MOHAN MART PRIVATE LIMITED vs. INCOME TAX OFFICER WARD 17 1 DELHI & ANR.

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W.P.(C)/6094/2025HC DelhiDLHC01028336202501 July 2025Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA2 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court, in its order dated July 1, 2025, decided to set aside the impugned assessment order dated March 28, 2025. The Court accepted the Revenue's submission that the matter should be remanded to the Assessing Officer (AO) for fresh consideration. The Court found this course of action to be appropriate. Consequently, the impugned assessment order was quashed, and the proceedings were remitted back to the AO to adjudicate the issues afresh in accordance with the law. No specific finding was given on the merits of the additions made by the AO, as the matter was being sent back for reconsideration. The petition was disposed of in terms of this remand.

What were the facts?

The petitioner, Mohan Mart Private Limited, is challenging an assessment order dated March 28, 2025, passed by the Assessing Officer (AO). The AO made additions totaling ₹3,21,04,891/- under Section 68 of the Income Tax Act, 1961, and an additional ₹1,90,56,735/- for cessation of liability. These additions were based on an investigation report alleging bogus purchases from M/s Irenia Impex Pvt. Ltd. However, during assessment, it was revealed that the petitioner had made sales of ₹3,21,04,891/- to M/s Irenia Impex Pvt. Ltd. The petitioner also stated that advances received for purchases in the prior year were adjusted against the sale consideration. The AO included both the sales amount and the adjusted liability in the additions.

What were the issues?

1. Whether the addition of ₹3,21,04,891/- under Section 68 of the Income Tax Act, 1961, is justified, considering the AO's premise of bogus purchases was contradicted by the finding of sales to the same entity? 2. Whether the addition of ₹1,90,56,735/- on account of cessation of liability is justified, given it was an adjustment from sale consideration? Assessee's Contention: The petitioner argued that the AO erred by treating sales as bogus purchases and by adding the adjusted liability. The petitioner relied on the fact that the entity was a customer, not a supplier of bogus goods, and that the adjustment was a legitimate set-off. Revenue's Contention: The Revenue, through its counsel, stated on instructions that the impugned assessment order may be set aside and the matter remanded to the AO for fresh consideration.

Which sections of the Income-tax Act were involved?

Section 68,Section 148

AI-generated summary — verify with the full judgment below

$~2 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 6094/2025 and CM APPL. 27850/2025 MOHAN MART PRIVATE LIMITED .....Petitioner Through: Mr Mani Bhadra Jain, Advocate. versus INCOME TAX OFFICER WARD 17 1 DELHI & ANR. .....Respondents Through: Mr Abhishek Maratha, SSC with Mr Apoorv Agarwal and Mr Parth Samwal, JSCs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA O R D E R % 01.07.2025 1. The petitioner has filed the present petition, inter alia, impugning an assessment order dated 28.03.2025 [impugned assessment order], whereby the Assessing Officer [AO] has made a total addition of a sum of ₹3,21,04,891/- under Section 68 of the Income Tax Act, 1961 [the Act]. In addition, the AO has also made an addition of sum of ₹1,90,56,735/- on account of cessation of liability. 2. The AO made the said additions on the premise that the entity to which sales were made [M/s Irenia Impex Pvt. Ltd.] was a bogus entity. The said assessment order was made pursuant to reassessment proceedings that were initiated by issuance of notice dated 14.03.2024 under Section 148 of the Act. The said notice was issued on the basis of an investigation report alleging that the petitioner had made bogus purchases of an amount of 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 07/07/2025 at 12:16:19

₹3,21,04,891/- from M/s Irenia Impex Pvt. Ltd. However, during the assessment proceedings it was found that the petitioner had made sales of ₹3,21,04,891/- to M/s Irenia Impex Pvt. Ltd. According to the petitioner, it had also received advances for purchases from the same entity during the the prior year and had adjusted an amount of ₹1,90,56,735/- from the sale consideration. However, the AO not only added the amount of sales made to the alleged bogus entity but also the amount, which is adjusted from the sale consideration. 3. In view of above, this court had issued a notice on 08.05.2025. Mr Agarwal, learned counsel for the Revenue had sought time to take instructions. He now states, on instructions, that the impugned assessment order may be set aside and the matter be remanded to the AO for consideration afresh. The said course commends to this court. Accordingly, the impugned assessment order is set aside and the matter is remanded to the AO for consideration afresh in accordance with law. 4. The petition is disposed of in the aforesaid terms. Pending application is also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J JULY 01, 2025/tr Click here to check corrigendum, if any 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 07/07/2025 at 12:16:19

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