SAVITRI JAIN,HARYANA vs. INCOME TAX OFFICER, WARD - 36(1), NEW DELHI, NEW DELHI

The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 10/02/2025 pertaining to Assessment Year 2018-19.

Brief facts of the case are that, the Assessee being a proprietor of M/s M J Paper India, filed return declaring total income of Rs. 2,98,550/- for Assessment Year 2018-19. An assessment order came to be passed on 30/03/2023 u/s 147 of the Act by making an addition of Rs. 76,10,580/- on account of unexplained expenditure u/s 69C of the Act.

Aggrieved by the assessment order dated 30/03/2023, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) partly allowed the Appeal by directing to A.O. to estimate the GP rate of 12.5% on the disputed purchase i.e. 76,10,580/- by restricting the addition toRs.

The Ld. Counsel for the Assessee submitted that the Assessee produced the books of account statement, purchase bills etc. to prove the genuineness of the purchases. At no point of time, the A.O. doubted the sales affected by the Assessee thus it can be inferred that without corresponding purchases been affected, the Assessee could not have made the sales. Further submitted that, both the A.O. as well as Ld. CIT(A) have relied on the information from the GST return of a third partyand treated the purchases of the Assessee are bogus. The Ld. Counsel further submitted that, there was no basis for the Ld. CIT(A) to restrict the addition to Rs. 9,51,322/-. Thus, sought for allowing the Appeal.

Per contra, the Ld. Departmental Representative submitted that the entire addition should have been upheld by the Ld. CIT(A), however, the Ld. CIT(A) has taken liberal view and restricted the addition by calculating ad-hoc G.P. rate at 12.5% on the purchase, thus submitted that there is no error or infirmity in the order of the Ld. CIT(A).

We have heard both the parties and perused the material available on record. The Ld. CIT(A) in Para 4.3.4 observed that the Assessee has produced bank statement, purchase bills, etc. to prove the genuineness of the purchases and at no point of time, A.O. doubted the sales affected by the Assessee and also found fault with the same. Further found that Ld. A.O. made addition based on the GST Department Information by treating the purchase as bogus. However, the Ld. CIT(A) restricted the addition to 12.5% of such purchase.

It is the specific contention of the Assessee that the total purchase made form M/s Jai Bhagwani Sales during the Financial Year 2017-18 wasRs. 30,42,821/- and not the alleged amount of Rs. 76,10,580/- and the Assessee is not responsible for reporting alleged purchase of Rs.76,10,580/- by the said M/s Jai Bhagwani Sales and further contended that the Assessee has never availed input of tax credit other than purchase of Rs. 30,42,821/-. To corroborate the same, we have verified the ledger account of M/s Jai Bhagwani Sales and also books of account of the Assessee produced along with the other documents in the paper book and found that the Assessee made purchase of Rs. 30,42,821/- and not of Rs. 76,10,580/-. We are of the considered opinion that merely because the third party i.e. M/s Jai Bhagwati sales declared wrong sales before the GST, that cannot be a sole basis to make addition in the hands of the Assessee. Considering the above facts and circumstances and also looking into the business of the Assessee, we modify the order of the Ld. CIT(A) and direct the A.O. to estimate the GP rate at 5% on the admitted total purchase of Rs. 30,42,821.