INCOME TAX OFFICER, DELHI vs. KARAN KUMAR AGARWAL, DELHI

P a g e | 1 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER

ITA No.4518/Del/2025 (Assessment Year: 2021-22)

Income Tax Officer Vs. Karan Kumar Agarwal C-515, 1st Floor, Avantika Room No. 1810, E-2 Block, SPM Civic Centre, Sector-1, Rohini, New Delhi – 110002 New Delhi – 110085 स्थायीलेखासं./जीआइआरसं./PAN/GIR No: APPPA0357Q Appellant .. Respondent Appellant by : Sh. Navneet Singal, CA Sh. Nitin Kumar, Adv. Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR

Date of Hearing 07.05.2026 Date of Pronouncement 15.07.2026

O R D E R PER ANUBHAV SHARMA, JM:

This appeal is preferred by the Revenue against the order dated 28.02.2025 of the Ld. National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/NFAC/S/250/2024-25/1073861483(1) arising

P a g e | 2 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) out of the assessment order dated 23.12.2022 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed Assessment Unit, Income Tax Department, for AY: 2021-22.

“4.3 Synopsis of the reply of the assessee to SCN and additional SCN (if any) : On submission assessee has explained the fact which is reproduce as below : “We submitted that the Address of M/s Akansha Traders Prop. Bhudev Singh as mentioned in the invoices is 25-A-1985-Old No.-460-B-1,Pandav Road, Vishwas Nagar, Delhi – 110032 & same address was also mentioned in his GST registration and Form 27D(TCS Collection Certificate). The address mentioned in the inspector visiting report attached by your goodself in Show cause notice is Village Askaripur, Chandpur, Bijnor. We are not aware about the address mentioned in Inspection Report by the Income tax Inspector. Your goodself we have dealt with M/s Akansha Traders Prop. Bhudev Singh on their billing address only. We are submitted further submission in this regards as under:- 1. On receipts of your show cause notice we have contacted with M/s Akansha Traders Prop. Bhudev Singh & collected further document

P a g e | 3 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) such as their bank statement in which our transaction are reflecting. The copy of bank statements of Akansha Traders as per Annexure – 1. We hereby again submitting ledger confirmation of our purchase, ledger in our books, our bank statement reflecting payments made to Akansha Traders and some invoices on sample basis as per Annexure – 2. 2. Further In thisregards, we hereby also submitting that M/s Akansha Traders Prop. Bhudev Singh is also having bank account with Bank of Baroda, Subhash Nagar New Delhi – 110027 branch. The Bank Account no. is 41550200000344 and IFSC Code is BARB0SUBDEL. As your goodself know that during the opening of the Bank account, the Bank officials also carrying all due diligence relating to existence of business and also required physical presence of the Proprietor in the branch for verification of the identity and signature of the proprietor of the firm. The bank officials also verify the original documents i.e. Aadhar Card, PAN Card and existence of the business. On the basis of the due diligence carried by the bank officials, hence the identity of suppliers can’t be questioned. 3. In this regards we hereby also submitting that M/s Akansha Traders Prop. Bhudev Singh are GST registered person and their GST No. is 07MFCPS6099Q1Z3. As your goodself know that the GST registration was provided after all due diligence relating to existence of business are carried out by the GST officials and even Aadhaar authentication and physical verification also carried out before issuing registration certificate, hence the identity of suppliers can’t be questioned. 4. We hereby also submitting Form 27D (TCS collection certificate) on purchase of goods. The copy of TCS certificate for the Quarter 3 and Quarter 4 of F.Y. 2020-21 are enclosed as Annexure – 3. Your Honour where TCS on purchase are collected by Akansha Traders it means the purchase are also justified automatically by the Income Tax website. In this regards we hereby also submitting that Akansha Traders Prop. Bhudev Singh are also having valid TAN i.e. DELB23063F. As your goodself know that the Income Tax Department was provided the TAN after all due diligence relating to proprietor of the firm. As the identity also verified by the Income Tax Department hence the identity of suppliers can’t be questioned. 5. On the abovesaid point no. 2, 3 and 4 where the identity of the Akansha Traders Prop. Bhudev Singh are verified by the GST department, Bank of Baroda officials and Income Tax Department. Your Honour we hereby submitting that all the three Institutions can’t be wrong at the same point. 6. Further we are enclosing the GSTR – 2A downloaded from GSTN portal in which Input tax credit and purchase amount from Akansha Traders whom we purchase made are reflected at S. No. 1466 to S. No. 1525. The Input Tax Credit of GST is reflected in GSTR2A only basis of

P a g e | 4 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) GST return filled by supplier, hence our transaction of purchases automatically confirmed through GSTN Portal. The Copy of GSTR – 2A are as per Annexure –4. In this regard the reliance is placed upon the decision of Hon’ble Apex Court of India in the case of CIT vs. Odeon Builders (P.) Ltd. reported at 266 Taxman 461 (SC), wherein the Hon’ble Court dismiss the appeal of the revenue. The head note of such judicial precedent is appended herein below for the purpose of reference:- “Where assessee had submitted purchase bills, transportation bills, confirmed copy of accounts and VAT Registration of sellers as also their Income-tax Return and payment was made through cheques, impugned purchases could not be disallowed” The reliance is also placed upon the following judicial precedents where the purchases have been held to be genuine on basis of the documents submitted by the assesse:- ITO vs Mr. Madhukar Yashwant Kutrekar Vijay Process, Surat vs Department Of Income Tax (ITAT Ahmedabad) Your Honour based on the abovesaid facts and documents we are fully disagreed with the proposed variation of Rs.3,92,79,968 in respect of purchases, as we are provided complete documents to justify the transactions. So, you are humbly requested to consider our reply and not to make any addition in this regard. It is further requested to kindly take the above on record and grant an opportunity of being heard through video conferencing before taking any view prejudicial to the assessee.” On perused of the above it is clear that the assessee mainly relied on the address of invoice, GST and Bank account address at 25A-1985-OLD No-460-B-1, Pandav Road, Vishws Nagar, Delhi-110032not at Village-Askarpur, Chandpur, Bijnor. As desired by the assessee video conference (VC) was given on 22.012.2022 at 03:38 p.m. On VC assessee did not furnish any further documents, relied only on address of submission dated 21.12.2022.”

made which however has been deleted by the ld. CIT(A) by following

relevant findings in para 6.1.3 to 6.2.9.

P a g e | 5 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) “6.1.3 During the assessment proceedings, the Assessing Officer (AO) noted that the appellant was asked to furnish party-wise purchase details along with supporting evidence to verify the genuineness of such purchases as claimed in their return. The appellant complied with the notice on 23.11.2022. The AO gathered party-wise purchase details from the GST data available in the Departmental database. Additionally, the AO issued notices under section 133(6) of the Income Tax Act to 23 parties for cross-verification of the authenticity of the purchases. In response, six parties confirmed their transactions with the appellant, while no replies were received from the remaining 17 parties. As no replies were received, physical verification was conducted. The verification report revealed that 11 parties were either untraceable at the given address, unavailable, or the address could not be located in the given area. In one case, the party denied having any transactions with the appellant. However, the AO gave the appellant another opportunity on 14.12.2022 through a letter to prove the authenticity and genuineness of the purchases from the 23 parties by furnishing cogent evidence. The appellant furnished their reply/submission on 17.12.2022.Further, the AO noticed that in one case involving Shri Bhudev Singh, PAN: MFCPS6099Q, with an amount of transaction of 3,92,79,968/-, the party claimed that they neither registered any firm in GST nor entered into any transaction with Karan Kumar Aggarwal. The party denied having any transactions with the appellant. Physical verification was made by Verification Inspector on 02.12.2022. Relevant part of the verification report is reproduced as under: “Shri Bhudev Singh claimed that he never entered into any transaction with Karan Kumar Agarwal. He drives RIKSHA and the same has been confirmed by village head Shri Suresh Singh and other villager” 6.1.4 Further, On the perusal of assessment order, it is seen that AO vide para no. 4.5 on page 9 to 11 of 12 has given reasoning for making the addition to the income of the appellant. Relevant part of the assessment order is reproduced as under: a) Notice u/s 142(1) was issued to the assessee on 01.10.2022 to file the details (mentioning Name, Address, PAN, e-mail Id etc.) of the purchaser on or before 17.10.2022. Apart from that several opportunities were given to the assessee to provide the required information, but assessee did not response before 22.11.2022. In this circumstances notice u/s 133(6) was issued to Shri Bhuvev Singh, PAN:MFCPS6099Q to the given e-mail and address as on PAN based data. The address (Village-Askarpur, Chandpur, Bijnor) which are in PAN of Shri Bhuvev Singh cannot denied by the assessee. b) As Shri Singh did not response, a physical enquiry was conducted by the Verification Unit to find out the reality. The Inspection report is reproduced below: As per inspection report (point No.4, 5 and 7) the person concern Shri Bhuvev Singh, PAN:MFCPS6099Q claimed that he never entered into any transaction with Karan Kumar Agarwal and neither registered any firm in GST and the same was affirmed by Village head Shri Suresh Singh.

P a g e | 6 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) In submission and VC the assessee only focused on the address not the statement of person concern. When the person is identified on the PAN bases data address and he himself denied any transaction, then the claim of assessee about of address is not sustain. c) Assessee also relied on the address given in GST registration. The same plea of the assessee is not at all considerable as the below facts come to the light from the GST data available from services.gst.gov.in which are placed below: On observation of the above it is clear that in the name of Bhudev Singh Trade name Akansha Traders was registered in GST bearing number of 07MFCPS6099Q1Z3 on 23.08.2020 and cancelled suo-moto on 10.09.2020. On submission dated 23.11.2022 (annexture -3) assessee produced ledger copy of purchase. On verification it is found that all the transaction with Shri Bhudev Singh proprietor of Akansha Traders was made on or after 20.12.2020 using such GST number which was not existed at that time. So the claimed of assessee of a cancelled GST number and billing of that number is nothing but a bogus transactions and claim of assessee denied. Onus is upon the assessee to prove the genuineness of transactions but he failed to furnish the same by cogent evidence.” 6.1.5 Upon thorough examination of the rival contentions and submission made by the appellant at the assessment stage as well as appellate stage, it is seen that appellant contended that his submission dated 20.12.2022 was not considered. On going through the records, it is seen that appellant filed a detailed submission before the AO well ahead of the passing of assessment order. AO has mentioned in the details of opportunities that he was in receipt submission dated 21.12.2022 and 22.12.2022 treating the same as full response. In view of the above, it is explicitly evident that AO has taken the said submission on record and perused but not found tenable. However, it is evidently found that AO omitted to give the reasoning to the reject the submissions of the appellant. 6.1.6 Further, appellant contended that verification report relied upon by the AO has been conducted at the wrong address i.e. Village-Askarpur, Chandpur, Bijnor. In rebuttal, AO has stated in assessment order that appellant only focused on the address not the statement of person concern. When the person is identified on the PAN bases data address and he himself denied any transaction, then the claim of appellant about of address is not sustaining. 6.1.7 The verification report sourced the address from the PAN database of the Income Tax Department. However, the address provided was incomplete and imprecise, referring only to the locality and village, i.e., Askarpur, Chandpur, Bijnor. Additionally, the identity of Shri Bhudev Singh was not confirmed by supporting documents or evidence such as ID or signature in the verification report. 6.1.8 Upon perusing the verification report, it was found that no supporting documents were attached as annexures. There is no mention of any primary document relied upon to arrive at the conclusions in the verification report. The Assessing Officer

P a g e | 7 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) (AO) heavily relied upon and discussed only the comments in the verification report, which were unaccompanied by supporting documents. 6.1.9 Furthermore, there is an address from which commercial activities are claimed to be conducted by the appellant, i.e., 25-A-1985-Old No.-460-B-1, Pandav Road, Vishwas Nagar, Delhi – 110032. Records indicate that no verification was done at this address, as the AO accepted the contents of these documents without proper verification. In this regard, appellant submitted the following documents related to the person: S. No. Documents details (B) Address mentioned in (A) Documents mentioned in column (B) (C) 1. Bills and vouchers along with E-way bill 25-A-1985 – Old No.- 460-B-1, issued by the person i.e. Shri Bhudev Pandav Road, Vishwas nagar, having address of same Delhi – 110032 2. Form 27D pertains to TCS wherein 25-A-1985 Old No. 460-B-1, details of person are mentioned along Pandav Road, Vishwas Nagar, with address Delhi – 110032 3. GSTIN having Address of Shri Bhudev 25-A- 1985- Old No.- 460-B-1, Pandav Road, Vishwas Nagar, Delhi – 110032 4. Bank account statement in Bank of 25-A- 1985 Old No. 460-B-1, Baroda wherein address of the person Pandav Road, Vishwas Nagar, i.e. Shri Bhudev is mentioned Delhi – 110032 5. Confirmation of the Accounts of i.e Shri 25-A- 1985 Old No. 460-B-1, Bhudev having address of the same and Pandav Road, Vishwas Nagar, signed by the Proprietor of the Akansha Delhi – 110032 Traders i.e. Sh. Bhudev (Snippet is attached below the table)

6.1.10 This address, 25-A- 1985-Old No.-460-B-1,,Pandav Road, Vishwas Nagar, Delhi – 110032, features in all the documents furnished and the same was brought to the knowledge of Assessing Officer during the Video Conference and through the written submission by the appellant, duly acknowledged by the Assessing Officer in para 4.3 on 9 of 12 of assessment order. This address clearly appears to be principle place of business/registered address for the supplier i.e. Sh. Bhudev Singh. No enquiries were conducted at the address where commercial activities claimed to have been taken place as the documents furnished. 6.1.11 Further, It is also observed that AO attached a screenshot of GST portal wherein details of the Shri Bhudev is mentioned. In this screenshot, address of Shri Bhudev claimed by appellant is mentioned. AO also mentioned on page 9 of 12 of the assessment order that appellant mainly relied on the address of invoice, GST and Bank account address at 25A-1985-OLD No-460-B-1, Pandav Road, Vishws Nagar, Delhi- 110032 not at Village-Askarpur, Chandpur, Bijnor. It explicitly elucidates that AO was in knowledge of the address claimed by the appellant before passing the order and the same did not take any step to verify claimed address and restricted himself to the verify

P a g e | 8 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) the address mentioned in PAN data base only. Screenshot of GST portal referred above is reproduced as under: Image-1 6.1.12 In light of the aforementioned, it becomes evident that all the documents tendered by the appellant and also relied upon by the Assessing Officer bear the identical address of the individual in question, to wit: 25-A-1985-Old No.-460-B-1, Pandav Road, Vishwas Nagar, Delhi– 110032, save for the verification report. It is an established precept of jurisprudence that mere a self serving report, unaccompanied by any documentary evidence, ought not to be employed as evidence against the appellant. In this particular matter, an array of documents was presented by the appellant, which are preserved by diverse establishments such as the GST Department, the Bank of Baroda (a scheduled bank), and the Income Tax Department itself. The Assessing Officer has also placed reliance upon the GST portal as a source of information, wherein the same address as asserted by the appellant is documented. However, the Assessing Officer neglected to consider the address delineated in the source of information upon which his reliance was founded. The Assessing Officer did not adduce any reasoning to counter the appellant's assertion that the verification had been conducted at an incorrect address. 6.1.13 It is also relevant to elucidate that in response to the show cause notice dated December 19, 2022, the appellant avowed that he had engaged in communication with M/s Akansha Traders, represented by Mr. Bhudev Singh, and procured additional documents such as their bank statement, which corroborates the transactions in question. Furthermore, he submitted the ledger confirmation of his purchase signed by supplier (Proprietor of Akansha traders), the ledger entries in his own accounting books, his bank statement reflecting payments made to Akansha Traders, and sundry invoices. This assertion unmistakably leads to the conclusion that Mr. Bhudev Singh is having business transactions with the appellant. He has also furnished the appellant bank account statement maintained with the Bank of Baroda, wherein the address of Mr. Bhudev Singh is duly recorded as follows: Image-2 6.1.14 Appellant further submitted that identity of the Akansha Traders Prop. Bhudev Singh can not be questioned as during the opening of the Bank account, the Bank officials also carrying all due diligence relating to existence of business and also required physical presence of the Proprietor in the branch for verification of the identity and signature of the proprietor of the firm. The bank officials also verify the original documents i.e. Aadhar Card, PAN Card and existence of the business. Appellant also submitted that M/s Akansha Traders Prop. Bhudev Singh are GST registered person and their GST No. is 07MFCPS6099Q1Z3. GST registration was provided after all due diligence relating to existence of business are carried out by the GST officials and even Aadhaar authentication and physical verification also carried out before issuing registration certificate. Appellant further submitted Form 27D (TCS collection certificate) for the Quarter 3 and Quarter 4 of F.Y. 2020-21on purchase of goods and stated that where TCS on purchase are collected by Akansha Traders it means the purchase are also justified automatically by the Income Tax website.

P a g e | 9 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) Appellant submitted that Akansha Traders Prop. Bhudev Singh are also having valid TAN i.e. DELB23063F and stated that the Income Tax Department was provided the TAN after all due diligence relating to proprietor of the firm. 6.1.15 Upon meticulous examination of the appellant's submission, it is seen that the verification report consists of a single page, wherein comments are provided regarding the inquiries conducted. This document lacks any annexures in the form of supporting materials or evidence such as identity proof, signatures, etc. The identity of the individual contacted and purported to be Bhudev Singh has not been ascertained within this report. Additionally, nothing has been brought on record to ascertain the identity of the persons contacted, as discussed in the verification report. 6.1.16 When juxtaposed with the documents furnished by the appellant, a clear factual matrix is presented. Contrary to the contents of the verification report, the appellant has furnished a plethora of documents in support of his claim, thereby substantiating the authenticity of the identity of Shri Bhudev and corroborating the address according to his records. Despite the appellant's repeated assertions through his submissions and the video conference held, the Assessing Officer confined himself to the comments in the verification report and did not duly address the appellant's contention. Moreover, the Assessing Officer did not provide any reasoning or evidence to refute the appellant's claim that the verification was conducted at an incorrect address. 6.1.17 The appellant has satisfactorily discharged his burden of proving the identity of his supplier by furnishing a multitude of documents pertaining to various organizations, including the Income Tax Department itself. Consequently, it is determined that there is merit in the appellant's contention regarding the verification made at an address unknown to him according to his records. Henceforth, the ground related to the verification conducted at the incorrect address is hereby resolved in favor of the appellant. 6.2 The appellant has astutely brought to light the discrepancies inherent in the verific ation report, as acknowledged by the Assessing Officer in the assessment order. In this matter, the verification report asserts that Shri Bhudev is not registered with the GST. However, the Assessing Officer, in paragraph 4.5(c), contends that Bhudev Singh, trading under the name Akansha Traders, was registered with the GST, bearing the number 07MFCPS6099Q1Z3, on the 23rd of August, 2020. These statements stand in stark contradiction to one another. In light of the aforementioned observations, it is my considered opinion that the veracity of the verification report, upon which the Assessing Officer has placed reliance, is questionable in its entirety. 6.2.1 Moreover, the Assessing Officer presented facts on record indicating that Bhudev Singh, trading under the name Akansha Traders, was registered with the GST bearing the number 07MFCPS6099Q1Z3 on the 23rd of August, 2020, which was subsequently cancelled suo motu on the 10th of September, 2020. In the submission dated the 23rd of November, 2022, the appellant produced a ledger copy of the purchase. Upon verification, it was discovered that all transactions with Shri Bhudev Singh, the proprietor of Akansha Traders, were conducted on or after the 20th of December, 2020, utilizing the said GST number, which no longer existed at that juncture.

P a g e | 10 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22)

6.2.2 The appellant deftly countered the observations of the Assessing Officer by asserting that M/s Akansha Traders, under the proprietorship of Shri Bhudev Singh, has been consistently filing their GST returns during the period of transactions conducted with the appellant. Furthermore, the address detailed in their GST registration corresponds precisely with that mentioned on their invoices. To fortify his claim with documentary evidence, the appellant submitted a screenshot from the Goods and Services Tax website, which is herein reproduced as follows: Image-3 6.2.3 Upon a scrupulous examination of the facts presented by the Assessing Officer and the counter-submissions of the appellant, it is undisputed fact that GST returns cannot be filed without an active GST registration number. Both screenshots produced by the Assessing Officer and the appellant are derived from the same source, namely the GST portal. Herein, the Assessing Officer confined himself to a limited inquiry, solely verifying the GST status, and failed to note that Mr. Bhudev commenced filing GST returns only from September 2020 which clearly establishes that GST number was active during the period of the transactions with Shri Bhudev Singh, the proprietor of Akansha Traders, were conducted by the appellant. Moreover, Assessing Officer did not bother to note the registered business address/principle place of business of the Sh. Bhudev Singh reflecting on the same page and highlighted in Image -3 attached above. 6.2.4 To ascertain the filing status of Shri Bhudev, an independent inquiry was conducted by the CIT(A) utilizing the open source available on the GST portal. It was discovered that Shri Bhudev commenced filing GST returns only from September 2020, and thereafter, he continued to file regular GST returns until the conclusion of the year under consideration. The pertinent screenshot, procured from the GST portal, is presented as follows: Image-4 6.2.5 Further, The Assessing Officer (AO) stated that the appellant's claim involving a cancelled GST number and the associated billing is nothing more than bogus transactions, thus denying the appellant's claim. The onus is on the appellant to prove the genuineness of these transactions, but he failed to provide cogent evidence to support them. However, it is seen from the assessment records that appellant furnished the documents mentioned in the Table-1 alongwith the exhaustive written submission on 21.12.2022. In respect the said submission, AO omitted to discuss the reasoning to reject the said submission. 6.2.6 Upon a thorough perusal of the submissions furnished by the appellant, both at the assessment stage and the current appellate stage, it is observed that the appellant has provided Invoices, E-way bills, corresponding payments made to Shri Bhudev through the Banking Channel, an audit report detailing the quantitative aspects of the principal items traded, ledger confirmations of account bearing the requisite stamp and signature of Sh. Bhudev Singh proprietor of M/s Akansha Traders, and finally, the Income Tax Return filed within the stipulated timeframe. The Assessing Officer did not

P a g e | 11 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) raise any dispute regarding the documents submitted by the appellant, which serve to substantiate the genuineness of the transactions. 6.2.7 In light of the aforementioned deliberations, The Assessing Officer (AO) relied on a verification report conducted at an incorrect address. The actual address for M/s Akansha Traders was at 25-A-1985-Old No.-460-B-1, Pandav Road, Vishwas Nagar, Delhi – 110032. However, the verification was done in Village-Askarpur, Chandpur, Bijnor. The AO failed to verify the Delhi address provided by the appellant, which was present in various documents such as invoices, GST registration, Form 27D filed as TCS return, and the bank account statement of Bhudev Singh’s account maintained in Bank of Baroda. It is found that the verification report, being a self-serving document without supporting evidence, should not be used against the appellant, especially when the appellant provided numerous documents supporting their claim. 6.2.8 Additionally, contradictions were highlighted in the AO's observations regarding the GST registration of Bhudev Singh. While the verification report stated that Bhudev Singh was not GST registered, the AO noted that Akansha Traders (Bhudev Singh) was GST registered on August 23, 2020. Even though the GST was cancelled on September 10, 2020, the appellant provided evidence that M/s Akansha Traders regularly filed GST returns during their transaction period. The CIT(A) independently verified from the GST portal, that Bhudev Singh started filing GST returns from September 2020 and continued throughout the year. It was noted that the AO did not provide reasoning to reject the appellant's submission of documents. The appellant provided invoices, E-way bills, payment records through banking channels, quantitative details, ledger confirmations duly signed and stamped by the supplier, and TCS Returns such as Form 27D, which the AO did not dispute. 6.2.9 Therefore, in light of the peculiar facts and circumstances of the case, and considering the totality of the situation, it is clearly discernible that the contentions made by the appellant in grounds no. 1 to 3 have merit. Hence, the grounds are allowed in favor of the appellant.”

“1. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in not appreciating the fact that during the course of assessment proceedings, on verification it is found that all the transactions with Shri Bhudev Singh proprietor of Akansha Traders was made on or after 20.12.2020 using such GST number, which was not existed at that time. So, the claim of assessee of cancelled GST number and billing of that number is nothing but bogus transactions and claim of assessee was rightly denied. Onus is upon assessee to prove the genuineness of transactions, but he had failed to furnish the same by cogent evidence. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of' Rs.3.92.79.968/- made on account of bogus

P a g e | 12 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) purchases u/s 69C r.w.s. 115BBE of the Act without appreciating the fact that the assessee has failed to comply with the terms of notices issued by this office and never responded to the communication sent to the assessee in terms of e- proceedings. 3. The appellant craves, leave or reserve the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time during the hearing of appeal.”

findings and has filed written submissions the relevant part of which is

reproduced below:

“The Revenue respectfully submits that the order of the Ld. CIT(A) is not sustainable either on facts or in law. The relief has been granted by overlooking substantive evidence establishing that the transactions were non-genuine. The core issue in the present case is not procedural adequacy of verification but the inherent impossibility of the transactions claimed by the assessee. The use of a cancelled GST registration for recording purchases conclusively establishes that the invoices relied upon by the assessee could not have been valid commercial documents. Once it is demonstrated that the supplier's statutory registration had ceased to exist prior to the alleged transactions, the burden squarely lies upon the assessee to establish the genuineness of purchases through credible and independent evidence. The assessee has failed to discharge this burden. It is a settled legal principle that the onus to prove the genuineness of expenditure claimed in the books of account rests upon the assessee. Mere production of ledger entries or self-serving documentation does not establish the reality of transactions. Where the identity of the supplier is doubtful, the statutory registration is invalid, and the supplier denies the transaction, the claim of expenditure cannot be accepted. In the present case, the addition made by the Assessing Officer is based on objective and verifiable facts demonstrating that the purchases were accommodation entries and not genuine business transactions. The Ld. CIT(A) erred in substituting substantive evaluation of evidence with procedura considerations. Even assuming arguendo that certain aspects of verification could have. been more elaborately documented, such circumstances cannot convert inherently non-genuine transactions into genuine expenditure. The appellate authority is required tc examine whether the assessee has discharged the burden imposed by law. The material on record clearly demonstrates that the assessee failed to establish identity of supplier, genuineness of transaction, and actual receipt of goods. The Ld. CIT(A) has failed to consider that:

P a g e | 13 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) Ld. CIT(A) failed to consider, on the facts and in law, is that the defect in the assessee's claim was not merely procedural but went to the root of the genuineness of the transactions. The appellate order overlooks that the purchases were recorded by using a GST registration that had already been cancelled prior to the alleged transactions. Once it is an admitted factual position that the GST registration of Akansha Traders stood cancelled on 10.09.2020, the recording of purchases on or after 20.12.2020 by quoting the same registration renders the invoices legally non-existent and commercially implausible. The Ld. CIT(A) did not examine the legal consequence of transactions being supported by a non-existent statutory registration, which directly undermines the authenticity of the expenditure claimed. The Ld. CIT (A) further failed to appreciate that the alleged supplier, Shri Bhudev Singh, denied having conducted any transaction with the assessee, and such denial remained unrebutted by any independent evidence. The appellate authority focused on the manner of verification and the address discrepancy but did not address the substantive evidentiary value of the supplier's denial. The critical issue was not the completeness of the address but the absence of any credible proof of supply of goods, movement of stock, transportation evidence, or third-party confirmation. The failure of the assessee to establish identity of the supplier in operational terms, genuineness of the transaction, and actual receipt of goods was not adequately examined. The Ld. CIT(A) also did not consider that the assessee produced only ledger entries and self-serving documents, which by settled legal principle do not discharge the burden of proof imposed under section 69C. No inquiry was made into the absence of delivery challans, transport documents, stock registers, or payment evidence capable of demonstrating real commercial activity. The appellate order does not deal with the statutory burden placed upon the assessee to substantiate expenditure with cogent and verifiable material. Additionally, the Ld. CIT(A) overlooked that once primary facts indicate that the transaction itself is inherently unreliable, procedural observations regarding the form of verification cannot substitute for substantive proof of genuineness. The focus on alleged deficiencies in the verification report resulted in ignoring the cumulative evidentiary circumstances, namely the cancelled GST registration, the denial by the supplier, and the absence of corroborative documentation, all of which collectively establish that the purchases were not genuine. Thus, the Ld. CIT(A) failed to consider the decisive factual inconsistencies and the statutory burden of proof applicable to unexplained expenditure, and consequently granted relief without addressing the fundamental defects that formed the basis of addition made by the Assessing Officer.”

we find that assessing officer had questioned total purchase of

P a g e | 14 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) Rs.16,61,13,308/- and had issued notices to 23 parties and out of them it was only the case of one of the parties Bhudev Singh from which assesse had made purchases of Rs.3,92,79,968/- were doubted on the basis of the report of inspector dated 02.12.2022 which is reproduced on page No. 6 of the assessment order.

P a g e | 15 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) Assessee has brought on record the bills and vouchers along with e-way bills issued by Shri Bhudev Singh for the same address. Then Form 27D which pertains to TCS also mentions the same address and GSTIN has the same address of Delhi. Assessee has also provided bank account statement of Shri Bhudev Singh in Bank of Baroda wherein the same address were provided and then confirmation of the account on the same address were provided to the assessing officer yet the assessing officer has not made any effort to make any inquiry and allege on the basis of any evidence or circumstances, whatsoever, that the identity of the person in regard to which inspector report was given is correct and these evidences of assessee were not reliable.

P a g e | 16 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) purchases, signed by supplier yet assessing officer has not alleged the same to be fictitious or fabricated but still disregarded them.

P a g e | 17 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) 15. Ld. CIT(A) makes a very relevant observation in this regard in para

6.24, that individual inquiry was also conducted by CIT(A) which establish the credibility of assertion of assesse. As for completeness relevant finding of ld. CIT(A) in para 6.23 & 6.24 are reproduced below:

6.2.3 Upon a scrupulous examination of the facts presented by the Assessing Officer and the counter-submissions of the appellant, it is undisputed fact that GST returns cannot be filed without an active GST registration number. Both screenshots produced by the Assessing Officer and the appellant are derived from the same source, namely the GST portal. Herein, the Assessing Officer confined himself to a limited inquiry, solely verifying the GST status, and failed to note that Mr. Bhudev commenced filing GST returns only from September 2020 which clearly establishes that GST number was active during the period of the transactions with Shri Bhudev Singh, the proprietor of Akansha Traders, were conducted by the appellant. Moreover, Assessing Officer did not bother to note the registered business address/principle place of business of the Sh. Bhudev Singh reflecting on the same page and highlighted in Image -3 attached above. 6.2.4 To ascertain the filing status of Shri Bhudev, an independent inquiry was conducted by the CIT(A) utilizing the open source available on the GST portal. It was discovered that Shri Bhudev commenced filing GST returns only from September 2020, and thereafter, he continued to file regular GST returns until the conclusion of the year under consideration.”

genuineness of transaction on the basis of invoices, e-way bills, payment record through banking channel, quantitative details, ledger confirmations and TCS returns such as Form 27D which have not been rebutted for their

genuineness by any allegation or counter evidences by Assessing Officer then merely on the basis of doubting the identity of the supplier, on the basis

of inspectors report was not justified and ld. CIT(A) has made no error of

P a g e | 18 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) fact or law in allowing the grounds of the assesse whereby assesse had challenged the additions u/s 69C of the Act.

Order pronounced in the open court on 15.07.2026

Sd/- Sd/- (M Balaganesh) (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 15.07.2026 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

P a g e | 19 ITA No.4518/Del/2025 Karan Kumar Agarwal (AY; 2021-22) ASSISTANT REGISTRAR

ITAT NEW DELHI