ACIT vs Hari Om Sehgal

PER M. BALAGANESH, A. M.:

The appeal in ITA No.6392/Del/2025 filed by the revenue and CO 35/Del/2026 filed by the assessee for AY 2018, arises out of the ld. Commissioner of Income Tax (Appeals)-23, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 14.07.2025 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 24.03.2023 by the Assessing Officer, NFAC, Delhi (hereinafter referred to as ‘ld. AO’).

The only issue to be decided in the appeal of the revenue is as to whether the ld CIT(A) was justified in deleting the addition of Rs. 2,64,71,290/- made in respect of purchases made by the assessee u/s 69C of the Act in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the material available on record. The assessee is an individual and filed her return of income u/s 139 of the Act for AY 2018-19 on 24-10-2018 declaring total income of Rs. 15,83,010. Based on some information received by the Income Tax Department, notice u/s 148 of the Act stood issued to the assessee on 07-04-2022 that sales made by assessee to Shri Anshul Jain, proprietor of M/s Surya Jewellers is not genuine. In response to the said notice, the assessee filed the return of income on 07-06-2022 declaring the same total income of Rs. 15,83,010. During the course of reassessment proceedings, the sales made by the assessee to Shri Anshul Jain, proprietor of M/s. Surya Jewellers was treated as ingenuine and accordingly sought to be brought to tax by applying the provisions of Section 69C of the Act. In response to the query raised by the ld AO, the assessee furnished the written submission on 19.02.2023, 22.02.2023 and 27.12.2023 by furnishing the following details with supporting evidences:-

The assessee is the proprietor of M/s. Sai Max Traders and had made sales of Rs. 264.71 crores to Shri Anshul Jain. The said sale is duly reflected in the books of accounts of the assessee by duly crediting the same to the profit and loss account of the assessee and offered to tax in the return of income. During the course of reassessment proceedings, notice u/s 133(6) of the Act dated 23.02.2024 was sent to the Hisar address which stood non-compliant. The assessee submitted that entire business is carried on only in Delhi and not in Hisar. In any event, the learned AO completely disregarded the entire contentions of the assessee and proceeded to treat the sales made by the assessee to Anshul Jain as unexplained expenditure u/s 69C of the Act.

Before the ld CIT(A), the assessee objected to the preliminary applicability of provisions of Section 69C of the Act to the impugned transaction by stating that assessee had not made any payment to Shri Anshul Jain for which source of payment is not explainable. The assessee has not made any payment to Anshul Jain from unexplained sources. In fact, no payment at all was made to Anshul Jain. Instead, assessee has only received monies from Anshul Jain. Accordingly, it was contended that the entire premise of the revenue that assessee had made payment on account of bogus purchases to Anshul Jain is factually misconceived. These facts and contentions were duly appreciated by the ld CIT(A) and the ld CIT(A) granted relief to the assessee by clearly observing that assessee had not incurred any expenditure per se and hence the provisions of section 69C of the Act could not be made applicable at all. Further, the assessee has only made sales to Anshul Jain and the same had been duly disclosed in the books of accounts, profit and loss account and the ITR of the assessee. The ld CIT(A) also examined the bank statements wherein amount received from Anshul Jain, proprietor of M/s. Surya Jewellers has been duly highlighted. The ld CIT(A) also highlighted the GST returns of the assessee wherein it was found that GST collected from the buyer had been duly remitted to the account of the Central Government. The ld CIT(A) also examined the audited balance sheet of the buyer and also the ld CIT(A)’s order passed in the hands of the buyer vide appellate order dated 14.07.2025 for the very same AY 2018-19 wherein no adverse inference has been drawn by the revenue with regard to purchases made by Anshul Jain, proprietor of M/s. Surya Jewellers from the assessee herein. We find that the ld CIT(A) had examined all the relevant records and had taken a correct decision by deleting the addition made u/s 69C of the Act in the hands of the assessee herein for the sales made by assessee which stood already disclosed by the assessee in the return. Further, we find that the entire grounds raised by the revenue are totally flawed as it only seeks to address the point that there had been some payment made by the assessee from unexplained resources to Anshul Jain, proprietor of M/s. Surya Jewellers without even basically understanding the fact that assessee has only received monies from the said party and had not made payments to the said party. Hence, it is crystal clear that the grounds raised by the ld AO and the authorization given by the ld PCIT is without any application of mind and this appeal is a frivolous appeal filed by the revenue. Since the grounds raised by the revenue are dismissed on merits, the cross objections raised by the assessee are hereby dismissed as infructuous.

In the result, the appeal of the revenue is dismissed and cross objection of the assessee is dismissed as infructuous.