KAPIL RAJ ANAND,DELHI vs. DCIT, CENTRAL CIRCLE 30, NEW DELHI, ARA CENTRE JHANDEWALAN, NEW DELHI

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ITA 877/DEL/2025Status: DisposedITAT Delhi05 January 2026AY 2021-224 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that the assessee is in the construction business and that some cash turnover is possible, with no dispute regarding the corresponding sales. It noted that various recent judicial precedents have decided the issue of bogus purchases with divergent views. Faced with these facts and divergent views, the Tribunal deemed it appropriate in the larger interest of justice to allow a lumpsum disallowance at 6% of the alleged bogus purchases for both assessment years. This disallowance amounts to Rs. 3,40,17,291 in AY 2020-21 and Rs. 23,79,987 in AY 2021-22. The Tribunal explicitly stated that this decision shall not be treated as a precedent. Necessary computations are to follow as per law. No other ground or argument was pressed.

What were the facts?

The assessee, Sh. Kapil Raj Anand, has filed two appeals (ITA Nos. 873 & 877/Del/2025) against the orders of the Commissioner of Income Tax (Appeals)-30, Delhi, for Assessment Years (AY) 2020-21 and 2021-22. These orders upheld the disallowance of purchases amounting to Rs. 3,40,17,291 in AY 2020-21 and Rs. 23,79,987 in AY 2021-22, sourced from M/s. Sanjay Jain group, treating them as bogus purchases under section 69C of the Income-tax Act, 1961. The assessment orders were passed under section 153C r.w.s. 143(3) of the Act. The appeals were heard on 05.01.2026.

What were the issues?

1. Whether the purchases amounting to Rs. 3,40,17,291 in AY 2020-21 and Rs. 23,79,987 in AY 2021-22, sourced from M/s. Sanjay Jain group, are to be treated as bogus purchases, thereby warranting disallowance under section 69C of the Income-tax Act, 1961. Assessee's contentions: The assessee's sole substantive ground challenges the lower authorities' action of treating the purchases as bogus. The assessee is engaged in the construction business, and while cash turnover is possible, their corresponding sales have not been questioned. Revenue's contentions: The revenue supports the lower authorities' decision to disallow the purchases as bogus. The judgment notes that both parties reiterated their stands.

Which sections of the Income-tax Act were involved?

Section 69C,Section 153C,Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARAAND

For Respondent: Ms. Amish S. Gupt, CIT(DR)
Hearing: 05.01.2026Pronounced: 05.01.2026

ORDER PER SATBEER SINGH GODARA, JM These assessee’s twin appeals & 877/Del/2025 for assessment years 2020-21 and 2021-22, arises against the Commissioner of Income Tax (Appeals)-30 [in short, the “CIT(A)”], Delhi’s orders, both dated 30.01.2025, having DINs and orders no. ITBA/APL/M/250/2024-25/1072740858(1) and ITBA/APL/M/ 250/2024-25/1072740374(1), involving proceedings under section 153C r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively.

Heard both the parties. Case files perused.

2.

It emerges during the course of hearing that the assessee raises his sole substantive ground challenging both the learned lower authorities’ action treating his purchases amounting to Rs.3,40,17,291 in AY 2020-21 and Rs.23,79,987/- in AY 2021-22 sourced from M/s. Sanjay Jain group, as bogus purchases under section 69C of the Act, in assessment orders dated 29.03.2023 and 27.12.2022 for AY 2020-21 and 2021-22, respectively, as upheld in the lower appellate discussion.

3.

That being the case, both the parties vehemently reiterate their respective stands against and in support of the impugned bogus purchases disallowance. We wish to make it clear that there is no dispute in principle that the assessee is engaged in construction business all along wherein possibility of some cash turnover could not be altogether ruled out. And that his corresponding sales have nowhere been questioned in both the lower proceedings. 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.;

1.

2 | P a g e (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.

4.

Faced with these peculiar facts, it is thus deemed appropriate in the larger interest of justice that a lumpsum disallowance @ 6% of the assessee’s alleged bogus purchases amounting to Rs.3,40,17,291 in AY 2020-21 and Rs.23,79,987/- in AY 2021-22 would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computations shall follow as per law. No other ground or argument has been pressed.

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