NV DISTILLERIES AND BREWERIES PVT LTD.,NEW DELHI V. DCIT, CENTRAL CIRCLE-31, DELHI

ITA 1303/DEL/2025

AI Insights

The case involves M/s. NV Distilleries & Breweries Pvt. Ltd, which appealed against the orders of the Commissioner of Income Tax (Appeals)-30, New Delhi, concerning the reassessment of income for the Assessment Years 2014-15, 2016-17, and 2017-18. The primary contention was the addition made on account of estimated gross profit on purchases from certain parties, which the Assessee argued were bogus. The Tribunal examined the validity of the reassessment under section 147 of the Income-tax Act, 1961, and the subsequent additions made by the Assessing Officer. The Tribunal found that the additions were made without sufficient tangible material and that the transactions in question were already recorded in the Assessee's books, leading to the decision to delete the additions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837335 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 18 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: 03-03-2025
• Other Referred Cases: GKN driveshafts vs. 259 ITR 19
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: NIRBHAY MEHTA; A SEPARATE SPEAKING
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Bogus purchase; Search and seizure; Accommodation entries; Tangible material; Bogus
• Section: 147; 148; 143(3); 142(1); 154; 132; 153A

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. 1303 to 1305/Del/2025 (AYs: 2014-15, 2016-17 and 2017-18) M/s. NV Distilleries & Breweries Pvt. Ltd, 10th Floor, Vandana Building, 11 Tolstoy Marg, New Delhi Vs. DCIT, Central Circle-31, New Delhi (Appellant) (Respondent) PAN: AAACN3240N Assessee by : Shri Nirbhay Mehta, Adv Revenue by: Shri Om Prakash, Sr. DR Date of Hearing 12/01/2026 Date of pronouncement 20/02/2026 O R D E R PER M. BALAGANESH, A. M.: 1. The appeals in ITA Nos.1303, 1304, 1305/Del/2025 for AYs 2014-15, 2016-17 and 2017-18, arises out of the order of the Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 17-12-2024 against the order of assessment passed u/s 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30-03-2022 by the Assessing Officer, DCIT, Central Circle-31, New 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 Assessee has challenged the addition made on account of estimation of gross profit on purchases made from certain parties. Apart Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 2 from this, the Assessee had also challenged the validity of assumption of jurisdiction under section 147 of the Act. 3. We have heard the rival submissions and perused the materials available on record. First let us take the facts relevant for Assessment Year 2014-15. The Assessee had originally filed the return of income for assessment year 2014-15 on 28-11-2014 declaring loss of Rs. 35,24,87,273. The assessment was completed under Section 143(3) of the Act on 31-12-2016 determining total income at Rs.17,53,00,980. A search and seizure action was conducted under Section 132 of the Act on 20-4- 2017 on N V Group in which the Assessee Company was also covered. The assessment was framed under Section 153A of the Act on 31-12-2019 determining total income of Rs. 138,35,11,667. Further an order under section 154 of the Act was passed on 31-1-2020 for rectifying the mistakes apparent from record and total income was finally determined at Rs. 22,85,66,475. Subsequently, the Learned AO received information from Investigation Wing that Assessee has received accommodation entries of Rs. 8,27,885 from M/s Mittersain Rajesh Kumar through M/s Raghuvir Singh Devender Kumar. This was sought to be considered as income escaping assessment in the hands of the Assessee and accordingly the assessment was sought to be reopened under section 147 of the Act vide issuance of notice under section 148 of the Act on 30-03-2021 with the prior sanction of Principal Commissioner of Income Tax, Central III, New Delhi under section 151 of the Act. In response to the said notice, the Assessee filed a return of income on 09-04-2021 declaring loss of Rs. 71,78,02, 604. The Assessee was provided the reasons recorded for reopening together with the copy of approval under section 151 of the Act. 4. We find that the reassessment proceedings have been initiated on the basis of the following information received through insight portal:- Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 3 a) A survey action has been carried out in the case of one Mr. Ashok Kumar Gupta, who is found to be an entry operator providing bogus purchase / sales bill through his various firms including M/s Riddhi Siddhi Impex. The Assessee company was found to be the beneficiary of bogus sales bills of Rs 22,50,000 and bogus purchase bills of Rs 44,23,70,894 during the relevant assessment year from M/s Riddhi Siddhi Impex. b) A search has been conducted in the case of M/s Mittersain Rajesh Kumar, Proprietor Hitesh Jain, which revealed that M/s Mittersain Rajesh Kumar has provided accommodation entry to the tune of Rs 8,27,885 to the Assessee company. 5. The Assessee company duly filed its objections to the reasons recorded vide letter dated 08-02-2022 challenging the validity of assumption of jurisdiction by stating- a) that the jurisdiction to reopen the assessment was assumed on incorrect facts without making any independent inquiry and application of mind and the same tantamount to review of earlier proceedings as the same information was already considered in the search assessment proceedings under section 153A of the Act in the case of the Assessee wherein the Assessee company had submitted that during the year under consideration, the Assessee had not carried out any transaction with M/s Riddhi Siddhi Impex and M/s Mittersain Rajesh Kumar and thereafter no addition was being made in the search assessment order framed under section 153A of the Act. b) that the present reopening was beyond four years and as per the proviso to section 147 of the Act there was no failure on the part of the Assessee Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 4 company to disclose fully and truly all material facts during the course of search assessment proceedings under section 153A of the Act. Hence the assessment could not have been subjected to reopening as per the proviso to section 147 of the Act. c) that there is no fresh tangible material on record and thus reassessment proceedings are merely a change of opinion which is not permitted as per law as the Learned AO on due appreciation of the contentions of the Assessee had indeed taken a plausible view and had already formed an opinion in the search assessment proceedings framed under section 153A of the Act. 6. The objections raised by the Assessee were disposed of by the Learned AO vide letter dated 27-03-2022 in the fag end of the reassessment proceedings. In fact, the Assessee has raised a specific objection that the very same issue that was subject matter of reopening was indeed considered in the search assessment framed under section 153A of the Act and the then assessing officer was convinced with the contentions of the Assessee and had proceeded not to make any addition in that regard. Hence the then assessing officer had indeed taken a plausible view and had formed an opinion. Without there being any existence of a tangible material, the very same issue being considered in the fresh reassessment proceedings would only amount to change of opinion. However, these contentions were not even met by the Learned AO in the letter dated 27-03- 2022 disposing of the objections of the Assessee. Further, we find that without disposing of the objections of the Assessee by a separate speaking order as mandated by the Hon’ble Supreme Court in the case of GKN driveshafts reported in 259 ITR 19, the Learned AO had proceeded to issue notice under section 142(1) of the Act dated 4-1-2022 seeking details about Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 5 an absolutely altogether different party M/s Raghuveer Singh Devender Kumar which was not even the subject matter of reasons recorded. In other words, the notice under section 142(1) of the Act stood issued to the Assessee on 04-01-2022 whereas the objections for reopening were disposed of by the Learned AO vide letter dated 27-3-2022. In response to the notice under section 142(1) of the Act, the Assessee filed a reply letter dated 25-3-2022 furnishing the copy of ledger account of M/s Raghuveer Singh Devender Kumar along with the bank statements. Thereafter, a show-cause notice dated 27-03-2022 was issued stating that only copy of ledger account of transactions with M/s Raghuveer Singh Devender Kumar was provided and that no invoices, confirmations and communications in the form of email / letters were provided and the Assessee was show-caused as to why the profit/ turnover as percentage on bogus purchases amounting to Rs 2,07,82,168 be not added in the hands of the Assessee. 7. In response to the said show-cause notice, the Assessee reiterated that since no reasons whatsoever has been recorded on the alleged party, no addition can be made as per the settled law and furnished the copy of invoices of the party along with ledger account and copy of bank statement to prove the genuineness of the transactions. The Learned AO completely disregarded the contentions of the Assessee and proceeded to make an addition of Rs 21,59,267 by applying the gross profit percentage of 10.39% on the transactions of Rs 2,07,82,168 with M/s Raghuveer Singh Devinder Kumar and completed the reassessment proceedings. The Learned AO noted that the accommodation entry from M/s Mittersain Rajesh Kumar has been recorded by the Assessee in its books and the layer through which entry has been received is M/s Raghuveer Singh Devinder Kumar. Hence the purchases from M/s Raghuveer Singh Devinder Kumar though not mentioned in the reasons could be subject matter of addition in the Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 6 reassessment proceedings. The Learned AO noted that as per the provisions of section 147 of the Act, he can reassess any other information which comes to his notice subsequently during the course of assessment. The Learned AO noted that mere filing of ledger account, invoices and bank statements does not prove the genuineness of the transactions with M/s Raghuveer Singh Devinder Kumar. 8. The Learned CITA observed that the reasoning given by the Learned AO to substantiate the linkage of M/s Mittersain Rajesh Kumar with M/s Raghuveer Singh Devendra Kumar weakens the Assessee's legal and factual claim that no addition could have been made without recording reasons on purchases made from M/s Raghuveer Singh Devendra Kumar. He noted that the Assessee did not furnish critical evidence such as delivery challans, goods movement records, confirmation from supplier etc. Further, he relied on the investigation carried out by the Learned AO which revealed that substantial doubts about the existence and operational capacity of M/s Raghuveer Singh Devendra Kumar. With these observations, he upheld the validity of assumption of jurisdiction under section 147 of the Act and also confirmed the addition made by the Learned AO. 9. At the outset, we find that the reasons recorded for reopening the assessment are enclosed in Page 34 of the Paper Book. Admittedly, the name of the party M/s Raghuveer Singh Devendra Kumar is not mentioned in the reasons recorded. Hence the Learned AO did not even intend to consider the transactions of M/s Raghuveer Singh Devendra Kumar while recording his satisfaction of formation of belief that income of the Assessee had escaped assessment. Admittedly, the reasons recorded for reopening contained the details of purchases made from M/s Riddhi Siddhi Impex and M/s Mittersain Rajesh Kumar only. The addition has been made on account of bogus purchases only in respect of a totally different party by the Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 7 Learned AO in the reassessment proceedings. With regard to purchases made from M/s Raghuveer Singh Devendra Kumar, the Assessee had furnished the invoices raised by the said party ad statement of the supplier which are enclosed in pages 62 and 64 of the paper book and the said invoice itself mentioned the transportation details of inward and outward movement of goods. Hence the grievance of the lower authorities in this regard is addressed in the invoice itself which was filed by the Assessee. Further, the sales made by the Assessee out of purchases made from M/s Raghuveer Singh Devendra Kumar is not doubted by the lower authorities. Admittedly, the purchases made from M/s Raghuveer Singh Devendra Kumar and corresponding sales made by the Assessee are already recorded in the books of accounts of the Assessee. These facts could have been cross verified had minimal enquiries were sought to be carried out on M/s Raghuveer Singh Devendra Kumar by the lower authorities to ascertain the truth. This was admittedly not done by the lower authorities. We find that the entire addition was sought to be made merely on suspicion. Hence there is absolutely no case made out by the revenue for sustaining the addition on merits. Hence the addition made by the Learned AO is hereby directed to be deleted. 10. Since the relief is granted to the Assessee on merits, the other legal arguments advanced by the Learned AR on the legal grounds need not be gone into as adjudication of the same would become academic in nature and hence they are left open. Accordingly, the grounds raised by the Assessee are partly allowed for Assessment Year 2014-15. ITA No. 1304/Del/2025 – Asst Year 2016-17 – Assessee Appeal 11. The issues involved in this appeal are identical to those involved in Assessment Year 2014-15 except with variance in the name of the supplier. The reasons recorded for reopening the assessment are enclosed in Page Printed from counselvise.com ITA Nos. 1303 to 1305/Del/2025 M/s. NV Distilleries & Breweries Pvt. Ltd Page | 8 143 of the Paper Book. The decision rendered by us hereinabove for Assessment Year 2014-15 shall apply mutatis mutandis for this Assessment Year also. ITA No. 1305/Del/2025 – Asst Year 2017-18 – Assessee Appeal 12. The issues involved in this appeal are identical to those involved in Assessment Year 2014-15 except with variance in the name of the supplier. The reasons recorded for reopening the assessment are enclosed in Page 230 of the Paper Book. The decision rendered by us hereinabove for Assessment Year 2014-15 shall apply mutatis mutandis for this Assessment Year also. 13. In the result, all the appeals of the Assessee are partly allowed. 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 "