SUNITA GROVAR,HARYANA V. ITO,WARD-4, PANIPAT

ITA 3233/DEL/2024

AI Insights

The case involves an appeal by Sunita Grovar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, which confirmed the AO's addition of INR 50,05,052 as income from bogus purchases. The AO had reopened the assessment for the year 2011-12 based on information that the purchases were from non-existent parties. The Tribunal found that while the purchases were dubious, the sales were accepted and the books of accounts were not doubted, leading to the decision to tax only the profit margin on these purchases rather than the entire amount.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470450 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: ARCHIT GUPTA
• Keywords: Additional evidence; Bogus purchase; Reopening of assessment; Reason to believe; Bogus
• Section: 147; 144; 250; 145(3)

Judgement Text

"ITA No.3233/Del/2024 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3233/Del/2024 [Assessment Year : 2011-12] Sunita Grovar, T-7, Industrial Area, Panipat, Haryana-132103. PAN-AFMPG8500N vs ITO, Ward-4, Panipat. APPELLANT RESPONDENT Appellant by Shri Archit Gupta, Adv. Respondent by Shri Sahil Kumar Bansal, Sr.DR Date of Hearing 03.02.2025 Date of Pronouncement 03.02.2025 ORDER PER MANISH AGARWAL, AM : The present appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 16.05.2024 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld.CIT(A)”] in DIN & Order No. ITBA/NFAC/S/250/2024- 25/1064936233(1) passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the order dated 26.12.2018 passed u/s 147 r.w.s 144 of the Act pertaining to assessment year 2011-12. 2. The assessee has challenged the appellate order on the following grounds:- 1. “That on facts and circumstances of the case and in law the impugned order dated 16.05.2024 passed by the National Faceless Appeal Centre, Delhi ('the CIT(A)') is without jurisdiction and bad in law. ITA No.3233/Del/2024 Page | 2 2. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal, arbitrarily, holding that the appellant had not filed any request for admission of additional evidence under Rule 46A of the Income Tax Rules, 1972. 3. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal, arbitrarily, that the case of the appellant does not fall in any of the clauses provided under Rule 46A of the Income Tax Rules, 1972 ('the Rules'). 4. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal, arbitrarily, following the remand report furnished by the assessing officer and not dealing with the rejoinder filed by the appellant. 5. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal, presuming that the appellant did not comply with Rule 46A of the Rules in furnishing additional evidence; such presumption is contradictory since, if the additional evidence was not admissible, there was no need for seeking remand report by the assessing officer. 6. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal and not giving any findings on the merits of the case. 7. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal and not appreciating that the reopening of assessment was without complying with the statutory conditions prescribed under section 147 r.w.s 148 of the Income Tax Act, 1961 ('the Act') is bad in law. 8. That on the facts and circumstances of the case, the CIT(A) erred, both on facts and in law in dismissing the appeal and not appreciating that reassessment under Section 147 of the Act as the reasons recorded for reopening the assessment does not meet the requirements of Section 147 of the Act. ITA No.3233/Del/2024 Page | 3 9. That the CIT(A) and AO erred in law and on facts of the case in making the additions of Rs. 50,05,052, simply on surmises and suspicion, without recording any justifiable dissatisfaction with the appellant's explanations regarding the genuineness of purchases. The appellant craves leave to add, amend, alter or vary, any of the aforesaid grounds of appeal before or at the time of hearing of the appeal.” 3. Brief facts of the case are that the case of the assessee was re-opened on the basis of information that the assessee has made purchases from parties totaling to INR 50,05,052/- from two parties and as per the Investigation Wing Report, the parties were non-existent. Thus, the AO has the reason to believe that income chargeable to tax of INR 50,05,052/- remained assessed to tax. Accordingly, notice u/s 148 of the Act was issued and finally the re-assessment order was passed vide order dated 26.12.2018 by making addition of INR 50,05,052/- by treating the purchases made from two parties of INR 42,29,902/- from M/s. Radhey Shaym Wool Traders and INR 7,75,150/- from M/s. Radhika Wool Traders as bogus purchases. In first appeal, the Ld.CIT(A) confirmed the addition and dismissed the appeal of the assessee. 4. During the course of hearing, the Ld.AR for the assessee submits that the assessee has submitted the stock register and copies of sales invoices. Besides this, the copy of the ledger account of both suppliers and bank statements were filed wherein it was claimed that the payments against such purchases were made through banking channels. The Ld.AR for the assessee further submits that the sales has been accepted and stock has not been doubted nor the provision of section 145(3) of the Act were invoked therefore, ITA No.3233/Del/2024 Page | 4 no addition could be made by doubting the purchases recorded in the same books of accounts. He thus, prayed for the deletion of the addition so made. 5. On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that during the course of assessment proceedings, the necessary verifications were made by the AO from the respective parties and it was found that they were not aware of the transactions with the assessee therefore, the purchases made from those parties were treated as unexplained. Under these circumstances, he prayed that the lower authorities have rightly disallowed the purchases and made the additions which orders deserves to be upheld. 6. We have heard the rival submissions and perused the material available on record. In the instant case, it is seen that the assessee has filed all the plausible evidences with regard to the purchases made and the payments have been made through banking channels. It is also a matter of fact that though the AO has inquired from the respective suppliers and it was found by the AO that these parties were not aware with regards to the transactions of sales to the assessee. However, since the sales made by the assessee have been accepted by the Department and trading results declared were also accepted and provision of section 145(3) of the Act were not invoked. Once the sales have been accepted, the entire purchases could not be added and at the most profit embedded therein could be held as the income earned by assessee in garb of such purchases. In this way, the assessee has tried to suppress the profits. Under these circumstances, we are of the considered view that if the profit rate of 12.5% on such purchases of INR 50,05,052/- is applied that will ITA No.3233/Del/2024 Page | 5 meet the end of justice. Accordingly, we direct the AO to apply net profit of 12.5% of such alleged bogus purchases of INR 50,05,052/-. As a result, the assessee will get part relief. 7. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 03.02.2025. Sd/- Sd/- (VIKAS AWASTHY) JUDICIAL MEMBER *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "