TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED,HARYANA vs. DCIT/ACIT CENTRAL, KARNAL

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ITA 1706/DEL/2026Status: DisposedITAT Delhi07 August 2026AY 2013-147 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition under Section 68 was unwarranted as the Assessing Officer did not conduct independent inquiries into the affairs of the buyer. The Tribunal noted that the assessee had provided substantial evidence to support the genuineness of the transactions.

What were the facts?

The Assessing Officer treated sales made by the assessee to M/s Indore Agri Traders as accommodation entries, adding the amount under Section 68. The assessee argued that the sales were genuine, constituted a negligible percentage of turnover, and all supporting documents were provided.

What were the issues?

Whether sales treated as accommodation entries can be added under Section 68 without independent inquiry by the revenue. Whether the onus is on the revenue to prove the lack of genuineness of transactions when the assessee provides supporting evidence.

Which sections of the Income-tax Act were involved?

Section 68,Section 131,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, ‘A’ NEW DELHI

Before: SHRI ANUBHAV SHARMA

Pronounced: 07.08.2026

आदेश / ORDER PER AMITABH SHUKLA, AM These three appeals filed by the same assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Appeals)-3, Gurgaon, all dated 19.12.2025 arising out of separate assessment orders dated 24.12.2019, 26.12.2019 and 28.09.2021, respectively, passed under section u/s 147 r.w.s. 143(3) and 147 r.w.s. 144B of the Act for the Assessment Years 2012-13, 2013-

ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED 14 and 2014-15, respectively. The word ‘Act’ herein this order would mean Income Tax Act, 1961. 2. All the above three appeals of the appellant are containing common issues and facts and hence for the purposes of convenience were heard together and are being adjudicated by this common order. Accordingly, we are taking AY 2012- 13 as lead year. The decision taken in ITA No.1705/Del/2026 for AY 2012-13 shall apply mutatis mutandis to all the appeals. 3. The main issue raised by the assessee is regarding the addition made by ld. Assessing Officer u/s 68 by treating the sales made to M/s Indore Agri traders as being a part of accommodation entries. Brief factual matrix of the case is that information was received by the Assessing Officer from the Investigation Wing that the assessee has obtained accommodation entry from one Indore Impex controlled by one Shri Ajay Maheshwari an alleged accommodation entry provider. The ld. Assessing Officer noted that the assessee had shown to have made sales of Rs.19,40,379/- to one M/s Indore Agri traders, however, payment was received from Indore Impex. Considering the overall background of the case, the ld. Assessing Officer proceeded to treat the impugned transaction as one concerning indulgence in accommodation entry and added the same u/s 68 of the Act. The ld. CIT(A) concurred with the findings of the ld. Assessing Officer and confirmed the addition. The assessee is in appeal assailing the order of ld. CIT(A). 4. We have heard rival submissions in the light of material placed on record. The ld. Counsel for the assessee has argued that the transaction with said Indore

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ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED Agri Traders is a miniscule per centage of its total turnover and does not even constitute even 1% of its total turnover. Attention was invited the following tabular information of AY 2012-13 to 2014-15

5.

The ld. Counsel vehemently argued that considering the negligible amount of sales with Indore Agri Traders (hereinafter referred to ‘IAT’), there cannot be a case of procuring any accommodation entry. The ld. Counsel for the assessee submitted that it has made sales to IAT though admittedly payment was received from Indore Traders (hereinafter referred to ‘IT’). It was argued that the same was on account of adjustment between the two party and that the assessee has not received any other payment qua sales made to IAT. Mere receipt of payment from a third party could not be construed as ground to treat sales as bogus. 6. The ld. Counsel submitted that it has provided all the evidences to establish genuineness of the sales with IAT, inter alia, included ledger accounts of IAT, details of payment made through RTGS- banking channels, sales invoices, GR and transport bills, stock accounts, etc. It was further argued that the ld. Assessing Officer has not pointed any defects in the books of accounts and accepted the book results and therefore the addition is unwarranted. In support of its submissions, the ld. AR for the assessee has placed on record voluminous paper book for AYs

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ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED 2012-13 to 2014-15. Reliance in this regard was placed upon a catena of judgments including of this Tribunal in the case of Bharat Bhushan Gandhi at 2024 (5) TMI 1073 (ITAT Delhi). The ld. Counsel vehemently argued that the addition has been made without holding any enquiries into the affairs of IAT u/s 131 or section 133(6) of the Act. It was argued that the onus was upon the Revenue to have conducted meaningful enquiries before drawing adverse inferences. Reliance was placed on the judgment of the Hon'ble Delhi High Court in CIT v. Fair Finvest Ltd. (357 ITR 146), wherein it was held that in the absence of any independent enquiry or finding that the evidences furnished by the assessee are unreliable, no addition can be sustained under section 68 of the Act. The Hon'ble High Court was stated to have observed as under: 6. This Court has considered the submissions of the parties. In this case the discussion by the CIT(Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the Directors, Form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the assessing officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahesh Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the assessing officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68.

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ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED …… 8. The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the assessing officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators, such a link was shown to be present in the case of Nova Promoters & Finlease (P) Ltd. (supra) relied upon by the revenue. We are therefore not to be understood to convey that in all cases of share capital added under section 68, the ratio of Lovely Exports (supra) is attracted, irrespective of the facts, evidence and material." 7. The ld. Counsel further submitted that addition u/s 68 on account of unexplained sales would tantamount to double addition since the sales were already included in the sales turnover and therefore could not have been doubly added. The ld. Counsel further argued that the entire addition based upon pre- conceived notion and suspicion. It was submitted that it is a settled principle of law that suspicion or doubts, howsoever may be strong cannot take place the character of any evidence. Reliance was placed upon Hon’ble Apex Court decisions in the case of Umacharan Shaw and Brothers Versus Commissioner of Income-Tax, West Bengal 37 ITR 271, Sreelekha Banerjee Versus Commissioner of Income-tax, 49 ITR 112 and of Lalchand Bhagat Ambica Ram Versus Commissioner of Income-Tax, Bihar and Orissa 37 ITR 288. 8. The ld. DR vehemently argued in favour of the lower authorities. It was argued that the assessee had transacted with a party known for providing

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ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED accommodation entries. It was insisted that the sales were bogus as no payments were received from IAT. 9. We have noted that the sales made by appellant assessee to IAT are duly established by the availability of sales invoices, transport, extracts of bank accounts, etc. The Revenue has not pointed out any defect in the impugned sales so as to support its case of the same being bogus. We have further noted that the Revenue has accepted book results and no rejection of books of accounts done u/s 145 of the Act. The only grudge of the Revenue is that the payment has been received from IA as against IAT. It is also a fact of the matter that the Revenue has not done any independent enquiry with IA and/or IAT before drawing any adverse conclusions. The entire addition thus delves upon a hypothesis built on conjectures, suspicion and surmises and therefore cannot be sustained. We are of the considered view that in view of the failure of the revenue to support its case with any meaningful enquiries and demonstrative evidence, the impugned addition of Rs.19,40,379/- u/s 68 on account of bogus sales cannot be sustained. In the interest of justice, we therefore set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned addition of Rs.19,40,379/-. All the grounds of appeal raised by the assessee qua merits of the addition are allowed. 10. The ld. Counsel for the assessee submitted that it does not wish to press the legal grounds of appeal. Accordingly, the same are dismissed as not pressed.

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ITA 1705/DEL/2026 TIKU RAM GUM AND CHEMICLA PRIVATE LIMITED

11.

In the result, the appeal of the assessee in ITA No.1705/Del/2026 for AY 2012-13 is partly allowed. 12. As the facts for AY 2013-14 and 2014-15 are identical, the decision taken in ITA No.1705/Del/2026 for AY 2012-13 shall apply mutatis mutandis in ITA Nos.1706 and 1707/Del/2026 as well. 13. Finally, all these three appeals of the assessee are party allowed. Order pronounced in the open court on 07th August, 2026.

Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07.08.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi,

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