AARES TELECOM PVT LTD,DELHI vs. DEL-W-(31)(1), DELHI

ITA 1809/DEL/2026Status: DisposedITAT Delhi09 October 2026AY 2022-237 pages
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What did the Tribunal hold?

The Tribunal observed that while the AO's disallowance of 25% of the entire purchases was not proper, in cases of bogus purchases, only a certain percentage should be sustained as income, considering the actual benefit earned. The assessee had declared a Gross Profit (GP) rate of 5.22%. The Tribunal, relying on various ITAT Benches that have sustained a GP rate of 10% in cases of bogus purchases, held that the differential rate of 4.78% (10% - 5.22%) should be added as income. The Tribunal directed accordingly. The issue regarding the exact total purchases from the suppliers was not explicitly decided, but the overall addition was modified based on the GP rate.

What were the facts?

The assessee, Aares Telecom Pvt. Ltd., filed its return of income for Assessment Year 2022-23 declaring Rs. 19,33,410/-. The case was selected for scrutiny to verify substantial purchases from suppliers who had filed non-business ITRs or reflected substantially lower turnover. The Assessing Officer (AO) identified four suppliers from whom the assessee claimed purchases totaling Rs. 5,75,28,192/-. Independent inquiries revealed these suppliers did not respond to notices, were non-filers, had inactive GST registrations, and lacked business activity evidence. The assessee failed to provide primary evidence for these purchases. The AO, concluding the purchases were from accommodation entry providers, estimated a 25% profit element, disallowing Rs. 1,43,82,000/- and adding it to the total income. The Commissioner of Income-tax (Appeals) sustained the addition. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 1,43,82,000/- made by the AO as a disallowance of 25% of purchases is bad in law and on facts, being an ad-hoc disallowance without reasonable basis, as argued by the assessee. The assessee contended that purchases were supported by invoices, ledger accounts, GST and PAN details, and payments were made through banking channels, citing CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. and CIT vs. Bholanath Poly Fab Pvt. Ltd. The assessee also argued that since sales were accepted and audited books were not rejected, no estimated disallowance could be made, especially when its GP ratio was 5.22% against 5% in the previous year, citing PCIT vs. Mohammad Haji Adam & Co. for adding only the profit element. The revenue relied on the orders of the authorities below. 2. Whether the AO erred in mentioning total purchases of Rs. 5,75,28,192/- from the four suppliers, when the actual total was Rs. 5,51,23,894/-, as argued by the assessee. The assessee provided a breakdown of purchases from each supplier. The judgment does not record specific arguments from the revenue on this point, other than reliance on the lower authorities' orders.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 133(6),Section 143(3),Section 144B,Section 250,Section 37(1),Section 156,Section 274,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI

For Appellant: Shri Deepak Gupta, Advocate
For Respondent: Shri Balkishan Gopal, Sr. DR
Hearing: 06.10.2026Pronounced: 09.10.2026

PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

1.

The assessee has filed appeal against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”, for short] dated 15.12.2025 for the Assessment Year 2022-23. 2. Brief facts of the case are, the assessee, a private limited company has filed its return of income on 06.10.2022 declaring Rs.19,33,410/-. Further, the case of the assessee was selected for scrutiny under CASS to 2 verify the issue “The assessee has made substantial purchases from such suppliers who have filed non business ITR or reflected a substantially lower turnover in ITR”.

3.

During assessment proceedings, the Assessing Officer issued multiple

The order continues below.

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