Sunil Garg v. DCIT

Case snapshot

Sections / provisions: 145(3)

Questions before the Court / Tribunal

• Bogus purchases and gross-profit estimation: The reported order concerns rejection of books and an addition connected with alleged non-genuine purchases. The Tribunal is reported to have preferred a profit-based approach over the impugned addition on the facts.

Material facts and background

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 1212/Del/2023 (AY 2009-10); ITA NO. 1213/Del/2023 (AY 2010-11); ITA NO. 1214/Del/2023 (AY 2011-12); ITA NO. 1215/Del/2023 (AY 2012-13); ITA NO. 1216/DEL/2023 (AY 2013-14)’ AND ITA NO. 1217/Del/2023 (AY 2014-15) SUNIL GARG, C-2/15, 1ST FLOOR, PRASHANT VIHAR, DELHI - 110 085 (PAN: AIDPG1460H) (APPELLANT)

ORDER PER BENCH : These are six appeals filed by the assessee against the common order dated 27.02.2023 passed by the ld. CIT(A-3), Gurgaon relating to assessment years 2009-10 to 2014-15 respectively, confirming the action of the AO in

grounds have been raised in all the appeals, except the difference in figures of additions. Therefore, for the sake of brevity, we are only reproducing the grounds of appeal pertaining to AY 2009-10 as under:“1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eyes of law and on facts. 2.

CIT(A) has erred both on facts and in law in confirming the order passed by the AO under section 153A(1)(b) read with 143(3) of the Act despite the same is illegal and void-ab initio in the absence of any search initiated under section 132 of the Income Tax Act in the name of the assessee. 3.

by the AO and proceedings initiated thereto under section 153C of the Act is bad in law, being barred by limitation and hence the 2|Page

CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and assumption of jurisdiction by AO are illegal and void ab initio. 5.

CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment order passed in consequence thereto are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of search. 6.

Appellant / assessee submissions

the assessee submitted that AO has made the additions of gross profit over and above the gross profit declared by the assessee without detecting even a single defect in the books of accounts. The AO has made the additions in respective assessment years by adding the same gross profit rate on the total turnover over and above the gross profit declared by the assessee. He further submitted in identical situation in verbatim order of the AO, similar addition has been deleted by this Tribunal vide its order dated 24.10.2024 passed in ITA No. 3400/Del/2023 & ITA No. 3402/Del/2023 in the matter of Kamal Sharma vs. DCIT pertaining to assessment 2008-09 & 2014-15, which has been followed in order dated 10.12.2014 passed in ITA

observing as under:“9.4 Learned counsel for the assessee reiterated the submissions as made in the synopsis filed on behalf of the assessee and submitted that all relevant details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer. The AO without detecting any defect in the books of accounts, rejected the same u/s 145(3) of the Act and made addition of Rs.12,86,416/- by applying the GP rate of 0.24% (declared in its books of accounts) on the total turnover accounted by it in its books of accounts. Learned counsel submitted that the AO has made addition of Gross Profit which has already been considered by the assessee for computing its tax liability. He submitted that the AO by adding gross profit again to the income of the assessee has made double taxation which is unsustainable and unjust in the eyes of law. He submitted that the AO has made the addition by relying on the statements recorded on the back of the assessee without providing an opportunity of cross-examine the same. Relying upon the decision of Hon’ble Supreme Court in the case of Andaman Timber Industries v. CCE 2015 SCC Online SC 1051 he submitted that no...

Revenue / respondent submissions

Per contra, Ld. DR relied upon the orders of the authorities below. She

Court / Tribunal analysis and reasoning

- ITAT Delhi in the case of Divya Exim Pvt. Ltd. C/O. Kapil Goel, Adv., Renu Jain C/O. Kapil Goel, Adv., Nisha Jain C/O.Kapil Goel, Adv. Versus DCIT Central Circle 25 New Delhi 2024 (1) TMI 750, dated:-15-1-2024 9.5 On the other hand, learned DR supported the orders of authorities below. 9.6 We have heard rival submissions and perused the material available on record. The stand of assessee is that all details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer and the AO without pointing out any specific defect therein rejected the books of account u/s 145(3) and made the impugned addition of Rs. Rs.12,86,416/- by applying the GP rate of 0.24% on the total turnover accounted by the assessee in its books of accounts. We fail to understand the reasoning of AO as at one hand he stated sale/purchase claimed to have been made by M/s Kamal Trading Company amounting to Rs. 54,14,14,119/- as bogus then he proceeds to make addition on the basis of GP disclosed by the assessee without any justification and explanation. Such order, on merit as well, fails to meet the test of law and deserves to be quashed. The grounds raised by the...

Operative decision and relief

Considering the fact that the Co-ordinate Bench of the Tribunal deleted the similar addition on the same set of facts for Assessment Year 2008-09 and 2014-15 and in the absence of any change of facts or circumstances pointed out by the Department, by respectfully following the order of the Co-ordinate Bench in ITA No. 3400 and 3402/Del/2023 (supra), we set aside the addition made by the A.O. which have been confirmed by the Ld. CIT(A) in so far as Assessment Year 2010-11 to 2013-14.

deleted the similar additions on the same set of facts for Assessment Years 2008-09 and 2014-15, which has also been followed in assessment years 201011 to 2013-14, as aforesaid. In the absence of any change of facts or circumstances, by respectfully following the orders of the Coordinate Bench, as aforesaid, we set aside the additions made by the AO which have been confirmed by the ld. CIT(A) in the present appeals relating to assessment years 2009-10 to 2014-15 and allow the grounds raised in all the appeals of the assessee. 7. Since we have set aside the additions made by the AO, which was confirmed by Ld. CIT(A), hence, other aspects for arguments/ grounds need not be adjudicated. 8.

SRBHATNAGAR Copy forwarded to:1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar

Authorities and precedents appearing in the judgment

• Del/2023 & ITA No. 3402/Del/2023 in the matter of Kamal Sharma vs. DCIT pertaining to assessment 2008-09 & 2014-15
• PCIT vs. Abhisar Buildwell Pvt. Ltd
• Kamal Sharma vs. DCIT pertaining to assessment 200809 & 2014-15
• Andaman Timber Industries v. CCE 2015 SCC Online

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Bogus purchases and gross-profit estimation. The operative result is classified as Quashed Or Set Aside. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Bogus purchases and gross-profit estimation. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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