INCOME TAX OFFICER, NEW DELHI vs. ADVERMARK WIRESMITH PVT LTD, DELHI

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ITA 3389/DEL/2025Status: DisposedITAT Delhi29 January 2026AY 2016-173 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that the issue of bogus purchases has been decided with divergent views in various recent judicial precedents. In the larger interest of justice, the Tribunal decided to allow a lumpsum disallowance at 5% of the assessee's alleged bogus purchases, amounting to Rs. 17,82,500/-. This disallowance is to be made with a specific rider that it shall not be treated as a precedent for future cases. The necessary computation of this disallowance shall follow as per law. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The Revenue has appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, for assessment year 2016-17. The appeal pertains to proceedings under sections 147 and 144 of the Income-tax Act, 1961. The core of the dispute involves the deletion of the Assessing Officer's disallowance of the assessee's alleged bogus purchases amounting to Rs. 17,82,500/-, which were sourced from M/s. R.K. Enterprises. The CIT(A)/NFAC had set aside the Assessing Officer's action.

What were the issues?

1. Whether the CIT(A)/NFAC erred in law and on facts by deleting the Assessing Officer's disallowance of the assessee's entire bogus purchases of Rs. 17,82,500/- sourced from M/s. R.K. Enterprises, under Section 147 r.w.s. 144 of the Income-tax Act, 1961? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the CIT(A)/NFAC erred in deleting the disallowance of bogus purchases. The Revenue cited several recent judicial precedents, including Ravjibhai Becharbhai Dhamelia vs. ACIT (2025) 173 taxmann.com 592 (Guj.), PCIT Vs. Hitesh Mody (HUF) (2024) 160 taxmann.com 110 (Bom), PCIT Vs. Forum Sales (P) Ltd. (2024) 160 taxmann.com 93 (Del), PCIT Vs. Kanak Impex (India) Ltd (2025) 172 taxmann.com 283 (Bom), DCIT Vs. Kohinoor Foods Ltd. (2025) 178 taxmann.com 424 (Del. — Trib.), and DCIT Vs. Tirupati Matsup (P.) Ltd. (2025) 177 taxmann.com 836 (Delhi-trib.), noting that these cases had decided the issue of bogus purchases with divergent views.

Which sections of the Income-tax Act were involved?

Section 147,Section 144

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

For Appellant: Adv. Sh. Rajkumar, Adv
Hearing: 29.01.2026Pronounced: 29.01.2026

ORDER

PER SATBEER SINGH GODARA, JM

1.

This Revenue’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1074956578(1), dated 24.03.2025, involving proceedings under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

Learned departmental representative vehemently argues during the course of hearing that the CIT(A)/NFAC has erred in law and on facts in deleting the Assessing Officer’s action disallowing the assessee’s entire bogus purchases of Rs.17,82,500/- sourced from M/s. R.K. Enterprises.

3.

That being the clinching factual position, the Revenue could hardly dispute that various recent judicial precedents (2025) 173 taxmann.com 592 (Guj.) Ravjibhai Becharbhai Dhamelia vs. ACIT; (2024) 160 taxmann.com 110 (Bom) PCIT Vs. Hitesh Mody (HUF), (2024) 160 taxmann.com 93 (Del) PCIT Vs. Forum Sales (P) Ltd.; (2025) 172 taxmann.com 283 (Bom) PCIT Vs. Kanak Impex (India) Ltd; (2025) 178 taxmann.com 424 (Del. – Trib.) DCIT Vs. Kohinoor Foods Ltd.; and (2025) 177 taxmann.com 836 (Delhi-trib.) DCIT Vs. Tirupati Matsup (P.) Ltd. have recently decided the instant issue of bogus purchases with divergent views as well. It is thus deemed appropriate in the larger interest of justice that a lumpsum disallowance @ 5% of the assessee’s alleged bogus purchases amounting to Rs.17,82,500/-, would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

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