DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, RAIPUR, NAWA RAIPUR vs. SUNIL KUMAR AGRAWAL LLP, RAIGARH

ITA 494/RPR/2026Status: DisposedITAT Amritsar25 September 2026AY 2021-2210 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's purchase register, ledger accounts, bank statements, and transport details, when coupled with seized material, supplier statements, and the surrendered income of Rs. 2,71,50,000/-, did not conclusively prove the genuineness of purchases amounting to Rs. 2,33,65,186/-. The assessee failed to provide any material to contradict the AO's findings or explain the genuineness of these purchases, nor did it produce any supplier confirmations or produce suppliers for cross-examination. The CIT(A) did not provide a categorical finding that the purchases of Rs. 2,33,65,186/- were genuine. The Tribunal found the CIT(A)'s application of 12.5% on the entire purchases, especially when the assessee had surrendered a significant portion of income, to be unjustified. Citing decisions from the Hon'ble Supreme Court in N.K. Proteins Ltd. and the Hon'ble Bombay High Court in Kanak Impex and Shoreline Hotel (P.) Ltd., the Tribunal concluded that partial disallowance was not justified in cases of unproven purchases. Therefore, the Tribunal set aside the impugned order of the CIT(A) and restored the assessment order, allowing the Revenue's appeal. The issue of whether the surrendered income subsumed the addition was implicitly decided against the assessee by restoring the AO's order.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2021-22. The assessee, Sunil Kumar Agrawal, LLP, initially filed its return declaring an income of Rs. 23,66,07,770/-. A search under Section 132 was conducted on 07.09.2022, leading to the seizure of incriminating documents. The Assessing Officer (AO) reopened the case under Section 147. The assessee filed a revised return declaring Rs. 26,38,57,770/-, which included a surrender of Rs. 2,71,50,000/-. The AO taxed the entire purchases of Rs. 5,05,15,186/- as bogus, after deducting the surrendered amount, resulting in an addition of Rs. 2,33,65,186/-. The CIT(A) restricted the addition to 12.5% of the bogus purchases, finding that the surrendered income subsumed this addition.

What were the issues?

1. Whether, on the facts and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,33,65,186/- out of the total addition of Rs. 5,05,15,186/- made by the AO on account of bogus purchases? 2. Whether, on the facts and in law, the Ld. CIT(A) was justified in allowing the assessee's appeal by restricting the addition to the profit element @12.5% of bogus purchases of Rs. 5,05,15,186/-, and ignoring that there was sufficient evidence of bogus billing/circular transactions, the AO's conclusion was based on thorough analysis, and the assessee engaged in non-genuine purchase transactions corroborated by vendor statements? 3. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring that mere production of purchase invoices, ledger accounts, and banking transactions does not conclusively prove the genuineness of purchases when surrounding circumstances establish non-genuineness? Assessee's Contention: The assessee relied on the CIT(A)'s order, arguing that the 12.5% profit element was applicable given its business in construction/steel and citing decisions relied upon by the CIT(A). Revenue's Contention: The Revenue argued that the CIT(A) erred in deleting the addition and restricting it to 12.5%, highlighting that the CIT(A) admitted evidence of bogus billing, the AO's analysis was sound, and the assessee's transactions were non-genuine. The Revenue also contended that mere documentary compliance does not prove genuineness when surrounding circumstances indicate otherwise. The Revenue further argued that the CIT(A)'s reliance on certain case laws was misplaced as they were not search cases with adverse material and admitted bogus transactions.

Which sections of the Income-tax Act were involved?

Section 132,Section 147,Section 148,Section 250,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI AVDHESH KUMAR MISHRA, AM

For Appellant: Ms. Shreeya Gupta, CA
Hearing: 08/07/2026

Per Avdhesh Kumar Mishra, AM: This appeal for Assessment Year (‘AY’) 2021-22 filed by the Revenue is directed against the order dated 27.03.2026 of Commissioner of Income Tax (Appeals), [‘CIT(A)’], Raipur-3 passed under section 250 of the Income Tax Act, 1961 (‘Act’).

2.

The following grounds have been taken by the Revenue:

“1. Whether on the facts and circumstances of the case and

The order continues below.

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