 18.02.2026 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the Revenue against the order dated 30.05.2025 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld.CIT(A)”] in Appeal No. CIT(A), Delhi-20/10461/2017-18 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 11.12.2017 passed u/s 143(3) of the Act pertaining to Assessment Year 2015-16. 2. Brief facts of the case are that the assessee is a partnership firm and is engaged in the business of Trading of S.S. Steel goods under the name and style of M/s A.R. Enterprises and e-filed its return of income on 29.09.2015, declaring total income at INR 5,850/-. The Printed from counselvise.com ITA No.4565/Del/2025 Page | 2 case of the assessee was selected for scrutiny through CASS for following issues:- (i) Low Profit Before Interest and Tax (PBIT) shown; (ii) Large increase in sundry creditors with respect to Turnover as compared to preceding year; and (iii) Large increase in sundry creditors and reduction in business income as compared to preceding year. 3. Thereafter, notice u/s 143(2) dated 26.07.2016 was issued and served upon the assessee. Subsequently, notices u/s 142(1) alongwith questionnaire were also issued wherein the assessee was specifically asked to provide complete details of sundry creditors. In response to the statutory notices, assessee has filed necessary details. A examining the details filed by the assessee, AO concluded that the assessee was unable to prove the existence and genuineness of the sundry creditors and assessed the income of the assessee at INR 2,03,89,450/- vide assessment order dated 11.12.2017 passed u/s 143(3) of the Act. 4. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 30.05.2025, allowed the appeal of the assessee. 5. Aggrieved by the order of Ld.CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal:- “Ground 1: Whether on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in deleting the addition of? 2,03,83,595/- made by the Assessing Officer on account of bogus liability, without properly appreciating the facts of the case and the evidence placed on record. Printed from counselvise.com ITA No.4565/Del/2025 Page | 3 Ground 2: Whether on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in deleting the addition of? 2,03,83,595/-, on the basis of the remand report citing that the AO has not made any adverse comments OR given any comments regarding genuineness, creditworthiness OR identity though the remand report was sought only the specific issue of actual amount of credit and there were no directions whatsoever to examine the creditworthiness of the sundry creditors afresh OR otherwise. Ground 3: Whether the Ld.CIT(A) erred in law by accepting the assessee's explanation regarding the existence and genuineness of the liability, despite the fact that the assessee has failed to discharge the onus cast upon him under section 68 of the Income-tax Act, 1961. Ground 4: Whether the Ld. CIT(A) failed to appreciate that the assessee did not furnish any conclusive documentary evidence such as confirmation from the creditor, PAN, bank statement, OR proof of identity and creditworthiness of the party, to substantiate the genuineness of the liability which has been rightly added back under the provisions of section 68 of the Income Tax Act, 1961. Ground 5: Whether the Ld.CIT(A) erred in ignoring that the Assessing Officer had conducted adequate inquiry and found that the alleged liability was not only unexplained but also appeared to be non- existent OR fictitious, indicating an arrangement to inflate liabilities and suppress its income. Ground 6: Whether the Ld.CIT(A) erred in not appreciating the fact that the liability remained unconfirmed/unpaid over multiple years, and there was no movement OR actual transaction, which further indicated that the liability was not genuine. Ground 7: The order of the Ld CIT(A) is erroneous and unsustainable in law and on facts and deserves to be reversed. Ground 8: The appellant craves leave to add, amend, alter OR withdraw any of the grounds of appeal at the time of hearing.” 6. Before us, Ld. Sr. DR for the Revenue submits that during the course of assessment proceedings, summons were issued on two occasions, firstly, on the old address and secondly, on the new address provided by the assessee and in most of the cases, they were returned unserved expect in the case of G.K. Industries wherein the party had confirmed the balance and AO has made no addition for such balance. Ld.CIT(A) has deleted the addition solely by observing Printed from counselvise.com ITA No.4565/Del/2025 Page | 4 that no adverse remarks were given by the AO in the Remand Report however, Ld.CIT(A) in terms of the directions given u/s 250(4) of the Act, has directed the assessee to verify and comment on the additional evidence filed in cases where there were opening balances and the transactions carried out during the year. In response, the AO had filed the Remand Report stating that the transactions carried out with the creditors during the year under appeal. It is thus, prayed by Ld. Sr. DR that in the interest of justice since the assessee had not filed any details before the AO and were submitted before Ld. CIT(A), thus, the issue may please be remand back to the file of the AO for fresh verification of the details and facts so submitted by the assessee. He prayed accordingly. 7. On the other hand, Ld.AR for the assessee submits that assessee has filed ledger accounts of all the parties before the AO and further, submits their correct addresses however, the AO has not sent any notice to the correct addresses provided. Ld.AR further submits that parties are existing and during the year under appeal, it is admitted fact and also appreciated by the AO in the Remand Report that assessee is having regular transaction with these parties and is buying the goods from them regularly as well as making payments. Ld.AR submits that the AO has not doubted the purchases made from these parties nor the trading results declared were doubted. The aid alleged creditors are having live accounts with the assessee and thus no addition should be made by holding the same as bogus/unverifiable. Ld.AR further submits that assessee filed returns under VAT Act where the details of purchases made were Printed from counselvise.com ITA No.4565/Del/2025 Page | 5 submitted and VAT inputs were claimed however, no allegation was made with regard to any of the parties alleged as non-existent by the AO. Ld. AR further submits that parties have filed confirmations to the AO through online mode and the necessary copies of the same were placed in the Paper Book. It is thus, submitted that the allegation of the AO that parties have not responded is not correct. Ld. AR thus, submits that addition has rightly been deleted by Ld.CIT(A). It is further submitted that out of the parties alleged as bogus, no purchases were made with one party, M/s. Lalit Traders with whom opening credit balance was of INR 70,05,391/- and after making payment of INR 44,40,000/-, the closing credit balance remained of INR 22,65,391/- which was alleged as bogus. Besides this, ld.AR for the assessee also drew our attention to the Remand Report wherein Two parties i.e. Ganpati Trademart Pvt. Ltd. & Shree Balalji Enterprises were also having opening balances and during the year, purchases were made with them and payments were also made. Ld. AR thus, submits that AO has ignored the fact that balances include the opening balances therefore no addition could be made for the same. Accordingly, he prayed that Ld.CIT(A) has rightly deleted the addition which order deserves to be uphold. 8. Heard the contentions of both the parties at length and perused the material available on record. In the instant case, AO has made total addition of INR 2,03,83,595/- u/s 68 of the Act by treating sundry creditors (mainly Six parties) as unexplained/bogus liability. It is observed that in the Remand Report, as reproduced by ld. CIT(A) in its order, AO himself has accepted the fact that though the Printed from counselvise.com ITA No.4565/Del/2025 Page | 6 addition was made of INR 2,03,85,595/- however, during the year under appeal total value of transaction carried out with these parties were of INR 1,74,59,767/- and excluded the amount of opening balance in the case of M/s Lalit Traders. It is further observed that in the said Remand Report, AO has taken the opening balances of Two parties namely M/s Ganpati Trademart Pvt. Ltd. of INR 22,27,309/- and in the name of M/s Shree Balalji Enterprises of INR 17,88,143/-. It is further observed that assessee has made transactions with total Six parties during the year under appeal where purchases were made from Five parties and payments made to all the six parties which includes the payments towards the opening balances also. Once the payments made and purchases made from these parties have not been doubted and in the Remand Report, AO has himself accepted the fact that they are live parties from whom the transactions are being carried out on regular basis. Therefore, the said parties cannot be held as bogus/unexplained liability of the assessee. The Revenue in its grounds of appeal mainly alleges that assessee has failed to establish the genuineness and creditworthiness of the creditor parties however, once the AO has alleged that these are the bogus liabilities though the addition made u/s 68 of the Act and further AO himself observed that regular transactions are being carried out with these parties where purchases of more than INR 02.00 crores were made from these parties, the said parties cannot be held as non-genuine/non- existent. In view of these facts and the discussions, we find no infirmity in the order of Ld.CIT(A) which is hereby, upheld. Printed from counselvise.com ITA No.4565/Del/2025 Page | 7 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 18.02.2026. Sd/- Sd/- (YOGESH KUMAR U.S) JUDICIAL MEMBER Date:- 18.02.2026 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "