SATGURU SAI RICE & FABRIC EXPORTS,DELHI vs. ASSESSMENT UNIT, ASSESSMENT UNIT

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ITA 7558/DEL/2026Status: DisposedITAT Delhi19 August 2026AY 2018-194 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged the possibility of cash turnover in such businesses and the divergent views on bogus purchases. It decided to disallow a lump sum of 5% of the alleged bogus purchases as a disallowance of gross profit.

What were the facts?

The assessee challenged the lower authorities' decision to treat purchases of Rs. 15,66,031/- from a specific vendor as bogus. The assessee is in the business of trading rice and fabrics, and their sales and receipts were not questioned.

What were the issues?

Whether purchases from a particular vendor can be treated as bogus. The appropriate disallowance in case of alleged bogus purchases when sales and receipts are not questioned.

Which sections of the Income-tax Act were involved?

Section 69C,Section 147,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

Hearing: 19.08.2026Pronounced: 19.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: “SMC” NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER

ITA No. 7558/Del/2026, A.Y. 2018-19 M/s. Satguru Sai Rice & Vs. Assessment Unit Fabric Exports Delhi Khasra No. 257, GT Karnal Road, Bakoli, Delhi- 110036 PAN: ACLFS9136Q (Appellant) (Respondent)

Assessee by Sh. Tapesh Jindal, CA Department by Sh. Manoj Kumar, Sr. DR Date of hearing 19.08.2026 Date of pronouncement 19.08.2026

ORDER This assessee’s appeal for assessment year 2018-19 arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2026-27/1088967001/1), dated 13.05.2026 involving proceedings under section 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Heard both the parties. Case file perused.

ITA No. 7558/Del/2026

3.

It emerges during the course of hearing that the assessee presses for his sole substantive ground on merits challenging both the learned lower authorities’ action treating his purchases of Rs. 15,66,031/- sourced from M/s. Ms Mahavir Parshad Suresh Kumar as bogus ones under section 69C of the Act; as upheld in the lower appellate discussion.

4.

Learned departmental representative vehemently argues that the lower authorities have rightly treated the impugned purchases as bogus one.

5.

I wish to make it clear that there is no dispute in principle that the assessee is engaged in the business of trading in rice and fabrics all along where possibility of cash turnover in such an unorganized activity could not be altogether ruled out. And that its corresponding receipts and sales therefrom have also not been questioned in both the lower proceedings. Various judicial precedents (2025) 173 taxmann.com 592 (Guj.) Ravjibhai Becharbhai Dhamelia vs. ACIT; (2024) 160 taxmann.com 110 (Bom) PCIT Vs. Hitesh Mody (HUF), (2024) 160 taxmann.com 93 (Del) PCIT Vs. Forum Sales (P) Ltd.; (2025) 172 taxmann.com 283 (Bom) PCIT Vs. Kanak Impex (India)

ITA No. 7558/Del/2026

Ltd; (2025) 178 taxmann.com 424 (Del. – Trib.) DCIT Vs. Kohinoor Foods Ltd.; and (2025) 177 taxmann.com 836 (Delhi-trib.) DCIT Vs. Tirupati Matsup (P.) Ltd. have decided the instant issue of bogus purchases with divergent views i.e. both accepting or partly allowing or rejecting the same in entirety; as the case may be.

6.

Faced with these peculiar facts, it is thus deemed appropriate in the larger interest of justice that a lumpsum GP disallowance @ 5% of the assessee’s alleged bogus sales/purchases amounting to Rs. 15,66,031/- in A.Y. 2018-19, would be just and proper with a rider that the same shall not be treated as a precedent. The assessee’s book entries to this effect are hereby rejected to the very extent. Necessary computation(s) shall follow as per law.

No other ground or argument has been pressed.

6.

This assessee’s appeal is partly allowed in above terms.

Order pronounced in the open court on 19/08/2026

Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Dated: 10/09/2026 Binita, Sr. PS Copy forwarded to: 3

ITA No. 7558/Del/2026

1.

Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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