KANTA DEVI JALAN LEGAL HEIR OF LATE SH. VED PRAKASH AGARWAL,DELHI vs. WARD 43(8), DELHI

ITA 4538/DEL/2025Status: DisposedITAT Delhi28 September 2026AY 2012-135 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal, respectfully following its co-ordinate bench's decision in the assessee's own case for AYs 2013-14 to 2016-17 (ITA Nos. 807 to 810/Del/2023), decided to restrict the Gross Profit (GP) rate. The co-ordinate bench had observed that while parties did not respond to notices under section 133(6) and the AO could not verify genuineness, the assessee had provided VAT registration and bank account details, proving identity and creditworthiness. The Tribunal noted that the AO had accepted sales against purchases and all transactions were through banking channels. However, the co-ordinate bench also emphasized that the onus to prove the genuineness of expenditure lies with the assessee, including the source of payments for purchases. Applying the GP rate of 2.88% on alleged bogus purchases was deemed excessive. Therefore, in the interest of justice, the GP rate was restricted to 1%, aligning with the average GP declared by the assessee (0.67% to 1.52%) during AYs 2013-14 to 2016-17. This decision was made with the rider that it would not be treated as a precedent. Necessary computations were to follow as per law. The grounds raised by the assessee were partly allowed.

What were the facts?

The assessee, Kanta Devi Jalan, Legal Heir of Late Ved Prakash Agarwal, is in appeal against the order dated 22.05.2025 of the CIT(A)-30, New Delhi. This order arose from an assessment order dated 25.11.2029 for Assessment Year 2012-13, passed under sections 143(3)/147 of the Income Tax Act, 1961. The original assessment was completed at Rs. 5,31,810/-. Information from the investigation wing indicated that Sh. Hitesh Jain admitted to providing accommodation entries through bogus bills. Incriminating documents seized during a search on Sh. Hitesh Jain's premises suggested the assessee received huge credit entries from dummy concerns controlled by him. The Assessing Officer (AO) re-opened the case and made an addition of Rs. 97,50,663/- as unexplained credit under section 68 and Rs. 2,92,520/- as unexplained commission expense under section 69C. The CIT(A) confirmed these additions, finding the transactions with M/s Raghuvir Singh, Devender Kumar, and M/s Gagan Enterprises to be accommodation entries.

What were the issues?

1. Whether the sworn statements recorded by the Dy. Director (Investigation) on the CRIU portal, without providing the assessee an opportunity to cross-examine the deponents, and in the absence of response to notices under section 133(6) of the Act, are sufficient to treat purchases/sales as bogus and make additions (Question of law and fact turning on Section 133(6) and principles of natural justice). 2. Whether the AO discharged his onus to conduct further inquiries to ascertain the genuineness of the purchases if he doubted them (Question of law and fact turning on Section 143(3) and Section 147). 3. Whether the AO failed to conduct inquiries to establish his suspicion that the purchases/sales were bogus, and if the documentary evidence provided by the assessee to prove genuineness was wrongly disregarded (Question of law and fact turning on Section 143(3) and Section 147). Assessee's Contentions: The assessee argued that the AO did not reject the books of account and accepted the purchases. The lower authorities failed to provide an opportunity for cross-examination. The assessee also relied on a co-ordinate bench's decision in its own case for AYs 2013-14 to 2016-17, which held that applying a GP of 2.88% on bogus purchases was excessive and reduced it to 1%. Revenue's Contentions: The Revenue relied on the findings of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 133(6),Section 143(3),Section 147,Section 68,Section 69C

AI-generated summary — verify with the full judgment below

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

Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL

For Appellant: Shri Mayank Mann, Adv, Shri Atil Jindal, Adv
For Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Hearing: 13/08/2026Pronounced: 28/09/2026

PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal is preferred by the assessee against the order dated 22.05.2025 of the Commissioner of Income Tax (Appeals) -30 New Delhi [hereinafter referred to as “Ld.CIT(A))”] arising the assessment order dated 25- 11-2029 for the assessment year 2012-13 u/s 143(3) /147 of the Income Tax Act 1961[hereinafter referred to as “the Act”]

2.

The assessee has raised the following grounds in appeal:

1.

That the sworn statement of parties before Dy. Director (Investigation) Panipat on CRIU, Insight portal of Department/authorities, without affording the assessee any opportunity to cross examine those witnesses in regard or the fact that these pa

The order continues below.

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