KAPIL SAHNI,DELHI vs. DCIT, NEW DELHI

PER SHRI M BALAGANESH, ACCOUNTANT MEMBER: The appeal in ITA No.6245/Del/2026 for AY 2018-19, arises out of the 1. order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 18.03.2026 against the order of assessment passed u/s 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 25.01.2024 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as ‘ld. AO’).

The only effective issue on merits to be decided in this appeal is as to 2. whether the ld NFAC was justified in confirming the addition made on account of alleged bogus purchases from M/s. National Traders in the sum of Rs. 14,39,810/- in the facts and circumstances of the instant case .

I have heard the rival submission and perused the materials available on 3. record. The assessee is engaged in the business of fabrics. The return of income for AY 2018-19 was filed by the assessee u/s 139(1) of the Act declaring total income of Rs 25,42,220/-. The books of account of the assessee were duly subjected to tax audit u/s 44AB of the Act . The case of the assessee was sought to be reopened based on the information flagged on the Insight Portal stating that assessee was having alleged accommodation entry in the form of alleged bogus purchases of Rs. 14,39,810/- from M/s. National Traders (proprietor Deepak Sharma) which is stated to be an alleged dummy concern of an alleged accommodation entry provider namely Shri Aditya Jain. The ld AO claimed that impugned purchase transaction was bogus by purely relying on the statement of Shri Aditya Jain recorded during the course of third party search relevant to M/s. KK Spun India Ltd. The ld JAO failed to furnish any relied upon material including copy of statement of Shri Aditya Jain or any other person, despite the fact that the said documents were forming the very foundation of the impugned initiation of enquiry proceeding.

The assessee in support of proving the genuineness of purchases made 4. from M/s. National Traders in the sum of Rs. 14,39,810/- submitted the following documents before the ld AO:-

“a. ITR-V for AY 2018-19 filed in response to notice dated 06.04.2022 issued u/s 148 of the act. (Refer Page No. 89 of Paper Book.) b. Tax Audit Report for FY 2017-18 relevant to AY 2018-19 alongwith Audited Financial Statements. (Refer Page No. 90-111 of Paper Book.) c. Invoices issued by M/s. National Traders in respect of impugned purchases made during FY 2017-18 relevant to AY 2018-19, (Refer Page No. 112-116 of Paper Book.)

d. Third-Party confirmed copy of account indicating impugned purchases made from M/s. National Traders during FY 2017-18. (Refer Page No. 117 of Paper Book.) e. Relevant extracts of Bank Statement of appellant indicating payment made to M/s. National Traders in respect of impugned purchases made during FY 2017-18 relevant to AY 2018-19. (Refer Page No. 118-123 of Paper Book.) f. Extract of GSTR-2A indicating ITC available on GST Portal against impugned purchases made from M/s. National Traders (Prop. Deepak Sharma bearing PAN: FHEPS0212N)) during FY 2017-18 relevant to AY 2018-19. (Refer Page No. 124 of Paper Book.) g. Extract of Stock Register maintained for FY 2017-18 indicating impugned purchases made from M/s. National Traders were duly recorded therein and were subsequently sold to third parties in normal course of business. (Refer Page No. 125-127 of Paper Book.) h. Sale Invoices and delivery challans in respect of subsequent sales executed post recording of impugned purchases during FY 2017-18. (Refer Page No. 128-161 of Paper Book. The ld AO completely ignored the aforesaid documentary evidences and 5. even without resorting to make any enquiry with regard to the aforesaid documents proceeded to disallow the entire purchases of Rs. 14,39,810/- made from National Traders by the assessee by merely relying on the information available on the insight portal. This action of the ld AO was upheld by the ld NFAC.

We find that assessee had produced all the relevant documentary 6. evidences in support of proving the genuineness of purchases. These evidences were not even sought to be cross verified by the revenue. The purchase transaction and payments made thereon are duly reflected already in the books of accounts of the assessee. The books of the assessee were not rejected by the revenue. Hence, the action of the revenue is disbelieving the purchases cannot be sustained in these facts and circumstances. The Ground Nos. 3 to 5 raised by the assessee are allowed.

Since the relief is granted to the assessee on merits, the adjudication of 7. legal grounds raised by the assessee become academic in nature and they are left open.

In the result, the appeal of the assessee is partly allowed. 8.

Order pronounced in the open court on 31-Aug-2026.

-Sd/- M BALAGANESH ACCOUNTANT MEMBER Delhi Dated: 31/08/2026 AK Keot Copy to: KAPIL SAHNI, PP-7, MAURYA ENCLAVE, PITAMPURA, 1 NEW DELHI-110034, DELHI DCIT, 2 CIVIC CENTRE, MINTO ROAD, NEW DELHI-110002, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE