GLOBAL JEWELLERY,CENTRAL DELHI vs. ASSESSMENT UNIT, NFAC

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ITA 963/DEL/2026Status: DisposedITAT Delhi13 November 2026AY 2021-20227 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal on both issues. Regarding the addition of Rs. 10,00,000/- from Shri Satish Gara, the Tribunal found that apart from the GST return filed by a third party, there was no other evidence to prove the purchases. The revenue had not produced any enquiry report or recorded the statement of Shri Satish Gara. Therefore, the addition based purely on a third-party return and presumptions was not sustainable. For the addition of Rs. 1,60,73,404/- from Shri Boby Gupta of M/s. Trend Jewels, the Tribunal noted that the assessee had made all purchases through banking channels, and these were duly reflected in the books of account. Crucially, the revenue had not rejected the assessee's books of account. The Tribunal held that once the books of account are not rejected, the entire purchases cannot be denied, and an addition under Section 69C cannot be sustained. The CIT(A)'s rejection of additional evidence was also noted. The ratio decidendi is that additions under Section 69C require more than mere suspicion or third-party data, especially when the assessee's books of account are not rejected and payments are made through banking channels.

What were the facts?

The assessee, Global Jewellery, a partnership firm engaged in trading gold, bullion, and jewellery, filed its return for Assessment Year 2021-2022. The case was selected for scrutiny due to substantial purchases from non-filers or those with low turnover. The Assessing Officer (AO) made additions of Rs. 1,60,73,404/- for purchases from M/s Trend Jewels (Prop. Boby Gupta) and Rs. 10,00,000/- for purchases from Satish Gara, alleging these were unaccounted purchases under Section 69C. An additional Rs. 95,611/- was added for estimated gross profit. The assessee's appeal to the CIT(A)/NFAC was dismissed. The assessee is now appealing to the ITAT against the CIT(A)'s order dated 03-Dec-2025.

What were the issues?

1. Whether the addition of Rs. 10,00,000/- made by the AO and confirmed by the CIT(A) on account of alleged unaccounted purchases from Shri Satish Gara under Section 69C of the Income Tax Act, 1961, is sustainable in law, given that the assessee claims no such purchases were made and the addition is based solely on GST data filed by a third party without corroborative evidence. - Assessee's contention: No purchases were made from Shri Satish Gara; the addition is based on a presumption arising from a third party's incorrectly filed GSTR return without corroborative evidence. - Revenue's contention: Relied on the orders of the authorities below. 2. Whether the addition of Rs. 1,60,73,404/- made by the AO and confirmed by the CIT(A) on account of alleged unaccounted purchases from Shri Boby Gupta, Trend Jewels, under Section 69C of the Act, is sustainable, considering the assessee's claim that these purchases were genuine, paid through banking channels, and duly recorded in the books of account, which were not rejected by the revenue. - Assessee's contention: Purchases were genuine, paid through banking channels, and recorded in books of account; rejection of these purchases amounts to double taxation as sales and declared profit were accepted. Relied on coordinate bench decisions in ITO Vs. Ritu Bhandula and Gargi Woolen Pvt. Ltd. Vs. PCIT. - Revenue's contention: Relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(1),Section 143(3),Section 144B,Section 46A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI ANUBHAV SHARMA & SHRI KRINWANT SAHAY

PER SHRI KRINWANT SAHAY, ACCOUNTANTMEMBER: This appeal is filed by the Assessee against the order dated 03-Dec-2025 passed by the Ld. CIT(A) /NFAC for the Assessment Year 2021-2022.

2.

The Assessee has raised the following grounds of appeal:

1.Because, the orders passed by the authorities below are illegal, arbitrary, perverse, vexatious, erroneous, passed without application of mind, against the facts and circumstances of the case, just based on surmises and conjectures and hence is liable to be quashed.

2.

Because, the CIT A has erred in law and on facts in confirming the illegal addition of Rs. 10,00,000 made by the AO alleged as unaccounted purchase from Shri Satish Gara under section 69C of the Act based on presumption is liable to be deleted. 3. Because, the CIT A has failed to appreciate that no purchases were made from Shri Satish Gara during the relevant previous year and that mere reflection of a name in GST data just based on GSTR return incorrectly filed by third party, without corroborative evidence, cannot justify an addition under section 69C. 4. Because, the CIT A has erred in confirming the addition of Rs. 1,60,73,404 on account of alleged unaccounted purchases under section 69C of the Act from Shri Boby Gupta, Trend Jewels, ignoring the fact that the purchases were genuine, paid through banking channels and duly recorded in the books of account, hence the additions made based on assumptions is liable to be deleted. 5. Because, the CIT A has erred in rejecting the Appellants reconciliation and in declining to admit additional evidences under Rule 46A without appreciating that the assessment proceedings were conducted in a faceless regime and sufficient opportunity was not effectively granted. The impugned order being passed in violation of principles of natural justice was to be quashed. 6. Because, the authorities below erred in invoking section 69C of the Act in the absence of any finding that the expenditure was incurred out of undisclosed sources and without disproving the sales corresponding to the alleged purchases. 7. Because, the CIT A has erred in confirming the addition of Rs. 95,611 towards alleged gross profit on unaccounted purchases, which is purely consequential and unsustainable once the primary additions are deleted. 8. Because, the CIT A erred in not deleting the addition, which was made without rejecting the books of accounts of the Appellant and without finding any such undisclosed purchases in the appellants records, which were duly maintained in the regular course of business and the books were not found to be false OR incorrect by the AO. 9. Because, the Authorities below have proceeded on mutually destructive and inconsistent stands, inasmuch as on one hand the sales recorded in regular books of account and returned income based on which has been accepted as correct, while on the other hand additions were made on account of unaccounted purchases made from undisclosed sources, without finding any such purchase made from undisclosed sources, which is impermissible in law.

10.

Because, the CIT A has erred in law and on facts in upholding the impugned additions, which are vitiated by the doctrine of vagueness and the doctrine of approbate and reprobate.

11.

Because, the Authorities below are wrong in raising and upholding illegal and erroneous demands of tax, interest and penalties mechanically and perversely and all demands as well as penalty notices are liable to be quashed. 12. The appellant craves the leave to add, modify, amend OR delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.

3.

Brief facts of the case are as under :-

“The Appellant, M/s Global Jewellery, is a partnership firm engaged in the business of trading gold, bullion, and jewellery. For the Assessment Year 2021-22, the Appellant filed its return of income declaring a total income of Rs. 2,50,970/-, The return was processed under section 143(1) of the Act and accepted as correct. The case was selected for scrutiny on the grounds of "substantial purchases from non-filers or those with low turnover". The Assessing Officer (AO) passed an order u/s 143(3) r.w.s 144B on 26.12.2022, making significant additions on account of "unaccounted purchases". Specifically, the AO added Rs. 1,60,73,404/- for purchases from M/s Trend Jewels (Prop. Boby Gupta) and Rs. 10,00,000/- for purchases from Satish Gara, alleging these were unaccounted purchases. The AO further made an addition of Rs. 95,611/- towards estimated gross profit on the alleged unaccounted purchases without rejecting books of accounts and without disputing sales made and gross profit declared by the Appellant. The assessment was completed vide order dated 26.12.2022 determining total income at Rs. 1,74,19,985/-. Being aggrieved, the Appellant preferred an appeal before the Commissioner of Income Tax (Appeals), NFAC, Delhi and explained that no purchases were made from Shri Satish Gara during the relevant previous year as evidenced by GST input reconciliation. The Appellant explained the purchases from M/s Trend Jewels were genuine, paid through banking channels and duly recorded in books of account. The CIT(A), however, vide order dated 03.12.2025, dismissed the appeal primarily on the ground that the Appellant failed to reconcile the GST data with the books of account to his satisfaction and further declined to admit additional evidences under Rule 46A. The Appellant is aggrieved by the impugned appellate order, which is contrary to facts, law and principles of natural justice, and hence prefers the present appeal before this Hon'ble Tribunal.”

4.

During proceedings before us the Ld. Counsel of the assessee argued against the confirmation of addition with respect to only two parties one an addition of Rs.100000/- made by the AO and alleged as unaccounted purchase from Sh. Satish Gara under section 69C of the Act and the addition of Rs.1,60,73,404/- on account of alleged unaccounted purchases under section 69C of the Act from Boby Gupta, Trend Jewels.

5.

The Ld. Counsel argued that the addition on account of alleged purchases from Satish Gara is based on presumption only because no such purchase was make from Sh. Satish Gara during relevant previous year. The addition made by the AO was just based on reflection of a name in GST data just based on GSTR return incorrectly filed by 3rd party. The Ld. Counsel also argued that there is no corroborative evidence of the same, therefore, addition u/s.69C on this issue is not justified.

6.

Per contra the ld. DR relied on the orders passed by the authorities below.

7.

We have heard both the parties on this issue and we find that apart from GST return filed by a 3rd party there is no other evidence recorded to prove the purchases made by the assessee from one Sh. Satish Gara during relevant previous year. Even the revenue has not brought on record any enquiry report in this regard nor any statement of Sh. Satish Gara was recorded. So this addition has been made purely on the basis of 3rd party return which the assessee is claiming as a return filed 3rd party with some wrong information. Since no enquiry has been made in this regard by revenue nor any further evidence has been brought on record. Therefore, in our considered view addition on such presumptions and suspicion cannot be confirmed. Accordingly, assessee’s appeal on this issue is allowed.

8.

Appeal on the second addition is against the addition of Rs.16073404/- on account of alleged unaccounted purchases from Sh. Boby Gupta of M/s. Trend Jewels.

9.

During proceedings before us the ld. Counsel argued that all the purchases were genuine because the payments were made through banking channels and duly recorded in the books of account. It was further argued by the ld. Counsel of the assessee that the books of account of the assessee has not been rejected by the revenue or the corresponding sales of such alleged bogus purchases have been accepted by the revenue and profit declared on such sales has also been accepted. The Assessee has paid taxes thereon and that has also been accepted by the revenue. Therefore, it was argued that now rejecting the purchases made from M/s. Trend Jewels is tantamount to double taxation which is not acceptable.

10.

We have heard both the parties on this issue and we have also gone through the papers and details filed by the assessee. We find that the Ld. CIT(A) did not accept additional evidence in the form of confirmation of accounts, bank statements, copy of invoices etc and relied on the findings given by the AO in the assessment order. The Ld. Counsel of the assessee relied heavily on the orders of the coordinate Bench of Delhi ITAT in the case of ITO Vs. Ritu Bhandula in ITA No. 2750/Del/2025 where such addition made u/s.69C has been dismissed, there is yet another order passed by the coordinate Bench of Delhi ITAT in the case of Gargi Woolen Pvt. Ltd. Vs. PCIT in ITA No. 2771/Del/2025 (supra). Although it has been held in these orders that if the assessee produced all the details of purchases made by it through banking channels duly reflecting the books of account then addition u/s.69C is not applicable.

11.

We have heard both the parties on this issue and we have also considered the details filed by the Ld. Counsel of the assessee we find that the assessee had made all the purchases through baking channels and invoices/ GST are being duly reflected in the book of account. We also find that the revenue has not rejected the books of account of the assessee. Once books of account have not been rejected entire purchases made by the assessee cannot be denied and corresponding addition u/s. 69C cannot be sustained. Accordingly, assessee’s appeal on this issue is allowed.

12.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 13.11.2026.

Sd/- Sd/- [ANUBHAV SHARMA] [KRINWANT SAHAY] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13.11.2026 NEHA, Sr.P.S.* Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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