KAMAL KUMAR AGARWAL,PUSHPANJALI ENCLAVE PITAMPURA vs. ITO, CIVIC CENTRE

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, DELHI

BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER

ITA No.137/DEL/2026 Assessment Year- 2019-20

Kamal Kumar Agarwal Vs. ITO, Ward 43(6), D-32 Pushpanjali Enclave Civic Centre, Pitampura Delhi-110034 New Delhi PAN No. AEGPA4315J (APPELLANT) (RESPONDENT)

Appellant by Sh. Subhash Gupta, CA Respondent by Sh. Rajesh Kumar Dhanesta, Sr. DR

Date of hearing: 28/07/2026 Date of Pronouncement: 18/09/2026 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC) Delhi [hereinafter referred to as (“Ld. NFAC)”] vide order dated 05-01-2026 arising out of the order of the Assessing Officer vide order dated 18-03- 2024 for A.Y. 2019-20. 2. The assessee has raised the following grounds in appeal:- 1. The Ld. CIT(A) as erred in partly allowing of addition made by Ld. AO by disallow of purchase of Rs.12.50 percentage of purchase value Addition made Rs.3,10,50,000/- by AO against purchase

made from Madan Lal Madho Prasad on the facts and circumstances of the case and has not appreciated the facts evidences submission made by the appellant in correct perspective which is against the principle of natural justice with taxpayer. 2. The appellant craves leave to add amend any said ground of appeal.

3,10,50,000.- on account of disallowance of bogus expenses. Aggrieved the order, the assessee preferred the appeal before the Ld. CIT(A), who vide his order dated 31-10-2025 partly allowed the appeal of the assessee. The Ld. CIT(A) has observed in his order as under: 6.5 In this case the AO has not disputed the sales or rejected the books. Therefore, to realise sales of Rs.14,06,46,095(SHB Agro Foods), purchases amounting to Rs.3,10,50,000/- could not have been wholly bogus. In this case purchasing from non- genuine suppliers, or from the grey market at lower rates and recording same at inflated price in books of account cannot be ruled out. It follows that GP rate from the purchase should be brought to tax over and above the business income offered. Accordingly, concealed gross profit element from the purchase totaling Rs. 3,10,50,000/- may be estimated at 12.5 % (Kimaya Impex (P) Ltd. Vs. CIT [2022]136 taxmann.com 117 (Mumbai -trib.) {24-01- 2022}. This may be added under the head business. Grounds 1 to 4 are partly allowed. 7. In the result appeal is partly allowed. 4. Being aggrieved the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 5. Ld. AR of the assessee submitted that assessee has maintained the proper stock register and books of account was audited by the chartered Accountant. The assessee has sold the goods purchased from Madan Lal Madho Prasad to the various

parties and payment was received in bank account of the assessee. The AO accepted the sales made by assessee. Without purchases no sale can be made. He further submitted that the 12.5 % gross profit on the alleged purchases was wrongly made. The Ld. Departmental Representative submitted that the because the AO has disallowed the bogus purchases on account of bogus expenses under business head then taxation should be made as per slab rates. In the written submission the Ld. DR submitted that Ld. CIT(A) has erred by restricting purchases to be taxed at 12.5% over and above the business income already offered. He relied the order of the AO. We have heard the parties and perused the material available on record. The Ld. AR submitted that this is the appeal of the assessee than the Department cannot demand to increase the profit rate. It is evident from the order of the Ld. CIT(A) that the AO has not disputed the sales or rejected the books of account of the assessee. The Ld. CIT(A) relying the decision of (Kimaya Impex (P) Ltd. Vs. CIT [2022]136 taxmann.com 117 (Mumbai -trib.) {24-01-2022} estimated the gross profit 12.5% under the head business. The Ld. AR submitted that the estimated rate is so high and the books of account not rejected by the AO, therefore, we deem fit and proper to restrict the gross profit element from 12.5 % to 5% under the head business on the total purchase of Rs.3,10,50,000/-. The Assessing Officer is directed to calculate

the income of the assessee as indicated above. The ground raised by the assessee is partly allowed accordingly. 5.In the result, the appeal of the assessee is partly allowed in very terms. Order pronounced in the open court on 18.09.2026. Sd/- Sd/-

(MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER (JUDICIAL MEMBER) SR BHATNAGGR Date: 18.09.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI