INCOME TAX OFFICER, GHAZIABAD vs. SHANKAR METAL & ALLOYS, GHAZIABAD

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ITA 6036/DEL/2025Status: DisposedITAT Delhi16 June 20267 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that a previous order for the same assessment year had already decided that only 5% of the bogus purchases should be added as profit. Therefore, the current appeal by the Revenue and the cross-objection by the assessee were rendered infructuous.

What were the facts?

The Assessing Officer treated purchases amounting to Rs. 1,64,89,889 as unexplained expenditure under Section 69C. The CIT(A) considered these purchases as bogus but allowed only a 10% profit margin as income. The Revenue appealed against this partial disallowance.

What were the issues?

Whether the entire amount of bogus purchases should be added as income, or only the profit embedded therein, especially when a prior ITAT order has already set a precedent for the same assessment year.

Which sections of the Income-tax Act were involved?

Section 69C,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: SH. SUDHIR KUMAR & SH. NAVEEN CHANDRA

For Appellant: Shri Amit Walia, C.A
For Respondent: Shri Sangeet Bansal, Sr. D.R
Hearing: 04.06.2026Pronounced: 16.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 6036/Del/2025 (Assessment Year : 2019) Income Tax Officer Vs. Shankar Metal & Alloys CGO-2, Kamla, Nehru Nagar A-O/251, Industrial Area Ghaziabad – 201 002 South Side of GT Road, Amrit Uttar Pradesh Steel Compound, Ghaziabad – 201 001 Uttar Pradesh PAN No. ABPFS 6108 M (APPELLANT) (RESPONDENT) And CO No. 132/Del/2026 (Arising out of ITA No.6036/Del/2025) (Assessment Year : 2019) Shankar Metal & Alloys Vs. Income Tax Officer A-O/251, Industrial Area CGO-2, Kamla, Nehru Nagar South Side of GT Road, Amrit Ghaziabad – 201 002 Steel Compound, Uttar Pradesh Ghaziabad – 201 001 Uttar Pradesh PAN No. ABPFS 6108 M (APPELLANT) (RESPONDENT)

Assessee by Shri Amit Walia, C.A Revenue by Shri Sangeet Bansal, Sr. D.R. Date of hearing: 04.06.2026 Date of Pronouncement: 16.06.2026

ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

The above captioned appeal by the Revenue and Cross Objection by the assessee is preferred against order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi dated 22.07.2025 under section 250 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) arising from the Assessment order u/s 147 r.w.s 144B dated 15.03.2024 issued by the Assessment Unit for A.Y. 2019-20. 2. Since the underlying facts are common in the cross objections of the assessee and in appeal of the Revenue and pertain to same assessee, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

3.

Grounds of appeal filed by the Revenue are as under : 1. “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in estimating the addition by applying a percentage of disallowance on the bogus purchases, instead of confirming the full addition made by the Assessing Officer under section 69C of the Income Tax Act, 1961, despite the assessee's failure to substantiate the genuineness of such purchases and the identity and existence of the suppliers? 2) Whether on the facts, circumstances and in law, Ld.CIT(A) is justified in partly allowing the appeal of the assessee by ignoring the fact that the concern of Shri Daya Shankar from whom the purchases have been shown is providing bogus bills without actual delivery of goods and exists only on paper. Mere book entries or payment through banking channels does not prove the genuineness of the transaction under Section 69C. 3. That the Ld. CIT(A) has erred in law and on facts to consider that once the transaction is held to be non-genuine or bogus, the provisions of section 69C squarely

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ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys apply and the entire expenditure is liable to be taxed as unexplained expenditure, irrespective of entries in books or mode of payment. 4. That the decision of Ld CIT(A) is contrary to the decisions of CIT v. La Medica [2001] 117 Taxman 628/250 ITR 575 (Hon'ble Delhi High Court) and Kaveri Rice Mills v. CIT [2006] 157 Taxman 376 (Hon'ble Allahabad High Court) and the following recent decisions of Hon'ble Bombay High Court: 4.1. In the case of PCIT -5 vs Kanak Impex (India) Ltd in order dated 03.03.2025, it has been laid down that addition of entire amount of bogus purchases in hands of assessee was justified due to failure of assessee to prove said purchases in [2025] 172 in Taxmann.com 283 (Bombay). 4.2. In the case of PCIT vs Drisha Impex (P) Ltd in order dated 07.04.2025, it has been laid down that where assessee failed to prove genuineness of purchases, Assessing Officer was justified in making additions to income of assessee on account of disallowance of peak purchases made from said parties in [2025] 173 in Taxmann.com 571 (Bombay). It is also noteworthy that SLP to this order has also been dismissed/rejected by Apex Court as reported in [2025] 177 taxmann.com 808(SC). 5. That without the observation of Ld CIT(A) that disclosed sales would not have been possible impugned purchases is contrary to the observation of Hon'ble Bombay High that Court in the case law of Kanak Impex (India) Ltd (supra) wherein it is clearly held this sort of presumption would render provisions of section 69C as redundant. 6. That otherwise too, there cannot be any correlation of purchases and sales in this case as it is explicitly observed by Tax Auditors in this case that stock register not produced before them. Moreover, in Tax Audit Report, quantitative details of principal goods traded have been shown as 'Nil'. 7. That the appellant craves leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

4.

Brief facts of the case are that the assessee is a firm engaged in the business of trading of non-ferrous metal scrap copper, brass and manufacturing of aluminum Ingots. Return of Income was filed for the A.Y. 2019-20 declaring total income at Rs. 1,04,950. Information was available with the AO that the assessee had made bogus purchases from Sh. Daya Shankar, Prop. M/s JMD Trading House, amounting to Rs. 1,64,89,889 during the previous year. Based on this, the AO issued

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ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys notice u/s 148 on 31/03/2023 after obtaining approval of the competent authority. In response to the notice, the assesssee filed Return of Income on 27/04/2023 declaring total income at Rs. 1,04,950. As the assessee failed to prove genuineness of the above transaction with Sh. Daya Shankar, Prop. M/s JMD Trading House, amounting to Rs. 1,64,89,889/-, the AO completed the assessment u/s 144/147 by treating Rs. 1,64,89,889 as unexplained expenditure u/s 69C of the Income Tax Act 1961. 5. Aggrieved, assessee was in appeal before the CIT(A). The learned CIT(A) found that the assessee had a total purchase of Rs. 3,52,34,012, wherein purchases from concerns of Daya Shankar amounted to Rs. 2,57,70,880. The CIT(A) considered the total purchase from Daya Shankar amounting to Rs. 2,57,70,880 as bogus, but adopted a profit of 10% embedded in the said bogus purchase, as business income of the assessee. Aggrieved the Revenue filed this appeal before us for restoring the addition of total amount of bogus purchase under section 69C of the Act. Simultaneously, the assessee filed an appeal before ITAT in ITA 7510/Del/2025 against the estimation of GP @10%. The assessee also filed a cross objection in CO 132/Del/2026 against Revenue appeal in ITA 6036/Del/2026.

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ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys 6. At the outset, Learned AR appraised the Bench that the Assessee’s appeal in ITA 7510/Del/2025 for A.Y. 2019-20 has been adjudicated vide order dated 29.04.2026. It is submitted that the Hon’ble Tribunal vide its order dated 29.04.2026, in the assessee’s appeal, accepted the enhancement of bogus purchase made by the CIT(A) but reduced the disallowance to G.P. of 5% on the bogus purchases. 7. We have heard the rival submissions and perused the material available on record. We find that the appeal of the assessee has been in substantive manner, decided by the ITAT vide its order dated 29.04.2026 that total bogus purchase is not to be added as income under 69C but only 5% of the profit embedded in the bogus purchase, is to be considered for addition. As the ITAT has already adjudicated the issue of bogus purchase and G.P. addition of 5% of the total bogus purchase, in the assessee’s case for AY 2019-20, we are of the considered view that the instant appeal no longer survives. In view of the same, the appeal of the Revenue is dismissed and CO of the assessee is also dismissed as being infructuous. 8. In the result, appeal filed by the Revenue in ITA No. 6036/DEL/2025 is dismissed. The CO of the Assessee in CO No.132/Del/2026 is also dismissed.

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ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys Order pronounced in the open court on 16.06.2026

Sd/- Sd/- (SUDHIR KUMAR) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 16.06.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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ITA No. 6036/DEL/2025 CO No.132/Del/2026 [A.Y 2019-20] ITO vs Shankar Metal & Alloys

1.

Date of dictation of Tribunal Order 05.06.2026 2. Date on which the typed draft Tribunal Order is placed 15.06.2026 before the Dictating Member. 3. Date on which typed draft order is placed before the other 16.06.2026 member (in the case of DB) 16.06.2026 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S. /P.S. 16.06.2026 5. Date on which the fair Order is placed before the dictating Member for sign 16.06.2026 6. Date on which the fair order is placed before the other Member for sign (in case of DB) 16.06.2026 7. Date on which the order comes back to PS/ Sr. PS for uploading on ITAT website. 16.06.2026 8. Date of uploading, if not, reason for not uploading. 16.06.2026 9. Date on which the file goes to the Bench Clerk 10. Date on which order goes for Xerox 11. Date on which order goes for endorsement 12. Date on which the file goes to the Superintendent/OS for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order. 14 Date on which the file goes to dispatch section for dispatch the Tribunal order. 15 Date of dispatch of order. 16 Date on which file goes to Record Room after dispatch the order

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