SUNITA TAYAL,PANIPAT vs. ITO WARD 1, PANIPAT

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ITA 4506/DEL/2026Status: DisposedITAT Delhi18 September 2026AY 2018-194 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the entire alleged bogus purchases cannot be added back when sales and closing stock have been accepted by the AO. The reasoning is that purchases are required for sales, and the possibility of procuring goods from the grey market and obtaining bogus bills to match purchases cannot be ruled out. Following the Hon'ble Bombay High Court's decision in PC/T vs. Mohd. Haji Adam & Co., the addition for bogus purchases is restricted to the Gross Profit (GP) rate declared by the assessee on genuine purchases. The assessee declared a GP rate of 6.76%, and the addition was restricted to 7% of the alleged bogus purchases of ₹39,35,137/-. Regarding the addition of ₹78,703/- under Section 69C for alleged commission, the Tribunal held that it was made on surmises and conjectures without corroborative material and directed its deletion. Ground No. 6 of the appeal was partly allowed.

What were the facts?

The assessee, Ms. Sunita Tayal, a proprietor of M/s M.K. Threads, engaged in trading yarn waste and yarns, is in appeal against the order of the CIT(A), NFAC, Delhi for Assessment Year 2018-19. The Assessing Officer (AO) reopened the assessment based on information that M/s Shree Banke Bihari Enterprises, from whom the assessee made purchases of ₹39,35,137/-, was providing bogus sales bills. Consequently, the AO made an addition of ₹39,35,137/- under Section 68 of the Income Tax Act, 1961, for alleged bogus purchases, and a further addition of ₹78,703/- under Section 69C for alleged commission paid. The assessee's appeal before the CIT(A) was unsuccessful, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the entire amount of alleged bogus purchases from M/s Shree Banke Bihari Enterprises can be added back to the assessee's income when the corresponding sales and closing stock were accepted by the Assessing Officer, turning on Section 68 of the Income Tax Act, 1961? Assessee's contention: The assessee argued that if sales and closing stock are accepted, the entire alleged bogus purchases cannot be added back, as purchases are necessary for sales. Reliance was placed on the Bombay High Court's decision in PC/T vs. Mohd. Haji Adam & Co. Revenue's contention: The revenue contended that the assessee procured bogus purchase bills from a tainted trader and failed to establish proof of delivery, thus the entire purchases were rightly added back by the AO, relying on the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 68,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI

Before: SHRI VIKAS AWASTHY

For Appellant: Shri J.B.Sharma, Advocate
For Respondent: Shri Manoj Kumar, Senior DR
Hearing: 23.06.2026Pronounced: 23.06.2026

2 ITA No.4506/Del/2026

3 ITA No.4506/Del/2026

4 ITA No.4506/Del/2026

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