ASHOK GARG,DELHI vs. ITO WARD 51(1), DELHI

आयकर अपीलीय अिधकरण, िद�ी पीठ�, नई िद�ी INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, ‘A’ NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No.1621/DEL/2026 िनधा�रण वष�/Assessment Year: 2022-23) ASHOK GARG ITO WARD 51(1) 5529/73 REHGARPURA, KAROL CIVIC CENTRE BAGH, NEW DELHI 110005, DELHI, Vs. NEW DELHI-110002, DELHI NEW DELHI-110005, DELHI अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAGPK4346P

अपीलाथ� �ारा/Appellant represented by: Shri Raghav Sharma, CA & Shri Dhananjay Bhardwaj, ADV ��थ� �ारा/Respondent represented by: Shri Balkrishan Gopal, SR DR सुनवाई की तारीख / Date of conclusion of hearing: 24.06.2026 घोषणा की तारीख / Date of pronouncement: 23.09.2026 आदेश / ORDER PER AMITABH SHUKLA, AM This appeal filed by the Assessee is directed against the order of Ld. Commissioner of Income Tax(Appeals)/NFAC, Delhi, dated 17.12.2025 arising out of assessment order dated 27.01.2025 passed under section 147 r.w.s. 143(3) r.w.s. 144B of the Act for the Assessment Year 2019-20. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

ITA No.1621/Del/2026

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“…………………………………………….. Kindly furnish the details of the purchases in the format given below Name of PAN of Total Total Total Invoices, Mode of the party Party purchases payment payment e-way bills payment/

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from whom the made made made furnishe transaction purchases made during during one d Y/N year the year the year prior to relevant FY

You are also requested to furnish the stock register month wise, invoices, e-way bills, name and PAN of the transporter, invoices of the payment made to transporter , weighment slips, mode of payment to the transporter along with highlighted bank statements showing proof of payments.

It is also requested to provide the party wise Purchase ledger along with the documentary evidences as sought above Kindly furnish documentary evidences for the above information in order to substantiate your claims. …….” 4. In response, the assessee, as evident from page -4-7 of the assessment

order submitted following information

“In response to above notice, the assessee replied on 19.08.2023 and the relevant portion of the response is reproduced as under

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3.1.1 Summary of information/evidence collected which proposed to be used against it : During the assessment year under consideration, the asssessee has claimed purchases expenditure of Rs. 9,02,93,503/- as seen from the trading account of the assessee.

The assessee was asked to furnish the details of the purchases such as Name of the party from whom the purchases made, PAN of Party, Total purchases made during the year, Total payment made during the year, Total payment made one year prior to relevant FY, Invoices, Mode of payment/ transaction. Further, the assessee was also requested to furnish the stock register month wise, invoices, e-way bills, name and PAN of the transporter, invoices of the payment made to transporter, weighment slips, mode of payment to the transporter along with highlighted bank statements showing proof of payments.

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The assessee was asked to provide the party wise Purchase ledger along with the documentary evidences as sought above. The assessee in its response furnished the details of the purchases and the same is as below:

The assessee has furnished Purchase register containing date, account name, address , PAN, GSTIN No, taxable amount and GST details. To verify the genuineness of the purchases undertaken with the assessee, this office issued notices u/s 133(6) to the following major parties about the nature of transaction entered by them with the assessee and other relevant documents evidences in support of the transactions of purchases made with the assessee during F.Y.2021-22 through ITBA.

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ITA No.1621/Del/2026

S No Purchases claimed Value(Rs.) Party PAN Party Name excluding GST

AKASH KHOKHAR 1 EOOPK8378R (KANHAIYA 35,83,661 SALES CORPORATION) NYMPHAEA 2 AAGCN0585N TRADEMART PRIVATE 3,26,09,651 LIMITED 77,36,587

NAND KISHOR (SIGNATURE Enterprises 21,36,934

/SUNSHINE International ) (Total: 98,73,521) 3 JIQPK4711R SUSHIL KUMAR (Global 4 DPGPK3988P Rising Enterprises) 51,19,446

SUMAN TYAGI 5 ANQPT6992H (INFOSYS 1,56,36,240 ENTERPRISES) SONU 6 NJUPS1265M (GROOFER 10,49,796 ENTERPRISES)

The said notices u/s 133(6) were duly served through available email of these parties. None of the parties has responded to the notice u/s 133(6). It is to be underlined that none of the parties as mentioned in above table have confirmed the transactions undertaken with the assessee…..”

in response to which the assessee submitted its response vide letter dated

08.03.2024 as under:-

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incapable of doing any genuine business. The ld. Assessing Officer accordingly concluded that the purchases made by the assessee from Shri Akash Khokkar amounting to Rs.35,83,661/- were ingenuine and proceeded to add the same u/s 69C of the Act. Further, as regards balance five parties in respect of whom the appellant had claimed to made purchases of Rs.6,42,88,654/-, again considering the VU’s report, the ld. Assessing Officer made an estimated addition u/s 37(1) amounting to 15% of the total purchases and thus proceeded to add an amount of Rs.96,43,298/-. The matter travelled to the ld. First Appellate Authority, who concurred with the findings of the Assessing Officer on the bogus nature of the purchases in the light of report of the views. The ld. CIT(A) however placed reliance upon the decision of Hon’ble Bombay and Gujarat High Court postulating that in cases of bogus purchases, no percentage estimation is permissible and that rather the whole amount of purchases deemed as bogus need to be added back. Accordingly, the ld. CIT(A) enhanced the addition and directed the ld. Assessing Officer to add the entire purchases of Rs.6,42,88,654/- as against the amount of 15%. The ld. CIT(A) also confirmed the purchases made by the assessee from Shri Akash Khokkar amounting to Rs.35,83,661/-. 7. The ld. Counsel for the assessee submitted that the action of ld. Assessing Officer and ld. CIT(A) is patently flawed as the same is resting upon the report of the VU’s. It was contended that the impugned report was never supplied to the assessee by the ld. Assessing Officer and therefore would constitute conduct and consideration of enquiries at the back of the assessee. It was argued that it is trite

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law that any addition resting upon enquiries conducted at the back of an assessee can never be taken as a justified addition. The ld. Counsel argued that to this extent, the argument of ld. CIT(A) that the Assessing Officer was not bound to provide VU’s report to the assessee is not correct. The ld. Counsel further argued that as far as its affairs are concern, it has made genuine purchases from the said parties and that in support of its transactions, it has provided the copies of bills, ledger extracts, copies of bank account through which amounts were paid, GST details, ebay bills, copies of invoices, copies of product-wise stock register, copies of sales registers, confirmations of major suppliers. It was submitted that in spite of assessee providing all these documents to the Assessing Officer, the ld. Assessing Officer records non-submission of relevant documents by the assessee. It was contended that mere non-compliance of the impugned parties to Assessing Officer notices or their non-filing of personal Returns of Income cannot be a justified ground for making addition in the appellant’s case. It was contended that out of six parties chosen for his enquiry by the ld. Assessing Officer, two had unfortunately died thus justifying their non-compliance. The ld. Counsel argued that out of total purchases of Rs.9 Crores approximately, purchases of as high as Rs.6 Crores app. doubted thus making 2/3rd purchases as doubtful. It was contended that the case laws relied by the ld. CIT(A) were purely distinguished on facts. 8. The ld. DR vehemently argued in favour of order of ld. CIT(A) submitted that the purchases were bogus as GST of the impugned parties was cancelled and

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that the ratio of Hon’ble Bombay High Court in Kanak Impex, applied by ld. CIT(A), was purely applicable in this case. 9. We have heard rival submissions in the light of material placed on records. We have noted from the order of the ld. Assessing Officer that as Assessing Officer’s own enquiries u/s 133(6) went unanswered in respect of the six parties, it took help of VU unit for doing enquiries. We have also noted that the conclusions drawn by the ld. Assessing Officer for making the impugned addition is primarily resting upon the enquiry reports of VU. We have also noted that there is nothing on records so as to allude that the contents of the VU report were confronted to the assessee. Thus, it is evident that the appellant was not given an opportunity to defend its case qua report of VU authorities. We are also not convinced with the conclusion drawn by ld. CIT(A) that enquiries conducted by VU are internal matter of the department between the Assessing Officer and the VU and the Assessing Officer is not obligated to share the enquiry report with the assessee before drawing any adverse conclusions. We are convinced that the right to natural justice of the assessee has thus got adversely impacted. We are also at loss to comprehend as to why the ld. Assessing Officer has written his order that the assessee has not provided it requisite details of the said parties even though the Assessing Officer has himself recorded in his orders that the assessee had provided purchase registers, stock registers, GST details, etc. Further, we failed to comprehend as to when the assessee had provided explicit details and evidences

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alluding prima facie genuineness of purchases, conclusions qua their bogus character can be drawn by the ld. Assessing Officer. 10. We have also noted that the ld. CIT(A) has relied upon the judicial precedents of Hon’ble Bombay and Gujarat High Court presuming that the purchases were bogus. This conclusion was drawn in spite of the fact that the assessee had contended that the VU report upon which the addition was resting was not provided to it. Thus, in the absence of assessee being confronted the report of VU authorities, a conclusion qua ingenuine character of the impugned purchases can at best be regarded as a premature and half-baked conclusion. Accordingly, we are of the considered view that the addition made by the ld. Assessing Officer cannot survive in the event of existence of such circumstances. The action of the ld. CIT(A) in enhancing the addition made by the ld. Assessing Officer by relying upon the decision of Hon’ble Bombay High Court and Gujarat High Court has also been considered and not found to be inconformity with contemporaneous law. The argument of the ld. CIT(A) is that in the case of Kanak Impex, Hon’ble Bombay High Court has held that in cases of bogus purchases, estimations of bogus purchases are not permissible and that the whole amount of bogus purchases reserves to be added. In the absence of compliance to due process of law, the conclusion drawn of bogus purchases by the ld. Assessing Officer has been found to be premature. Thus, since the purchases did not conclusively suffer from any element of bogus, the decision relied upon by the ld. CIT(A) would not be applicable. Accordingly, the action of the ld. CIT(A) in

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making the impugned enhancement has also been found to be devoid of any legal satisfaction. We, therefore, direct the ld. Assessing Officer to delete the impugned addition of Rs.35,83,661/- and Rs.96,43,298/- made by the ld. Assessing Officer u/s 69C and u/s 37(1) of the Act. The grounds of appeal nos.3 to 7 challenging the merits of the addition of these amounts as well as on the issue of making addition relying upon unconfronted VU report are therefore allowed. 11. The ground of appeal no.1 and 2 were not pressed by the appellant assessee and hence are dismissed as infructuous. 12. The ground of appeal no.8 is regarding non-grant of opportunity of personal hearing through video conferencing. The appellant assessee has not adduced any evidence to suggest that it had asked for view conferencing and that the same were denied by the ld. Assessing Officer. In the absence of any such evidence the ground raised by the assessee is dismissed as infructuous. 13. The ground of appeal no.9 regarding invocation of penalty proceedings and charging of interest u/s 234A, 234B and 234C have been found to be consequential and hence dismissed as infructuous. 14. The ground of appeal no.10 is general in nature and hence dismissed. 15. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 23rd September, 2026.

Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER

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Dated: 23.09.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi,

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