SATISH KUMAR,PATIALA vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, CHANDIGARH, CHANDIGARH

आदेश / O R D E R MANOJ KUMAR AGGARWAL (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of an order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] dated 15.09.2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act

on 28.09.2021. Having heard rival submissions, the appeal is disposed-off as under. 2. The assessee being resident individual was running two proprietorship concerns viz. Shree Radhey Traders and Shree Ganesh Enterprises. The business premises of the assessee were subjected to survey proceedings u/s 133A on 07-09-2018 by the investigation wing in connection with search & seizure operation u/s 132 conducted by the department on M/s S.P. Singla Group on 09-08-2018. 3. The main issue was addition on account of unaccounted commission income. During survey, it transpired that Shree Radhey Traders made purchases from Shri Ganesh Enterprises who, in turn, made purchases from Shree Balaji Traders (Prop. Shri Vikram Singh). During survey, statement of Shri Balvir Singh (Accountant of Shree Radhey Traders) was recorded wherein he was confronted with genuineness of purchases made from Shree Balaji Traders. It was stated by him that mere exchange of bills took place between the above concern and no actual material was supplied against the said bill. Shri Satish Kumar (assessee), in recorded statement, failed to provide the requisite details. He was also confronted with the fact that the net profit as declared by the assessee was only 1.5% of total sales made by him which was much lower when compared with business of same nature. A commission u/s 131(1)(d) was issued to Shri Vikram Singh prop. Shree Balaji Traders who did not have any designated office or shop. Further, his house was located in a very poor locality of a village which was not commensurate with the profile of the

businessman declaring turnover worth several Crores. In the recorded statement, he stated that majority of sales were done to two proprietorship concerns of the assessee and also to another entity viz. M/s Mahadev Stone Crusher Co. He did not maintain transportation bills and also failed to give details of his suppliers. He also failed to produce copy of account of the three concerns and merely stated that the copy of accounts was lying with his CA in Rajasthan. All the above findings would indicate that the two entities of the assessee were mere book entities which were merely into providing bills without any actual supply of material. 4. On these facts, Ld. AO concluded that the two concerns of the assessee were bogus and issuing bills and vouchers to other entities just to earn commission. The assessee declared sales of Rs.15.85 Crores on which Ld. AO estimated commission of 2.5%. Similar estimation was applied for purchases of Rs.14.96 Crores. The said working resulted into an addition of Rs.77.03 Lacs in the hands of the assessee. The Ld. CIT(A) confirmed the assessment against which the assessee is in further appeal before us. 5. The Ld. AR referred to the order of Tribunal in assessee’s own case for AYs 2014-15 to 2018-19, ITA Nos.1446/Chandi/2025 & ors. to support the case for this year. In earlier years, the Tribunal has deleted similar addition made by Ld. AO. However, the distinguishing feature as noted in that order was that in earlier years, no purchases were made by the assessee from Shree Balaji Traders. In this year, the assessee has made substantial purchases from Shree Balaji Traders. Therefore,

on the given facts, it was to be concluded that the transaction made by the assessee with Shree Balaji Traders are not fully substantiated. We also find that Ld. AO has accepted the returned business income of the assessee which is further enhanced by estimated commission of 2.5% on sales as well as on purchases. Once the business income is accepted, such a working could not be accepted. The sales and purchase break-up, as placed on record, would show that the assessee has made purchases of Rs.618.30 Lacs in Shri Ganesh Enterprises which include purchases from Shree Balaji Traders for Rs.550.20 Lacs. Similarly, the purchases made in Shree Radhey Traders are Rs.877.97 Lacs which include purchases made from Shree Radhey Traders for Rs.523.22 Lacs. The other purchase transactions are not in dispute. Further, the substantial sales by two concerns of the assessee is to M/s S.P. Singla Group of concerns in whose case the purchases made from these two concerns has been accepted to be genuine by Tribunal in the case of M/s SPS Construction Pvt. Ltd. (formerly known as S.P. Singla Construction Pvt. Ltd.), ITA Nos.1193 to 1197/Chandi/2025 order dated 21.04.2026. Once sales has been accepted in the hands of assessee’s customers and purchases made by assessee’s two concerns (except for purchases made from Shree Balaji Traders) are not in doubt, the only question would be to estimated additional profit margin on doubtful purchases as made by assessee’s two concerns from M/s Shree Balaji Traders. Considering the facts of the case, we direct Ld. AO to estimate additional profit margin of 0.5% on purchases made by the assessee’s two concerns from Shree Balaji Traders. In other words, the impugned

addition stand restricted to the extent of 0.5% on purchases of Rs.550.20 Lacs & Rs.523.22 Lacs as made from Shree Balaji Traders. The Ld. AO is directed to re-compute the income of the assessee. No other ground has been urged in the appeal. 6. The appeal stand partly allowed. Order pronounced on 01st September, 2026

-Sd- -Sd- (RAJESH DAMODARLAL SHARMA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 01-09-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR – 9A CHANDIGARH