INCOME TAX OFFICER, WARD-4(1)(3), ALIGARH vs. MUSTAK AHAMAD, ALIGARH

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ITA 106/AGR/2026Status: DisposedITAT Agra24 April 20264 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 2% of the bogus purchases. It acknowledged that the assessee had declared sales against these purchases, which were not disturbed by the Assessing Officer, and that the assessee was in the business of scrap sales.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the addition for bogus purchases to 2% of the total purchase value. The Assessing Officer had disallowed the entire purchases of Rs. 26,48,066/- from M/s Viswanath Trading Co. as bogus.

What were the issues?

Whether the entire bogus purchases should be disallowed when sales against such purchases were not disturbed, and whether restricting the addition to the gross profit margin is appropriate.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH (SMC

Before: SHRI S. RIFAUR RAHMAN

For Respondent: DR (Physical hearing)
Hearing: 21.04.2026Pronounced: 24.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH (SMC), AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No. 106/Agr/2026 Assessment Year: 2020-21 Income Tax Officer Vs. Mustak Ahamad War-4(1)(3), Saria Gvali, Khaidoora, Aligarh. Aligarh-202001. PAN : AKCPA2627D (Appellant) (Respondent) Assessee by None Department by Sh. Harsh Siddharth Gautam, Sr. DR (Physical hearing) Date of hearing 21.04.2026 Date of pronouncement 24.04.2026 ORDER PER : S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The Revenue has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 23.12.2025 for the Assessment Year 2020-21.

2.

Brief facts of the case are that the assessee is carrying the business of trading of scrap of Zinc & Brass metal from last 8 years. During the year under consideration based on the information available with the department that assessee has made fictitious/ bogus purchases. As per information from DDIT, Investigation -2, Agra that assessee has made bogus purchase of Rs. 26,48,066/- from M/s Viswanath Trading Co. Based on the information

ITA No.106Agr/2026

available on record, the case of the assessee was reopened after issue of notice u/s 148B and passed the order u/s 148A(d) of the Act. After considering the submissions of the assessee, issued notice u/s 148 of the Act and were served upon on assessee. Subsequently, notice u/s 142(1) of the Act were served on the assessee. After considering the submissions of the assessee the Assessing Officer came to the conclusion that the assessee has made bogus purchases during the year under consideration and based on the detailed information received from Investigation Wing. After considering the various information available on record the Assessing Officer proceeded to disallow the purchases made by the assessee from M/s Viswanath Trading Co. u/s 37(1) of the Act and also disallowed 2% of the total purchase value of as commission to obtain the same u/s 69C of the Act. 3. Aggrieved with the above order, the assessee preferred an appeal before NFAC, Delhi and filed detailed submissions. After considering the detailed submission of the assessee Ld. CIT(Appeals) held that the entire purchases made by the assessee is bogus however he observed that assessee has also declared sales against the above said purchase which was not disturbed by the Assessing Officer, therefore this is not proper. Accordingly, he determined the GP @ 2% of above bogus purchases as undisclosed income. Further, he sustained the addition u/s 69C of the Act to the extent of estimation of GP u/s 37(1) of the Act. Accordingly, partly allowed the appeal preferred by the assessee.

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ITA No.106Agr/2026

4.

Aggrieved with the above order the Revenue is in appeal before us raising following grounds of appeal:- “1. That the CIT(A) has erred on facts and law in restricting the addition to 2% out of total addition of Rs. 26,48,066/ made by the Assessing Officer treating this amount as bogus purchase, by observing that the sales has not been disturbed. As per the order of the CIT(A), NFAC, it appears that of Rs. 26,48,066/ has been considered as transaction in the hands of the Assessee, Shri Mustak Ahamad, as addition of Rs. 52,961/at the rate of 2% out of total G.P. i.e. 26,48,066/has been confirmed by the CIT(A). The reliance placed by the CIT(A) on such inconsistent and self-serving documents, without proper verification or reconciliation, renders the findings erroneous and unsustainable in law. The order of the Ld. CIT(A) is, therefore, liable to be set aside and that of the assessing officer restored, as the assessee also intended the case to be set aside as mentioned in his grounds of appeal at serial no. 04. the course of appellate proceedings. 2. The CIT(A) has erred on facts and law in restricting the addition to 2% out of total addition of Rs. 26,48,066/, treating as bogus purchase made by the assessee from Shri Vishwanath Singh Prop. M/s Vishwanath Trading Co. As per the report of the Investigation wing prepared on the verification made by the bank officials after visiting the premises of Shri Vishwanath Singh, it was observed that no stock/goods or any staff were found at the time of verification at the premises of Shri Vishwanath Singh. 3. That the appellant craves leave to add or delete or alter or modify any one or more ground(s) of appeal during the appellate proceedings.” 5. At the time of hearing, non appeared on behalf of the assessee. We proceeded to hear the appeal with the assistance of Ld. DR. Ld. DR brought to our notice facts available on record and he heavily relied on the detailed findings of the Assessing Officer. 6. Considered the detailed submissions of the Ld. DR and the material placed on record. I observed that assessee has made bogus purchases from M/s Vishwanath Trading Co. and at the time I notice that Ld. CIT(Appeals) has observed that the assessee has also declares sales out of alleged bogus 3 | P a g e

ITA No.106Agr/2026

purchases and which was not disturbed by the Assessing Officer. It is also fact on record the assessee is regularly in the business of scrap sales and bought from various parties. Since, the Assessing Officer has established the fact that assessee has purchased from accommodation entries provider i.e. from Viswanath Singh as bogus purchases however, we notice that the Assessing Officer has disallowed the whole alleged purchases without disturbing the sale. Since the assessee is dealing with scrap sales, Ld. CIT(Appeals) has rightly disallowed 2 % of bogus purchases as gross profit. After considering the detailed findings of the Ld. CIT(Appeals), we do not see any reason to disturb the detailed findings of the Ld. CIT(Appeals). 7. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 24.04.2026. Sd/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 24.04.2026 *Santosh, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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