JUGAL KISHOR PRADHAN,FARIDABAD V. ITO, WARD-1(3), FARIDABAD

ITA 427/DEL/2024

AI Insights

The case involves Jugal Kishor Pradhan, the appellant, who contested the final assessment order issued by the Income Tax Officer (ITO), Ward 1(3), Faridabad, for the assessment year 2012-13. The primary issues revolved around the treatment of certain purchases as 'bogus' and the addition of unexplained credits under section 68 of the Income Tax Act. The appellant argued that the purchases were genuine and that the income estimated by the Assessing Officer was excessively high compared to the declared profit margin of 3.5%. The Tribunal considered the submissions and evidence presented, including bank statements and ledger accounts, and found merit in the appellant's arguments, leading to a partial allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 43520 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: The Commissioner of Income Tax Vs Brandix Mauritius Holdings Ltd, Jammat-E-Islami Hind, New Delhi Vs CIT (Exemptions), New Delhi, Rhone Associates Pvt. Ltd., Gurgaon Vs ACIT Central Circle- 29, Pratap Singh Yadav, Gurgaon Vs. DCIT, Central Circle 7, Delhi, PCIT Vs M/s Mohommad Haji Adam & Co.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.S. ANAND
• Assessee Lawyers: JITENDER WADHWA
• Keywords: Business income; Unexplained cash credit; Bogus purchase; Bogus
• Section: 148; 68

Judgement Text

"I.T.A.No.427/Del/2024 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No.427/Del/2024 िनधा\tरणवष\t/Assessment Year: 2012-13 Jugal Kishor Pradhan, H.No. 424, Sector-21 D, Faridabad, NIT H.O., Faridabad, Haryana. बनाम Vs. ITO Ward 1(3), New SCO Complex, NH-4, Faridabad, Haryana. PAN No.ALZPP6321K अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक\rओरसे /Assessee by Shri Jitender Wadhwa, CA राज\u0012वक\rओरसे /Revenue by Shri B.S. Anand, Sr. DR सुनवाईक\rतारीख/ Date of hearing: 03.03.2025 उ\u0018ोषणाक\rतारीख/Pronouncement on 19.03.2025 आदेश /O R D E R This appeal is filed by the assessee against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 23/12/2019 for the AY 2012-13. The assessee has raised the following grounds: - 1. “That the appellant denies its liability to be assessed at a total income of Rs.44,05,290/- and accordingly denies his liability to pay tax and interest thereon. 2. That having regard to the facts and circumstances of the case, the Ld. A.O has erred in issuing the final assessment order dated 23/12/2019, U/s 143(3)/147 of the Income Tax Act, 1961 without quoting the mandatory Documentation I.T.A.No.427/Del/2024 2 identification number (‘DIN’) in conformity with Para-2 and Para-3 of CBDT Circular No. 19/2019 dated 14th August 2019 and thus, the said final assessment order deserves to be held as invalid, bad in law and void-ab- initio. Reliance is placed on the following judgments: i. The Commissioner of Income Tax Vs Brandix Mauritius Holdings Ltd dated 30.05.2023. [149 taxmann.com 238 (Delhi)( HC)] ii. Jammat-E-Islami Hind, New Delhi Vs CIT (Exemptions), New Delhi dated 20.11.2023. [ITA No. 1289/Del/2023] iii. Rhone Associates Pvt. Ltd., Gurgaon Vs ACIT Central Circle- 29 dated 01.11.2023 [ITA No.l68/Del/2023] iv. Pratap Singh Yadav, Gurgaon Vs. DCIT, Central Circle 7, Delhi dated 30.05.2023 [ITA No. 1898/Del/2022] 3. That the Hon’ble CIT(A) has erred in law and on facts in upholding the total addition by the Ld, A.O of Rs.31,02,845/- by treating the genuine purchases as Bogus Purchases. The Ld. A.O passed an Arbitrary Order by treating the ten percent of the purchases as the Income of the Income of the assessee. However, the Honorable Bombay High Court held in the case of PCIT Vs M/s Mohommad Haji Adam & Co. [ITA No. 1004 of 2016 that additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. 4. That the Hon’ble CIT(A) has erred in law and on facts in upholding the total addition of Rs. 6,00,000/- by the Ld. A.O on account of unexplained credit u/s 68 of the Act, and not considering the submission of assessee. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing.” I.T.A.No.427/Del/2024 3 2. At the time of hearing the Ld. AR brought to our notice that assessee is in the business of trading of iron and steel scrap and filed its original return of income on 27/08/2012 and subsequently filed return of income on receipt of notice u/s 148 of the Act declaring total income of Rs.8,08,633/-. Further he brought to our notice that the Assessing Officer has treated the purchase of Rs.31,02,845/- as bogus purchases and without disputing or doubting the sales made during the year. He submitted that Assessing Officer has estimated 10% of the purchases as gross income of the assessee and the same was sustained by Ld. CIT(A). He submitted that the addition proposed by the Ld. Authorities are on higher side and assessee has declared net income of Rs.3.5% of the total sales and he prayed that proper income may be estimated. 3. With regard to other additions made by the Assessing Officer of Rs.6 lakhs u/s 68 of the Act he submitted that the Assessing Officer has merely observed that Rs.3 lakh each of amount received from Goyal Trading Company and Sagar Enterprises (supra) as cash deposits without properly verifying the debit entries, wherein the same was contra entry for cancellation of cheques presented. In this regard he brought to our notice relevant ledger account, copy of Goyal Trading and Sagar Enterprises and bank account to show I.T.A.No.427/Del/2024 4 that assessee has deposited only cheques and there is no cash deposit. He prayed that on one hand the Assessing Officer made the addition on the basis of bogus purchases and also making the similar addition on receipt of payment from the same parties and prayed that the above additions may be deleted. 4. On the other hand, Ld. DR objected to the submissions of the assessee and submitted that the purchases declared by the assessee is bogus and also the cash received from the same parties which are bogus transactions, therefore, he submitted that the additions made and sustained by the lower authorities are proper. 5. Considered the rival submissions and material placed on record, I observe that the Assessing Officer has treated the purchases declared by the assessee as bogus and proceeded to make the addition on estimate basis @ 10%. After careful consideration, I observe that the assessee is dealing in trading in steel and scraps and in various cases coordinate benches have estimated the income in this line of business @ 5%. Therefore, the assessee has already declared profit @ 3.5% and I direct the Assessing Officer to make the addition of difference of 1.5% on the bogus purchases as income of the assessee. I.T.A.No.427/Del/2024 5 6. In the result, grounds raised by the assessee is partly allowed. 7. With regard to cash deposits, Ld. AR brought to my notice, bank account as well as ledger copies of Goyal Trading Company and Sagar Enterprises and we observe that there is no cash deposits in any of the ledger accounts submitted by the assessee and also there is no cash deposits in any of the bank accounts submitted before us to the extent of Rs.3 lakh each from both the parties. In the case of Goyal Trading Company, I observe that there is a credit balance of Rs.3 lakhs and at the same time I observe that there was also a debit of Rs.3 lakhs, which shows that it is a contra entry for dishonour of the cheque deposit by the assessee. Therefore, in absence of any cash deposits and I observe that all the transactions recorded in the bank account are only through cheques, therefore, I do not see any reason to sustain the addition. 8. In the result, ground no.4 raised by the assessee is allowed. 9. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 19/03/2025 Sd/- (S RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 19.03.2025 *Kavita Arora, Sr. P.S. I.T.A.No.427/Del/2024 6 Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "