KRISHAN MODI,RAJASTHAN vs. ACIT, CENTRAL CIRCLE-3, DELHI

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ITA 7402/DEL/2025Status: DisposedITAT Delhi24 June 2026AY 2023-244 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no error in the CIT(A)'s order, which confirmed the application of Section 145(3) but reduced the estimated gross profit rate. The Tribunal noted the assessee's lack of seriousness in pursuing the appeal and failure to controvert the allegations.

What were the facts?

A search and seizure action revealed that the assessee's proprietorship firm was used by other companies to route transactions and reduce their tax liability. The Assessing Officer (AO) invoked Section 145(3) and estimated a higher gross profit rate, making a significant addition to the assessee's income.

What were the issues?

Whether the AO was justified in invoking Section 145(3) and estimating the gross profit rate based on evidence of the assessee's firm being used as a conduit for tax evasion by other entities.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 132(4),Section 250,Section 143(3),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “E” BENCHES, NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

आयकर अपील�य अ�धकरण, �द�ल� पीठ�, नई �द�ल� INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCHES, NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA 7402/DEL/2025 िनधा�रण वष�/Assessment Year: 2023-24) KRISHAN MODI ACIT, CENTRAL CIRCLE-3 GOUSHALLA ROAD, MAIN ACIT, CENTRAL CIRCLE-3 MARKET, CHIRAWA, JHUJHUNU, DELHI-, DELHI CHIRAWA H.O 333026,, Vs. JHUNJHUNU DISTRICT-333026, RAJASTHAN अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: APHPM1725Q

अपीलाथ� �ारा/Appellant represented by: None ��थ� �ारा/Respondent represented by: Sh.Raghubir Singh,Sr.DR

सुनवाई की तारीख / Date of conclusion of hearing: 24-Jun-2026 घोषणा की तारीख / Date of pronouncement: 24-Jun-2026 आदेश / ORDER PER MANISH AGARWAL, A.M.: The present appeal is filed by assessee against the order dated 17.09.2025 passed by Ld. Commissioner of Income Tax (A), Delhi-23 [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-23/10047/2022-23 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 24.03.2025 passed u/s 143(3) of the Act pertaining to Assessment Year 2023-24.

2.

Brief facts of the case are that the assessee is an individual and filed his return of income, declaring total income of INR 16,94,980/- which was processed u/s 143(1) of the Act. A search and seizure action was carried out in the case of Rajdhani Flour Mills Ltd. (“RFML”); M/s. Victoria Foods Pvt. Ltd.; 1

ITA 7402/DEL/2025 KRISHAN MODI Shreedayal Enterprises Pvt. Ltd. (“SEPL”), Satender Kumar Jain, Chetan Jain, Shobha Jain, Rakesh Kumar Jain, Udit Jain, Ayub Vazir Khan, Rakesh Arora, Shivir Jain and Others on 21.01.2023. During the course of search, it was found that proprietary firm of the assessee i.e. K.M. Enterprises was used by RFML & SEPL for routing the transactions of purchases and sales to reduce their tax liability. This fact was further admitted by the Directors of RFML & SEPL Shri Chetan Jain in his statements recorded u/s 132(4) during the course of search and further by the CFO of RFML, Shri Arvind Kumar Gupta. Besides this, statements of other concerned person of firms used by RFML & SEPL were also recorded where they all had admitted that their firms were used by these companies to reduce their tax liability. Accordingly, the AO invoked the provision section 145(3) of the Act and estimated the gross profit rate @ 2% and after reducing the G. P. rate declared @ 0.3% by the assessee, made the addition of INR 1,75,70,335/-.

3.

Aggrieved by the said order, the assessee is in appeal before ld. CIT(A) who in terms of the order dated 17.09.2025 though, has confirmed the application of provision of section 145(3) of the Act however, has reduce the G.P. rate estimated at 2% to 1% and accordingly confirmed the addition of INR 70,71,836/-.

4.

Aggrieved by the order of ld. CIT(A), the assessee is in appeal before the Tribunal by taking various Grounds of appeal as mentioned in the appeal memo.

5.

Before us, no one appeared on the behalf of the assessee despite of the service of notice through RPAD/email thus the appeal was adjudicated on the basis of material available on record and after hearing the ld. Sr. DR for the revenue.

ITA 7402/DEL/2025 KRISHAN MODI 6. After carefully considering the submission of ld. Sr. DR and observations made by ld. CIT(A), we observed that after filing the appeal, the assessee was not serious in pursuing the appeal. Moreover, neither before the ld. CIT(A) nor before the AO, assessee has been able to controvert the allegation made that his proprietorship firm was used as a conduit to reduce the tax liability of RFML & SEPL which facts has been admitted by their directors and employees during the course of search carried out in their cases u/s 132 of the Act.

7.

Under these peculiar circumstances of the case and looking to the entirety of the facts, we find no error in the order of ld. CIT(A) who has already allowed substantial relief to the assessee by reducing G.P. rate to 1% which is inclusive of the G.P. rate declared by the assessee. In view of above discussions, all the Grounds of appeal raised by the assessee are dismissed.

8.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on 24.06.2026.

Sd/- Sd/-

(MAHAVIR SINGH) (MANISH AGARWAL) ACCOUNTANT MEMBER VICE PRESIDENT Date- 31.08.2026 *Amit Kumar, Sr. P.S*

ITA 7402/DEL/2025 KRISHAN MODI

Copy to: KRISHAN MODI, GOUSHALLA ROAD, MAIN MARKET, CHIRAWA, 1 JHUJHUNU, CHIRAWA H.O 333026, JHUNJHUNU DISTRICT-333026, RAJASTHAN 2 ACIT, CENTRAL CIRCLE-3, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE TRUE COPY

ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., DELHI

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