MANISHA,HAPUR vs. ITO, WARD- 2(1)(3), GHAZIABAD

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ITA 2271/DEL/2025Status: DisposedITAT Delhi12 November 2025AY 2022-23Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI ANUBHAV SHARMA (Judicial Member)5 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 held that if sales figures are reflected in returns and accepted under VAT/GST assessment, and the assessee shows them as sales in its books, there is no justification to treat them as undisclosed income under Section 68 without any adverse material or independent enquiry. The Tribunal noted that the assessee's name was not found in the list of persons to whom Radha Buildtech issued bogus bills.

What were the facts?

The assessee, a proprietor of a trading company, was selected for scrutiny. The Assessing Officer (AO) made an addition of Rs. 95,00,000/- on account of alleged bogus sales to M/s Radha Buildtech India Pvt. Ltd., relying on a search operation in a related group and the statement of the director of Radha Buildtech. The assessee had offered these sales in its profit and loss account.

What were the issues?

Whether addition under Section 68 is justified based solely on the statement of a third party without independent enquiry, when sales are already offered for taxation and accepted in other assessments.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : A : NEW DELHI

Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA

For Appellant: Shri Ruchesh Singh, Advocate &, Ms Monalisa Maity, Advocate
For Respondent: Shri Ajay Kumar Arora, Sr.DR
Hearing: 03.09.2025Pronounced: 12.11.2025
1.

This is an appeal preferred by the assessee against the order dated 18.03.2025 of the Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No.NFAC/2021-22/10331453 arising out of the appeal before it against the order dated 23.03.2024 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the Assessment Unit, Income Tax Department (ITO, Ward 2(1)(3), Ghaziabad) (hereinafter referred to as the Ld. AO).

2.

The grounds raised

by the assessee read as under:- “1. That on the facts and circumstances of the case, the Ld. CIT (A) has erred in confirming the addition made by the Ld. A.O of Rs.95,00,000/- on account of unexplained cash credits under section 68 originating from sales made to M/s Radha Buildtech (India) Pvt. Ltd.

2. That on the facts and circumstances of the case, the Ld. CIT (A) has erred in law in not considering that the confirmation of the addition as made by the AO, shall tantamount to making double addition in the hands of the appellant, as the appellant have already offered the amount under sales.

3. That on the facts and circumstances of the case, the Ld. CIT (A) while confirming the addition, has not appreciated that in this case, no opportunity of cross examination of any persons, has been given to the appellant.

4. That on the facts and circumstances of the case the Ld. CIT (A) has erred in not considering that in this case, the provisions of section 68 are not applicable.

5. That the appellant craves leave of adding, modifying any other grounds of appeal, at the time of hearing.”

3. Heard and perused the records. The appellant is a proprietor of M/s Shri Bankey Bihari Trading Co. dealing in Trading of PVC pipe, Pipe Fitting & Water tank etc. since 2015 at Hapur (U.P). The case of the assessee/appellant was selected for scrutiny. On being enquired the appellant stated that during the year under assessment, the appellant has inter alia sold PVC pipes to "M/s Radha Buildtech India Pvt. Ltd." aggregating to Rs. 95,00,000/-. During the assessment proceedings, the Ld. A.O. has observed that a search & seizure action was conducted in the case of companies of Gaur Sons group, where Radha Buildtech India Pvt. Ltd is one of the labour and material contractors of Gaur group. Based on the said search operation it was alleged that the said entity raised bogus bills and the payments against these bills were made through RTGS/cheque. It was observed that later on, cash was received by the said entity. Based on this theory, it was alleged that the sales made by the appellant to the tune of Rs. 95,00,000/- to the said entity is bogus.

4.

The ld. AR has submitted that during the course of assessment proceedings, the appellant has submitted the relevant documents to substantiate its sales like (a) Ledger Account (page 34) (b) copy of Tax Invoice (page 35 onwards), (c) E- Way Bills (page 36 onwards), (d) bank payment statement (page 72 onwards), (e) Copy of GSTR-1, GSTR-3B and GSTR-9 etc ( page 118), and the Ld. A.O. without finding any discrepancy in the books of accounts, without rejecting the books of account of the appellant, without appreciating that the appellant has already booked the said amount of Rs. 95,00,000/- in its profit and loss accounts and hence therefore the same has been offered for taxation, made the addition of Rs. 95,00,000/- by invoking the provision of section 68 of the Income Tax Act. It was submitted that while making the addition the Ld. A.O. has relied on the statement of Sh. Babloo (Director of Radha Buildtech India Pvt. Ltd.).

5.

Ld. DR however, submitted that Ld. AO has rightly relied the statement of Sh. Babloo and manner of cash transactions withdrawal from the bank account of Radha Buildtech to rightly hold that sales were bogus.

6.

We find that admittedly amount generated from sale of the PVC pipes to M/s Radha Buildtech India Pvt. Ltd is already offered/included under "sales figures'. Ld. AR pointed out that the Appellant has also made the sale transaction with M/s Radha Buildtech India Pvt. Ltd. In the preceding assessment year i.e., A.Y. 2021-22 and the said transaction has been duly accepted by the department and no adverse view in this regard has been taken. The appellant has also placed the copy of the assessment order passed in the case of M/s Radha Buildtech India Pvt. Ltd. for the A.Y. 2022-23, the same from internal page number 27 and 28 contains the list of the persons to whom the said entity has issued the bogus bill(s) during the statement of Sh. Babloo. The name of the appellant is not mentioned/reflected in the same. In the GSTR-9 which is the annual return filed by the appellant, the GST number of the said entity i.e. M/s Radha Buildtech India Pvt. Ltd. is clearly mentioned and is reflected.

7.

Now from the perusal of the assessment order, it shall be clear that no independent inquiry in any manner whatsoever has been conducted by the Ld. Assessing Officer and he has chosen to made the addition merely on basis of the statement of Sh. Babloo without affording the appellant opportunity of cross examination. Ld. AO ignored a vital fact that assesse has already declared a total sale of around Rs. 11 crores as per the audited books of account, which includes 4

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