INCOME TAX OFFICER, ROHTAK V. VIJENDER GOYAL, DELHI

ITA 4627/DEL/2024

AI Insights

The case involves an appeal by the Income Tax Officer, Rohtak against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, which had deleted the additions made by the Assessing Officer regarding alleged bogus purchases and disallowance of sundry creditors. The Assessing Officer had treated purchases amounting to Rs.9,11,40,892 as bogus and disallowed Rs.89,14,186 on account of sundry creditors under sections 37(1) and 68 of the Income Tax Act, 1961 respectively. The CIT(A) found that the assessee had provided sufficient evidence to substantiate the genuineness of the transactions, leading to the deletion of the additions. The Tribunal upheld the CIT(A)'s decision, agreeing that the evidence provided by the assessee was adequate and that the additions made by the Assessing Officer were not justified.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839854 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2021-2022
• Appeal Filed On: 01-10-2024
• Other Referred Cases: ACIT V/s Karamchand Rubber Industries, ITA No. 6599/Del/2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH KUMAR JHA
• Assessee Lawyers: VED JAIN; PAWAN GARG
• Keywords: Bogus purchase; Cancellation of registration; Bogus
• Section: 68; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘C’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER& SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No.4627/Del/2024 [Assessment Year:2021-22] Income Tax Officer, Rohtak, Ayakar Bhawan, Room No.7, Opp. Mansorver Park, Haryana-124001 Vs Vijender Goyal, H. No.8, Kh. No.767, Swaran Park, Mundka, Delhi-110041 PAN AIGPG3240a Appellant Respondent Revenue by Shri Mukesh Kumar Jha, CIT(DR) Assessee by Shri Ved Jain, Adv. & Shri Pawan Garg, CA Date of Hearing 16.12.2025 Date of Pronouncement 25.02.2026 ORDER PER AMITABH SHUKLA, AM, The captioned appeal has been preferred by theRevenue againstorder dated 02.08.2024 of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, [hereinafter referred to as ‘ld. CIT(A)’] arising out of assessment order dated 26.12.2022 passed u/s 143(3)r.w.s. 144B of the Income Tax Act, 1961 pertaining to Assessment Year 2021-22. The word ‘Act’ herein this order would mean Income Tax Act, 1961. 2. The Revenue has raised following grounds of appeal:- Printed from counselvise.com ITA No.4627/Del/2024 Page 2 of 9 1. Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.9,11,40,892 as bogus purchases u/s 37(1) of the Income Tax 1961 as the assessee has not furnished any documentary evidence in respect of business activities carried out by the parties (seller) during the relevant year ?\" 2. Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.89,14,186/- on account of disallowance of sundry creditors u/s 68 of the Income Tax Act, 1961\" as the assessee had failed to furnish the copy of account & confirmation of the said transaction during the assessment proceedings inspite of providing sufficient opportunity by issuing notices u/s 142(1)/show cause notice. 3. The first issue raised by the Revenue is regarding the action of ld. CIT(A) in deleting an addition of Rs.9,11,40,892/- made by the ld. AO as bogus purchases under section 37(1) of the Act. We have heard rival submission on the matter in the light of material available on records. The appellant Revenue hold the view that the assessee did not submit requisite documentary evidences qua business activities carried out by the sellers to the AO. The assessee is reportedly engaged in the business of scrap trading. The arguments raised by the rival parties have been heard and considered. The ld. Counsel for the assessee has argued that there is no merit in the ground raised by the assessee qua non-submissions of details since the AO in the assessment order has itself confirmed that the assessee has submitted necessary details on the matter. We have also noted the discussion of ld. CIT(A) contained in para-12.1 to 12.5 of his order on pages 27 to 29. For the purposes of clarity the same are extracted hereunder:- Printed from counselvise.com ITA No.4627/Del/2024 Page 3 of 9 “12.1 On going through the observations of the assessing officer as given in the assessment order it is seen that the assessing officer has treated an amount of Rs. 9,11,40,892/- as bogus purchases for the reasons given by him in para 4 of the assessment order which reads as under: \"1. Thus, in view of the above it is pertinent to mention here that it is Suo- Moto Cancellation of registration initiated by the Tax Official for various default as per the provisions of GST Law. However, the assessee did not furnish any clarification in this regard. 2. It is also to be noted that the above third parties have mostly started business only during the FY 2020-21, i.e. relevant to AY 2021- 22, filed GST returns for a small period i.e. for the F.Y. 2020-21. Further it is noticed that the co-called suppliers did not file GST return for the F.Y. 2019-20 and for the F.Y. 2021-22 regularly. 3. There is no record of business before F.Y. 2020-21. The business is in the name of individual who never indulged in any business activities, but suddenly has business activities with transactions running into lakhs of rupees and did not file return of income in spite of alleged tumover in that one year i.e. F.Y. 2020-21. The parties also have not carried out any business thereafter. 4. It is also seen from the records that some parties have not filed returm of income for any of the Assessment years till date. 5. Physical enquiries have shown that the address of the parties are either fake or the addresses available do not pertain to these parties. 6. The assessee did not exercise the option given in the SCN dated 14/12/2022 for cross examination of the suppliers. After been given ample opportunities, the assessee has failed to submit all relevant documents in support of his claim. Therefore, based on all materials available on record, the assessment is concluded by making the additions of Rs.9,11,40,892/-u/s.37(1) on account of bogus purchases\". 12.2 From the above observations of the assessing officer what transpires is that the assessing officer has made the addition for want of supporting documents to justify the genuineness of the purchases. Additionally, he has also relied upon the report received by him from the verification unit and his findings in regard to the GST registration of the alleged 10 suppliers. 12.3 I have given a thoughtful consideration to the facts on record. There is no dispute that the purchases made by the appellant are duly supported by tax invoices, e-way bills & the payments made by payee a/c cheque. There is also no dispute that all the 10 parties have confirmed the transactions as is evident from the confirmations furnished by the appellant as annexure C to C10 of his submissions. It is also not the case of the assessing officer that any of the parties have been declared as hawala dealers and/or that any action has been taken by GST authorities in appellant's case. At the outset, to set the framework, the case is not built on the premise that there were any independent enquiries conducted by enforcement agencies wherein suspicious transactions and parties/suppliers have been identified/statements recorded. There is no evidence brought on record by the assessing officer to draw the conclusion that the purchase consideration paid by appellant had come back to the appellant in cash. The assessing officer has neither pointed out any defect in the return of income filed and/or in the books of accounts maintained Printed from counselvise.com ITA No.4627/Del/2024 Page 4 of 9 by the appellant, nor has doubted the corresponding sales made by the appellant. 12.4. The appellant vide his submissions dated 09/07/2024, has specifically drawn my attention to the fact that if the disallowance of Rs. 9,11,40,892/- made by the assessing officer is held to be correct it would result into very absurd result, i.e, it would result into appellant having earned gross profit of Rs. 9,56,83,288/- i.e (45,42,396 as declared in the return of income filed + 9,11,40,892 being alleged bogus purchases) which works out to 34% & net profit of Rs. 9,31,29,942 (19,89,050+ 9,11,40,892) which works out to 33%. 12.5. Further ongoing through the submissions, of the appellant & the documents submitted as \"Annexure C to C10\" vide submission dated 09/07/2024, it is seen that the purchases claimed to have been made by appellant are duly supported by tax invoice & the e-way bills issued by the suppliers. From the ledger extracts of the parties as are furnished by the appellant it is also seen that the payments have been made to suppliers, which fact has not been denied even by the assessing officer, apart from which appellant vide his submissions filed on 09/10/2023 has also submitted copies of the following documents which too have been perused. Weightment/kanta slips and transporter invoices (Annexure GR) 271 pages (12+3+24+45+81+106) Stock register (ANNEXURE SR) 80 pages (9+53+18) Bank statement (annexure BR) 110 pages Confirmation of parties (annexure CP) 45 pages 12.6. After going through the assessment order, submissions made by the appellant, the judicial pronouncements relied upon by the assessing officer and also by the appellant, I am of the considered opinion that merely because during the course of assessment proceedings appellant had not been able to provide the confirmations from the suppliers admittedly for want of time as has been brought out by the appellant & for the reasons that the GST registration of the suppliers was cancelled either voluntarily or suo-moto, the same by itself does not calls for any adverse inference, particularly because the assessing officer has not brought any adverse material on record to hold that the purchases of Rs. 9,11,40,892/- claimed by the appellant are bogus. Further the issue of post facto non verification of addresses of the suppliers, has been visited by the Delhi Tribunal in ACIT V/s Karamchand Rubber Industries, ITA No. 6599/Del/2014 (discussed in detail below in para 12.8). Without prejudice to all of the above, there is also merit in the appellants submission…………” 4. We have further noted that the ld. CIT(A) has relied upon an order of Co-ordinate Bench of this Tribunal has in ITA No.6599/Del/2014 extracted as under:- “….15. We have considered the rival arguments made by both the sides and perused the material available on record. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made Printed from counselvise.com ITA No.4627/Del/2024 Page 5 of 9 addition of Rs.2,79,80,857/- on account of bogus purchases from the four parties, the details of which are given at para 3 of this order on the ground that those concerns were not existing at the given address and the assessee failed to produce the parties despite being asked. We find the ld.CIT(A) deleted the addition, the reasons for which are reproduced in the preceding paragraphs. It is the submission of the ld. DR that when the concerned parties were not available at the given address as found by the department during the post search enquiries and since the assessee failed to produce these parties to prove their identity, credit worthiness and genuineness, therefore, the ld.CIT(A) was not justified in deleting the addition so made. It is the submission of the ld. counsel for the assessee that merely because those parties were not traceable at the given address, addition cannot be made on account of such purchases, especially when such payments were made through banking channels and the assessee has substantiated the purchase by providing the documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of VAT return duly reflecting the said purchases, copy of Form No.XXXVIII issued by the Commercial Tax Department containing the name of the seller of the goods, details of the transporter, truck number, name and address and licence number of the driver etc. There is also no finding thatthe raw materials purchased from the above parties have not been utilized in the manufacturing process and sales have been accepted by the Revenue. 16. We find merit in the above argument of the ld. counsel for the assessee. It is an admitted fact that during the course of search nothing adverse was found from the premises of the assessee regarding the purchases made from the four parties concerned. Only during post search enquiry it was found that those four parties are not available at the given address. However, it is a fact that the payments have been made through banking channel and the assessee had substantiated the purchases by providing documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of VAT return duly reflecting the said purchases, etc. The assessee has also submitted the copies of Printed from counselvise.com ITA No.4627/Del/2024 Page 6 of 9 Form No.XXXVIII of the Department of Commercial Taxes which accompanies details of each consignment of goods that enters Uttar Pradesh from outside the State. None of these documents have been proved to be false or untrue and thus, the initial burden cast on the assessee was duly discharged. No doubt, those four parties were not available at the given address at the time of enquiry by the Inspector. However, is it is also an admitted fact that the enquiries were conducted at a later stage and there may be a number of reasons for those parties to shift their place of business. From the submissions made by the ld. DR, we find the names of those parties were existing at the website of the Government of NCT, Delhi earlier, but, at the relevant time of enquiry, the status of the concerns was shown as ‘cancelled.’ This indicates that at some point of time, these concerns were very muchavailable in the website of Government of Delhi and, therefore, it cannot be said that these firms are bogus when the assessee purchased the goods and made the payments through banking channel and the assessee substantiated all the necessary documents which is required to be kept such as purchase invoices, ledger accounts, C Form issued to the suppliers, Form No.XXXVIII of the Department of Commercial Taxes which accompanies details of each consignment of goods that enters Uttar Pradesh from outside the State. In our opinion, the assessee in the instant case has discharged the initial onus cast on it. Under these circumstances and in view of the detailed reasoning given by the CIT(A) while deleting the addition, we do not find any infirmity in the order of the CIT(A). So far as the decision in the case of N.K. Proteins Ltd., is concerned, in that case, during the course of search proceedings at the office premises of the assessee blank signed cheque books and vouchers of number of concerns were found. Accordingly, the purchases made through these concerns were treated as bogus purchases by the Assessing Officer and the entire deposits in bank accounts of these parties were treated as assessee’s income on protective basis. The Tribunal restricted the addition on account of such alleged bogus purchases at 25% of the total purchases and the Hon'ble High Court modified the order of the Tribunal and directed for addition of the entire bogus purchases. However, in the instant case, no such blank cheque books and vouchers of the alleged four concerns have been found. Therefore, the decision in the case of N.K. Proteins Ltd. cannot be applied Printed from counselvise.com ITA No.4627/Del/2024 Page 7 of 9 to the facts of the present case. Similarly, in the case of Vijay Proteins Ltd., the purchases were made through brokers and such documents relating to the brokers were produced for the firsttime before the CIT(A) and it was also found that there was close link between the assessee company and one Mr. P. Therefore, the above decision relied on by the ld. DR is also not applicable to the facts of the present case. In view of the above discussion, we do not find any infirmity in the order of the CIT(A) deleting the above addition on account of the purchase from the four parties. Accordingly, the order of the CIT(A) is upheld and the ground of appeal No.2 of the Revenue is dismissed….” 5. We have noted from the appellate order that the ld. CIT(A) has extensively and comprehensively examined the entire issue in the light of the facts of the case and the submissions made by the assessee. All the facts have been elaborately and vividly brought on records by the ld. CIT(A). Apropos to his above analysis, he has concluded that the addition made by the ld AO cannot be sustained. The decision arrived at by the ld. CIT(A) is based upon adequate marshaling of facts and evidences of records and we do not find any infirmity in the same. Accordingly, we are of the considered opinion that no case for any intervention to the decision of ld. CIT(A) is made out at this stage. The ground of appeal raised by the Revenue on the issue is therefore dismissed. 6. The next issue contested by the Revenue is regarding the action of the ld. CIT(A) in deleting an addition of Rs.89,14,186/- made by the learned Assessing Officer on account of disallowance of sundry creditors under section 68 of the Act. We have heard rival submission on the matter in the light of material available on records. The ld. AO had made the Printed from counselvise.com ITA No.4627/Del/2024 Page 8 of 9 addition on the premise that the assessee had not provided him with the requisite details qua confirmation of the parties. Before the ld. CIT(A), the assessee submitted the desired details which were admitted under Rule-46A by the ld. CIT(A). While granting the impugned relief ld. CIT(A) has observed as under:- “….13.5. I have gone through the confirmations submitted by appellant (as annexure D, D1 to D52). I have also considered the submissions made by the appellant; the ledger extracts duly confirmed by the creditors (i.e. the copies of ledger extracts of the year under consideration and the subsequent year in support of the contention that the amount outstanding as on 31/03/2021 has duly been squared off subsequently). It is seen that the amount of Rs.89,14,186/-. outstanding on 31/03/2021, has almost been totally squared off subsequently and there is merit in the other contention put forth by the appellant that out of the amount of Rs. 89,14,186/-, an amount of Rs. 62,32,012/-, pertaining to 7 creditors, has been brought forward from earlier year, and does not pertain to the purchases made during the year under appeal. 13.6 In view of the above facts, the provisions of Sec 68 of the I.T Act, in my considered opinion cannot be invoked & hence addition of Rs.89,14, 186/- is hereby deleted. Accordingly, Ground No's 8&9 are allowed…..” 7. The relief accorded by ld. CIT(A) has thus been found to be based upon correct understanding and interpretation of evidences produced before him under Rule-46A. The ld. DR requested that the matter be remitted back to the ld. AO for reconsideration as he has not had the opportunity of examine the same. The ld. Counsel vehemently argued that the ld. AO did not submit any remand report in response to requisition made by the ld. CIT(A). It was also contended that the matter cannot be remitted now as the Revenue has not raised any ground regarding any Printed from counselvise.com ITA No.4627/Del/2024 Page 9 of 9 violation of Rule-46A proceedings by the ld. CIT(A). Upon careful consideration of the matter, we are of the view that the conclusion drawn by the ld. CIT(A) is based upon evidences produced by the assessee, during appellate proceedings, which were deemed adequate to arrive at a conclusion its favour. Accordingly, we are of the considered opinion that no case for any intervention to the order of the Ld CIT(A) is made out at this stage. The ground of appeal raised by the Revenue is therefore dismissed. 8. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 25th February, 2026. Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:. 25.02.2026 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "