PR. COMMISSIONER OF INCOME TAX, CENTRAL -1, NEW DELHI vs. GAUTAM BALI

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ITA/846/2026HC DelhiDLHC01051127202629 October 2026Author: HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD,HON'BLE MS. JUSTICE RENU BHATNAGAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had correctly found that the departmental authorities proceeded on mere assumptions and presumptions. The ITAT's observation that there was no material on record indicating that M/s Vestige Marketing Private Limited had actually made any payments of advances or loans to the directors/promoters was not challenged by the revenue's counsel. Consequently, the ITAT allowed the assessee's appeal, setting aside the additions made under Section 2(22)(e). The High Court found no reason to interfere with the ITAT's findings as no substantial question of law arose. The Court clarified that its observations were limited to the present appeal and left open all contentions of the revenue for the appeal of M/s Vestige Marketing Private Limited.

What were the facts?

The Principal Commissioner of Income Tax, Central-1, New Delhi (Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated March 25, 2026, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order pertained to assessment year 2020-21 and concerned appeals filed by Gautam Bali (Assessee). The dispute arose from search and seizure proceedings at M/s Vestige Marketing Private Limited, which indicated alleged bogus expenses and commissions. This led to assessment proceedings under Section 147, with additions of Rs. 17,00,08,080/- for deemed dividend under Section 2(22)(e) and Rs. 26,42,28,143/- for unexplained money under Section 69A. The CIT(A) partly allowed the appeal, restricting the deemed dividend addition to Rs. 3,97,85,032/-.

What were the issues?

1. Whether the departmental authorities proceeded on mere assumptions and presumptions to hold the bogus purchases disallowance as dividend distribution under Section 2(22)(e) of the Act. Assessee's Contention: The ITAT held that there was no material on record to establish that M/s Vestige Marketing Private Limited had actually made any payments of advances or loans to the directors/promoters, thus the addition on account of deemed dividend was based on assumptions and presumptions. Revenue's Contention: The revenue's counsel was unable to point out any infirmity in the ITAT's finding. The revenue also contended that the ITAT's finding in this appeal would directly affect the appeal of M/s Vestige Marketing Private Limited, arguing that the income could be taxed either as income of the company or the directors.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 147,Section 148,Section 2(22)(e),Section 69A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~55 * IN THE HIGH COURT OF DELHI AT NEW DELHI # CNR No. DLHC010511272026 + ITA 846/2026 PR. COMMISSIONER OF INCOME TAX, CENTRAL -1, NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC, Mr. Ashvini Kumar, Mr. Surya Jindal, JSC with Ms. Nancy Jain, Mr. Nikhil Jain, Mr. Aryan, Advs. versus GAUTAM BALI .....Respondent Through: Mr. Ved Jain, Mr. Nischay Kantoor, Ms. Vandana Kothari, Advocate(s) CORAM: HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD HON'BLE MS. JUSTICE RENU BHATNAGAR

O R D E R %

29.10.

2026 CM APPL. 73515/2026- Exemption

1.

Allowed, subject to all just exceptions.

2.

Accordingly, the present application stands disposed of. ITA 846/2026

3.

The present appeal has been filed under Section 260A of the Income tax Act, 1961 (“the Act”), assailing the order dated 25.03.2026 passed by the learned Income tax Appellate Tribunal, This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/11/2026 at 11:27:01

Bench „G‟, New Delhi (“ITAT”), in ITA Nos. 5862/Del/2025 and 7896/Del/2025 for the Assessment Year 2020-21 (“Impugned Order”).

4.

Pursuant to the search and seizure proceedings conducted under Section 132 of the Act in a company called M/s Vestige Marketing Private Limited, stating that various incriminating documents were seized which revealed that Vestige Group of companies are involved into practice of booking bogus expenses on account of bogus purchases and bogus commissions. Based on the said information, the assessment proceedings under Section 147 of the Act were initiated by issuance of notice under Section 148 of the Act. Addition of Rs. 17,00,08,080/- was made on account of deemed dividend under Section 2(22)(e) of the Act and another addition of Rs. 26,42,28,143/- was made on account of unexplained money under Section 69A of the Act.

5.

On appeal by the assessee, the Commissioner of Income Tax(Appeals)-24 (“CIT(A)”) partly allowed the appeal, restricting the addition only to Rs. 17,00,08,080/- on account of deemed dividend under Section 2(22)(e) of the Act to Rs. 3,97,85,032/-.

6.

The order passed by the learned CIT(A) was challenged in appeal before the learned ITAT.

7.

A perusal of the Impugned Order shows that the learned ITAT, after perusal of the facts, held that the departmental authorities have proceeded on mere assumptions and presumptions to hold the bogus purchases disallowance as dividend distribution. The learned ITAT observed as under: “We wish to reiterate here that there is no material in the records This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/11/2026 at 11:27:01

indicating M/s. Vestige Marketing Private Limited to have actually made any such payment of advance(s) or loan to both these directors/promoters.”

8.

Learned counsel appearing for the revenue has not been able to point out any infirmity in the aforesaid finding of the learned ITAT.

9.

By way of the Impugned Order, the learned ITAT has allowed

the appeal preferred by the assessee-respondent and set aside the orders passed by the Assessing Officer and the CIT(A), whereby additions had been made under Section 2(22)(e) of the Act, on the ground that there was no material on record to establish that M/s Vestige Marketing Private Limited had, in fact, made any such advances or loans to the directors/promoters.

10.

Upon consideration of the material on record, this Court finds no reason to interfere with the findings of the learned ITAT as no substantial question of law arises for consideration under Section 260A of the Act.

11.

Accordingly, the present appeal is dismissed.

12.

It is stated that revenue has also challenged the Impugned Order passed by the learned ITAT where the assessee is the company, i.e., M/s Vestige Marketing Private Limited being ITA No. 859/2026. It is a contention of the learned counsel appearing for the revenue that this finding will directly affect the appeal of M/s Vestige Marketing Private Limited. He contends that this income can be taken as income of M/s Vestige Marketing Private Limited, if not, the income of the directors.

13.

It is made clear that the observations made by this Court above This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/11/2026 at 11:27:01

is only limited to the findings in the present appeal and all contentions of revenue are left open when the appeal of M/s Vestige Marketing Private Limited is taken up for hearing.

SUBRAMONIUM PRASAD, J

RENU BHATNAGAR, J OCTOBER 29, 2026/bs/sm This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/11/2026 at 11:27:01

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