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Judgment
PER SHRI M. BALAGANESH, AM:
The instant batch of 11 appeals involve the single assessee herein “Deepak Choudhary”. This assessee’s appeals in ITA No. 9078 to 9083 for AYs 2018-19, 2020-21 to 2024-25 and the Revenue’s cross appeals ITA Nos. 8674, 8608, 8626, 8739, 8740/Del/2025 for AYs 2018-19, 2021-22 to 2024-25arise against Commissioner of Income Tax (Appeals)-24, New Delhi’s orders dated 15.10.2025 (for AY 2018-19, 2020-21, 2021-22, 2022-23, 2023-24, 2024-25) respectively against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by DCIT, Central Circle-5, Delhi (hereinafter referred to as ‘ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
Both the parties before us suggested that appeal of the assessee in ITA No. 9078/Del/2025 for Assessment Year 2018-19 and appeal of the revenue in ITA No. 8674/Del/2025 for Assessment Year 2018-19 may be taken as the lead case. Both the parties suggested that the decision rendered in Assessment Year 2018-19 could be made applicable for other appeals of the assessee as well as by the revenue as the issues involved are common, except with variance in figures. Accordingly, we proceed to take up the appeal of the assessee in ITA No. 9078/Del/2025 and appeal of the revenue in ITA No. 8674/Del/2025 for Assessment Year 2018-19 as the lead case.
The Ground Nos. 2 to 4 raised by the assessee were stated to be not pressed by the learned AR at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly, the Ground Nos. 2 to 4 raised by the assessee are hereby dismissed as not pressed.
The Ground Nos. 1 and 11 raised by the assessee and Ground No. 8 raised by the revenue are general in nature.
The Ground Nos. 5 to 9 raised by the assessee and the Ground Nos. 1 to 7 raised by the revenue are challenging the addition made by the learned AO under section 69A of the Act.
We have heard the rival submissions and perused the materials available on record. A search and seizure operation under section 132 of the Act was carried out on the Vestige group of companies and on the assessee on 20-9-2023. The assessee is a practicing chartered accountant and the statutory auditor of Vestige Marketing Private Limited (VMPL in short). Both the residential and business premises of the assessee were covered in the search action along with VMPL. The shares of VMPL were held by three shareholders Shri Gautam Bali, Shri Kanwar Bir Singh and Shri Deepak Sood in the ratio of 60 percent, 23 percent and 17 percent respectively. The case of the revenue is that the search unearthed a well orchestrated modus operandi of large scale tax evasion with booking of bogus purchases and bogus commission / bonus expenses in the books of VMPL, generation of unaccounted cash in lieu thereof through non-genuine vendors and distribution of such cash amongst the shareholders and the facilitating auditor in a fixed and admitted ratio of 80 : 20 respectively. The revenue’s case is that during the course of search, sworn statements under section 132(4) of the Act were recorded from three shareholders viz Shri Kanwar Bir Singh, Shri Gautam Bali and Shri Deepak Sood who admitted to the generation of unaccounted cash through bogus billing and receipt of their respective share of money. The sworn statement of the assessee was also recorded under section 132(4) of the Act on 22-9-2023 wherein he admitted that he had arranged bogus bills of purchase and commission for the Vestige group including VMPL on a regular basis by explaining the modus operandi thereon. Apart from this, sworn statements of certain key finance personnel and of the assessee’s own staff were also recorded who corroborated the modus operandi and identifying the list of bogus entities. Statements of cash handlers / collection points and of proprietors of certain bogus concerns were also recorded. All these statements are enclosed in Pages 5 to 94 of the Paper Book. Further the summons under section 131(1A) of the Act issued to various persons were returned unserved as the parties did not exist at their registered addresses and inspector reports confirming non-availability of such parties. Apart from these, digital / documentary evidence including an excel sheet titled “bogus expense employee wise” seized from a Kingston pen drive from VMPL's head office and email conversation in which list of bogus parties and transaction amounts were exchanged between the assessee and his employees. Further Shri Kanwar Bir Singh in his statement specifically admitted that out of the unaccounted cash generated, 20 percent was received by the assessee and the remaining 80 percent was divided amongst the three directors in proportion to their shareholding in VMPL. This apportionment stood independently vindicated when the 17 percent share worked out for Shri Deepak Sood matched the quantum he separately admitted on oath demonstrating that the admitted pattern of distribution ) was true and reliable. The statements stood retracted by the respective parties at a later date. The retraction statements filed by various persons including the assessee are enclosed in Pages 97 to 161 of the Paper Book.
The assessee filed his return of income for the Assessment Year 2018-19 on 20-11-2024 in response to notice under section 148 of the Act declaring total income of Rs 82,25,020. In the search assessment of VMPL, purchases made by them were sought to be disallowed by treating them as bogus and not genuine. The learned AO of VMPL presumed that by making such bogus expenses in the form of purchases, VMPL had generated cash which was then distributed among the three shareholders and the assessee herein in the ratio of 80 : 20. According to the learned AO, 80 percent of the cash went to the shareholders and 20 percent of the cash went to the assessee herein. Thereafter, the learned AO of VMPL disallowed the alleged bogus expenses in the hands of the company VMPL and also made further addition in the hands of the shareholders and the assessee in the ratio of 80 : 20. Accordingly, 20 percent of alleged cash so generated was added in the assessee’s hands under section 69A of the Act and 80 percent of alleged cash was added in the hands of the shareholders under section 2(22)(e) of the Act treating the same as deemed dividend. All the search assessments framed by the learned AO was challenged before the learned CITA by the respective parties i.e. VMPL, three shareholders and the assessee herein. The learned CITA granted substantial relief in the case of VMPL and as a result, the corresponding addition made in the assessee’s hands under section 69A of the Act stood substantially reduced. Aggrieved by the order of the first appellate authority, both the assessees (i.e. VMPL, three shareholders and the assessee herein) as well as the revenue preferred further appeals before this Tribunal. The Coordinate Bench of Delhi Tribunal in the case of VMPL in ITA Nos. 5515 to 5521 /Del / 2025 along with ITA Nos. 7838 to 7844 / Del / 2025 for assessment years 2018-19 to 2024-25 dated 20-03-2026 granted further relief to VMPL and dismissed all the revenue appeals. With regard to issue of ingenuine purchases in the case of VMPL, the relevant observations of this Delhi Tribunal are as under:-
“7.It is thus clear that what all the learned CIT(A) has done is to delete the bogus disallowance involving those parties who had duly responded to Section 133(6) notice(s) and further filed their respective confirmations, income tax returns along with Form 16A, which has gone unrebutted from the Revenue side. We make it clear that there is no denial coming from the departmental side that neither the assessee's corresponding sales have been treated as unexplained nor its books of account stand rejected in the assessment order in issue. We thus see merit in the assessee's stand that learned CIT(A) has rightly deleted the impugned bogus purchases disallowance amounting to `8,72,84,192/- in its favour. The Revenue's instant former ground fails in very terms therefore.
8.We next come to the assessee's corresponding substantive ground seeking to delete the remaining bogus purchase disallowance of `13,52,382/- (supra). We deem it appropriate to reiterate here that the twin parties concerned namely, Smt. Payal Agarwal and Shri Mohit Jain had nowhere filed their responses to Section 133(6) notices nor their income tax returns or confirmations etc. could see light of the day. The fact also remains that the assessee business activity stands 75 ITA-5515/Del/2025 & 13 others admitted all along. Nor there is any serious abnormality noticed in its books of account as well. We thus deem it appropriate in this backdrop and in the larger interest of justice that a lump sum disallowance at the rate of 5% of the impugned remaining bogus purchases would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow accordingly. The assessee's instant appeal ITA No.5515/Del/2025 raising the very sole substantive ground stands partly accepted. 9. Learned CIT-DR, at this stage, refers to the Revenue's latter substantive ground that the Assessing Officer had rightly made Section 69A addition of `40,18,132/- in the assessee's hands which has been wrongly deleted in the CIT(A)'s detailed discussion. A perusal of the lower appellate discussion reveals that the assessee had duly proved the same as its receipts from ticket sales from public on various events. It had further filed all the relevant details in both the lower proceedings. We thus see no reason to interfere with the learned CIT(A)'s detailed discussion deleting the impugned addition. The Revenue's instant "lead" appeal ITA No.7838/Del/2025 is dismissed in very terms. 10. Same order to follow in the assessee's and the Revenue's remaining six cross-appeals each i.e., ITA Nos.5516 to 5521/Del/2025 and 7839 to 7844/Del/2025; respectively, since involving identical facts and grounds; as the case may be. 11. No other ground or argument has been pressed before us. 12. To sum up, these assessee's seven appeals ITA Nos.5515 to 5521/Del/2025 are partly allowed and Revenue's as well cross appeals 76 ITA-5515/Del/2025 & 13 others ITA Nos.7838 to 7844/Del/2025 are dismissed in above terms. A copy of this common order be placed in the respective files.”
Thus it could be seen that only an adhoc addition of 5% of value of purchases was sustained by the Tribunal in the hands of VMPL and this addition also was made only to take care of the deficiency in the form of non-compliance to notice under section 133(6) of the Act by two parties namely Smt Payal Agarwal and Shri Mohit Jain from whom total purchases were made to the extent of Rs 13.52,382 by VMPL. 95% of the value of purchases has been accepted as genuine by the Tribunal based on supporting and corroborative documentary evidences placed on record. Even for these two suppliers, VMPL had furnished the documentary evidences that are available from its side. Hence there cannot be any allegation that the purchases made by VMPL were ingenuine and that the cash was generated through such ingenuine purchases and the said cash to the extent of 20% has been given to the assessee herein. Hence there is absolutely no scope for making any addition to the extent of 20% of cash in the hands of the assessee herein.
Further in the case of the shareholders viz. Shri Gautam Bali (ITA Nos. 5860 to 5866 with ITA Nos. 7894 to 7900 / Del/ 2025 dated 25-3-2026 for Assessment Years 2018-19 to 2024-25) and in the case of Shri Deepak Sood (ITA Nos. 5867 to 5873 with ITA Nos. 7868 to 7874/Del/2025 dated 25-3-2026 for Assessment Years 2018-19 to 2024-25) , the additions made on account of deemed dividend under section 2(22)(e) of the Act to the extent of alleged cash of 80% of value of purchases were deleted. The relevant operative portion of the said order of this Tribunal are reproduced below:-
“4.We are further informed that both these assessees Shri Gautam Bali and Shri Deepak Sood hold 60 and 17% stake; respectively, in a company namely M/s. Vestige Marketing Private Limited. And that the Assessing Officer ("AO') had framed assessment in the said company's case disallowing its purchases claim of Rs. 8, 86,36,574/- as bogus ones u/s 37 of the Act in the "lead" A.Y. 2018-19. He thereafter treated 80% of the said disallowance amount; coming to Rs. 7,09,09,259/-as cash generated from the alleged bogus purchases as representing dividend distributed by the company to both these directors/ shareholders. The CIT(A) lower appellate discussion on the other hand appears to have relied upon his quantum order in the said company's cases) wherein he had partly upheld the aforesaid bogus purchases addition to conclude that the corresponding 80% of the remaining addition amount would now be added as deemed dividend in these twin assessees hands.
5.It is in this factual backdrop that both these assessees are aggrieved against the lower authority's action treating the foregoing bogus purchases disallowance as deemed dividends added in their hands whereas the Revenue's case is that we ought to uphold the same in entirety.
6.We have given our thoughtful consideration to the rival submissions of both these assessees as well as the Revenues respective stands. We find no merit in the Revenue's arguments justifying impugned deemed dividend addition. This is for the precise reason that Section 2(22)(e) of the Act itself makes it clear that the same gets attracted in an instance of "any ITA Nos.5853, 5854, 5855, 5856, 5857, 5858 and 5859/Del/2025 ITA Nos.7859, 7860, 7861, 7862, 7863, 7864 and 7865/Del/2025 payment by a company i.e. "M/s. Vestige Marketing Pvt. Ltd.", by way of advance or loan to a shareholder". We wish to reiterate here that there is no material in the records indicating M/s. Vestige Marketing Private Limited to have actually made any such payment of advance(s) or loan to both these directors/ promoters. It is thus a case wherein the learned departmental authorities have proceeded on mere assumptions and presumptions to hold that the aforesaid bogus purchases disallowance as dividend distribution which is not sustainable in light of Commissioner v. M/s. Dilip Kumar and Company (2018) 9 SCC 1 (SC) propounding stricter interpretation of a fiscal statute. With thus accept both these assessees' sole identical substantive ground directed against the impugned Section 2(22) (e) addition of deemed dividend addition which is deleted in entirety. The Revenue's stand supporting the same is declined in very terms.
7.No other ground or argument has been pressed before us.
8.To sum up, both these assessee's seven appeals each ITA No. 5860 to 5873/Del./2025 are allowed and the Revenue's as many cross appeals ITA Nos. 7868 to 7874/Del./2025 and 7894 to 7900/Del./2025; are dismissed in foregoing terms. A copy of this common order placed in the respectively case files..."
With regard to the third shareholder Shri Kanwar Bir Singh, this Tribunal in ITA Nos. 5853 to 5859 with ITA Nos. 7859 to 7865 / Del/ 2025 dated 08-04-2026 for Assessment Years 2018-19 to 2024-25 deleted the addition made on account of deemed dividend under section 2(22)(e) of the Act to the extent of alleged cash of 80% of value of purchases. This tribunal merely relied on the aforesaid order of the Tribunal passed in the case of other two shareholders and hence the operative portion is not reproduced herein for the sake of brevity.
We find that the Learned DR before us filed a detailed written submission on merits which are reproduced hereunder:-
“B. Grounds: Addition of Rs. 2,70,476/- under section 69A
15.The assessee contends that the sustained addition is based on suspicion and surmise, rests solely on a retracted third-party statement, and is bad because the assessee is neither a shareholder nor a director of VMPL and was never found in possession of any money. Each of these contentions is answered by the record.
16.The sustained addition rests on corroborated evidence, not suspicion. It is respectfully emphasised that the CIT(A) did not sustain the addition on the strength of the statements alone. He sustained it only to the extent of the bogus expenditure of Rs. 13,52,382/- that was independently established to be non-genuine through enquiries under section 133(6) where the two concerned parties failed to respond, had filed no return of income, and no confirmation was furnished. The sustained portion therefore rests on the confluence of: (a) the assessee's own sworn admission; (b) the mutually corroborating sworn admissions of the three directors and the finance personnel; (c) the independent enquiry under section 133(6) proving the two entities bogus; and (d) the seized digital evidence. This is precisely the corroboration the law requires, and it converts the exercise from one of suspicion into one grounded in tangible material
17.The assessee's own admission is the foundation, Crucially, this is not a case of an addition upon the assessee purely on the word of others. The assessee, in his statement under section 132(4) dated 22.09.2023, himself admitted that he arranged bogus bills of purchase and commission for the group including VMPL, described the modus operandi, and quantified the annual cash generation at Rs. 30-35 crore. An admission by the assessee is substantive evidence of the highest. order and binds the maker unless shown, by cogent evidence, to be untrue which the assessee has wholly failed to do.
18.Ingredients of section 69A are satisfied. Section 69A applies where the assessee is found to be the owner of money not recorded in the books, and offers no satisfactory explanation of its nature and source. Here, the assessee was found on his own admission, corroborated by the admitted 20% distribution ratio to have received and thereby owned unaccounted cash of Rs. 2,70,476/-(referable to the confirmed bogus expenditure), which finds no place in his books, and for which no satisfactory explanation of source has been offered.
19.Absence of shareholding/directorship is irrelevant. Section 69A operates on ownership of money, not on corporate office. The admitted modus was that the assessee as the professional who architected and operated the bogus-billing arrangement received a 20% share, distinct from and larger than any conventional "commission". The assessee's own tabulation of the audit/professional fees received from VMPL (ranging from about Rs. 71 lakh to over Rs. 3 crore per year) itself evidences a deep and continuing financial nexus wholly inconsistent with the picture of a detached, arm's-length auditor that the assessee now seeks to project.
20.No double taxation. The plea that the same sum is taxed twice, once as a section 37 disallowance in VMPL and again under section 69A in the assessee's hands is misconceived. The two additions operate on different persons, in respect of different subject-matter: the disallowance in VMPL neutralises the company's inflated/bogus expenditure, whereas the addition in the assessee's hands taxes the unaccounted cash that he personally received out of the funds so siphoned. These are distinct charges and there is no overlap of the same income in the same hands.
21.No breach of natural justice. The assessee was afforded repeated and effective opportunity. Before the AO, notices under sections 142(1) and 143(2) and a show-cause notice were issued and the assessee's replies were considered. Before the CIT(A), the assessee was granted four opportunities and his written submissions were duly taken on record and considered. Grounds 8 and 9 are therefore factually unfounded.
C. Grounds: Cross-examination and retraction
22.The cross-examination plea does not assist the assessee. The principle in Andaman Timber Industries v. CCE (2015) 62 taxmann.com 3 (SC) applies where an addition rests solely on the untested statement of a third party. That is not this case. The sustained addition is founded on the assessee's own admission and on the independent section 133(6) enquiry, and is therefore not vulnerable on the ground of denial of cross-examination of other deponents. A person cannot claim to cross-examine himself out of his own sworn admission.
23.The retraction is an afterthought and lacks credibility. The statements were recorded in September 2023; the retractions were filed only in March 2025, about eighteen months later, while the assessment was underway and the digital evidence was being confronted. A retraction, to be effective, must be prompt and must be supported by cogent evidence establishing that the earlier admission was untrue or was extracted by coercion. Here there was no contemporaneous complaint of coercion to any higher authority, no adverse entry in the panchnama, and no material whatsoever led to substantiate duress. A belatedly filed, self-serving retraction cannot dislodge the evidentiary value of a statement recorded on oath.
24.On this issue the Revenue relies, first, on the authorities that already form part of the record of the proceedings: Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) (the burden to displace an admission lies on its maker); ACIT v. Hukum Chand Jain (2010) 191 Taxman 319 (Chhattisgarh) and Bachittar Singh v. CIT (2010) 328 ITR 400 (P&H) (a retraction under section 132(4) must be prompt and evidence-backed, failing which it has no force in law): both relied upon by the AO; Bannalal Jat Constructions (P) Ltd. v. ACIT (2019) 106 taxmann.com 128 (SC) (retraction requires strong evidence; SLP dismissed) and Surjeet Singh. Chhabra v. Union of India AIR 1997 SC 2560 (a retracted confession remains binding on its maker) both relied upon by the AO; and CIT v, O. Abdul Razak (2013) 350 ITR 71 (Ker.) (a self-serving retraction, without more, cannot dispel a statement recorded on oath) and Dr. S.C. Gupta v. CIT (2001) 248 ITR 782 (All.) (the burden to prove the admission wrong was not even attempted to be discharged): both relied upon by the CIT(A).
25.Significantly, the CIT(A) has himself recorded a finding of fact that the retraction "lacks credibility and cannot be treated as genuine, the assessee having failed to prove any force or coercion. The assessee has led no material before this Hon'ble Tribunal to unsettle that concurrent finding.
IIL. SUBMISSIONS IN THE REVENUE'S APPEAL (REVENUE AS APPELLANT) (D) 8674/DEL/2025
26.The Revenue is in appeal against the very same order to the extent the learned CIT(A) restricted the addition made by the Assessing Officer from Rs. 1,77,27,315/- to Rs. 2,70,476/- under section 69A. Without prejudice to the submissions in the assessee's appeal that the sustained addition is, at the very least, unimpeachable, it is respectfully submitted that the learned CIT(A) erred in not sustaining the addition in its entirety, and that the restriction is contrary to the material on record and to the settled position in law.
A. The findings recorded by the CIT(A) are irreconcilable with the restriction of the quantum
27.The learned CIT(A) recorded categorical findings of fact that the assessee had indulged in facilitation of large-scale tax evasion through bogus billing; that the assessee and the shareholders of VMPL had voluntarily admitted on oath the generation and distribution of unaccounted cash; that the subsequent retraction lacks credibility; and that the assessee had received his 20% share of such unaccounted cash. Having so held, the only course consistent with those very findings was to sustain the assessee's admitted 20% share of the bogus expenses of Rs. 8,86,36,574/-claimed by VMPL for the year, that is, Rs. 1,77,27,315/-. The restriction to Rs. 2,70,476/- is self-contradictory, in that it accepts the modus operandi, the identity of the beneficiary and the ratio of distribution, and yet withholds the quantum that necessarily follows from them.
B. The quantum stands established by the admissions, independent of vendor- level verification
28.The learned CIT(A) restricted the addition by confining it to the two entities (aggregating Rs. 13,52,382/-) that failed verification under section 133(6). That approach proceeds upon an erroneous legal premise. The quantum of unaccounted cash was established directly and independently by the sworn admissions on record, namely, the assessee's own admission of cash generation of Rs. 30-35 crore per year, Sh. Kanwar Bir Singh's admission of bogus billing of about Rs. 40 crore per year, and Sh. Deepak Sood’s admission of receipt of Rs. 57 to 63 crore over the block period, none of which depended upon any vendor-by-vendor enquiry. The figure of Rs. 8,86,36,574/- for the year (20% whereof is Rs. 1,77,27,315/-) was itself built upon four documented components, viz., summons under section 131(1A) returned unserved, the seized "Bogus Expense Employee-wise" excel, the list of bogus commission furnished by Sh. Anurag Anthwal during post-search proceedings, and the bogus parties identified in the seized email trail, Corroboration in a search of this nature operates at the level of the scheme; the law does not oblige the Revenue to re-verify every individual vendor before an admitted and digitally documented quantum can be brought to tax.
C. The genuineness of the conduit entities was wrongly equated with the genuineness of the expenditure
29.The balance was deleted on the footing that, for the remaining parties, returns of income had been filed, ledger confirmations were furnished, and payments had been routed through banking channels. In an accommodation-entry arrangement, however, these very features are the design of the scheme and not proof of its genuineness: the conduit entities are paid by cheque and return the equivalent cash, and they routinely reflect the receipts in their returns so as to lend the transactions a colour of legitimacy. Payment through banking channels, and the availability of a payee's PAN or return of income, do not by themselves establish the genuineness of an item of expenditure where the surrounding evidence, here multiple concurrent admissions on oath and seized digital records, demonstrates that the expenditure was bogus. Such matters fall to be tested on the touchstone of human probabilities and the totality of the circumstances, as held by the Hon'ble Supreme Court in Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) and CIT v. Durga Prasad More (1971) 82 ITR 540 (SC), both already on the record of the proceedings; and, so tested, the entirety of the admitted cash generation, and the assessee's admitted 20% share thereof, is exigible to tax.
D. The statements recorded under section 132(4) retain their full evidentiary value
30.Having itself found the retraction to be lacking in credibility, the learned CIT(A) ought to have given the statements recorded under section 132(4) their full effect, instead of confining their operation to a fraction of the admitted quantum. A statement on oath under section 132(4), corroborated by seized material, is substantive evidence, and a belated and unsubstantiated retraction does not dilute it, as held in Surjeet Singh Chhabra v. Union of India AIR 1997 SC 2560, Bannalal Jat Constructions (P) Ltd. v. ACIT (2019) 106 taxmann.com 128 (SC), ACIT v. Hukum Chand Jain (2010) 191 Taxman 319 (Chhattisgarh) and CIT v. O. Abdul Razak (2013) 350 ITR 71 (Ker.), all of which already form part of the record. The admissions in the present case are further corroborated by the seized excel, the email trail, and the arithmetical vindication of the admitted 20:80 (shareholding) pattern, in that the computed 17% share of Sh. Deepak Sood matched the figure he had separately admitted on oath.
E. The totality of the search material warranted the addition in full
31.The incriminating material unearthed in the course of the search entitled the Assessing Officer to bring to tax the whole of the assessee's share of the unaccounted cash, and not a token part of it, as held in PCIT v. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 (SC). The restriction to Rs. 2,70,476/-defeats the very object of a search assessment, in that it permits the bulk of the admitted, documented and corroborated unaccounted income of the assessee to escape assessment altogether.
IV. THE GROUP ORDERS OF THIS HON'BLE TRIBUNAL DO NOT GOVERN THE PRESENT CASE
(The orders relied upon in the assessee's paper book are those in the cases of Mis Vestige Marketing Pvt. Ltd., Sh. Gautam Bali, Sh. Deepak Sood and Sh. Kanwar Bir Singh)
32.The assessee's paper book carries three orders of this Hon'ble Tribunal relating to the same group. The Revenue submits, with respect, that not one of them touches the issue arising in this appeal. The submission is developed separately for each.
A. Sh. Gautam Bali and Sh. Deepak Sood: ITA Nos. 5860 to 5873/Del/2025 with ITA Nos. 7868 to 7874 and 7894 to 7900/Del/2025, common order dated 25.03.2026 (PB pp. 1034-1038).
33.The sole issue before the Bench is recorded at paragraph 3 of that order:
"It transpires at the outset during the course of hearing... that there arises the identical sole substantive ground for the tribunal's apt adjudication ie. correctness of the learned lower authorities' addition making Section 2(22)(e) deemed dividend addition in the taxpayers' hands; in axsessment order(s) as partly upheld in the lower appellate discussion para 3
34.The reason for deletion is recorded at paragraph 6:
"We find no merit in the Revenue's arguments justifying impugned deemed dividend addition. This is for the precise reason that Section 2(22)(e) of the Act itself makes it clear that the same gets attracted in an instance of any payment by a company i.e. M/x. Vestige Marketing Pvt. Ltd., by way of advance or loan to a shareholder. We wish to reiterate here that there is no material in the records indicating M/s. Vestige Marketing Private Limited to have actually made any such payment of advance(s) or loan to both these directors/promoters. It is thus a case wherein the learned departmental authorities have proceeded on mere assumptions and presumptions to hold that the aforesaid bogus purchases disallowance as dividend distribution which is not sustainable in light of Commissioner v. M/s. Dilip Kumar and Company (2018) 9 SCC 1 (SC) propounding stricter interpretation of a fiscal statute."- para 6
35.The order is therefore a decision on the ingredients of a deeming provision: s. 2(22)(e): and on nothing else. It is respectfully submitted that it is distinguishable, and indeed inapplicable, for the following reasons:
(a)Different charging provision. The addition in the present case is u/s 69A, not u/s 2(22)(e). The two provisions have nothing in common. Section 2(22)(e) requires a payment by a company by way of advance or loan to a shareholder, s. 69A requires ownership of money not recorded in the books, coupled with an unsatisfactory explanation of nature and source. The reason for which the deemed dividend addition failed, the absence of an advance or loan, has no counterpart in s. 69A.
(b)Different assessee, differently situated. Sh. Gautam Bali and Sh. Deepak Sood hold 60% and 17% of VMPL. The present assessee holds nothing. He is not a shareholder, not a director, and not a person to whom s. 2(22)(e) could ever apply. The Assessing Officer did not attempt to apply it to him. His 20% was not a distribution on shareholding; it was on the admitted facts, the consideration for arranging the bogus bills which is why it falls to be assessed as unexplained money and not as deemed dividend.
(c)The Tribunal made no finding on the merits of the modus operandi or on the statements. It did not hold that no unaccounted cash was generated. It did not hold that the s. 132(4) statements were untrue, involuntary or validly retracted. It did not consider the retraction. issue at all. It decided a pure question of statutory construction, on the footing that even assuming the bogus purchases disallowance, the receipt could not be characterised as deemed dividend.
(d)The reasoning cuts in the Revenue's favour. The vice identified by the Bench was that a deeming fiction had been stretched beyond its language, contrary to the strict-construction rule in Dilip Kumar & Co. In the present case there is no such stretching: every ingredient of s. 69A: ownership of money, absence of any record of it in the assessee's books, and absence of any explanation is present and, on the retraction question, admitted.
(e)A decision is an authority only for what it decides. The Revenue respectfully invokes the settled rule in State of Orissa v. Sudhansu Sekhar Misra, AIR 1968 SC 647; Ambica Quarry Works v. State of Gujarat, (1987) 1 SCC 213; and CIT v. Sun Engineering Works (P.) Ltd., (1992) 198 ITR 297 (SC), where the Hon'ble Supreme Court held that a judgment must be read as a whole and in the context of the questions which arose for consideration, and that observations are not to be picked out of context and applied to a different set of facts.
B. Sh. Kanwar Bir Singh: ITA Nos. 5853 to 5859 and 7859 to 7865/Del/2025, order dated 08.04.2026 (PB pp. 1044-1049)
36.This order adds nothing. The Bench recorded at paragraph 7:
"We have noted that the facts of the present case are identical to those in the case of other promoters. Accordingly, in respectful compliance to the order of this Tribunal in ITA Nos. 5860 to 5873, 7894 to 7900, 7868 to 7874/DEL/2025 (supra) and for the purposes of consistency, we set-aside the order of the ld. CIT(A) and direct the ld. AO to delete the impugned addition made under section 2(22)(e)."- para 7
37.Two points follow. First, the order is expressly one of consistency with the Bali and Sood order, on the same s. 2(22)(e) issue, and the distinctions in paragraph 35 above apply with equal force. Sh. Kanwar Bir Singh holds 23% of VMPL; the present assessee holds nothing. Secondly, the Bench decided as it did because "the Revenue could not point out any distinguishment of facts". In the present appeal the Revenue does point out the distinguishment, and it is a fundamental one: a different provision, a different assessee, a different juridical basis and a different body of evidence.
C. M/s Vestige Marketing Pvt. Ltd.: ITA Nos. 5515 to 5521 with ITA Nos. 7838 to 7844/Del/2025, common order dated 20.03.2026 (PB pp. 958-1033)
38.The two issues before that Bench were (i) the disallowance of VMPL's purchases of Rs. 8,86,36,574/-u/s 37(1) in the company's own hands, and (ii) a s. 69A addition of Rs. 40,18,132/-relating to receipts from sale of event tickets. Neither is the issue in this appeal.
39 The reason the Bench upheld the deletion of Rs. 8,72,84,192/- is recorded at paragraph 7 and is entirely company-specific:
"It is thus clear that what all the learned CIT(A) has done is to delete the bogua disallowance involving those parties who had duly responded to Section 133(6) notice(s) and further filed their respective confirmations, income tax returns along with Form 164, which has gone unrebutted from the Revenue side. We make it clear that there is no denial coming from the departmental side that neither the assessee's corresponding sales have been treated as unexplained nor its books of account stand rejected in the assessment order in issue." para 7
40.And on the residue, the Bench did not accept VMPL's case either. It sustained a lump-sum disallowance, and critically, expressly denied the ruling any precedential value:
"We thus deem it appropriate in this backdrop and in the larger interest of justice that a lump sum disallowance at the rate of 5% of the impugned remaining bogus purchases would be just and proper with a rider that the same shall not be treated as a precedent." para 8
41 The Revenue respectfully submits that the VMPL order does not assist the assessee, for these reasons:
(a)It is a ruling that disclaims its own precedential value. Paragraph 8 records in terms that the disposal "shall not be treated as a precedent". An order which by its own terms is not a precedent cannot be the foundation for deleting an addition in the hands of a different assessee under a different provision.
(b)Deductibility in the payer's hands and ownership of cash in the recipient's hands are different questions. The disallowance u/s 37(1) asks whether VMPL has proved that the expenditure was laid out wholly and exclusively for business. The addition u/s 69A asks whether this assessee owned unrecorded money. A disallowance may fail for reasons peculiar to the payer while the receipt of cash by a facilitator stands proved by other evidence. The two enquiries are simply not co-extensive, and the quantum sustained in one is not the measure of the other.
(c)The load-bearing reasons in VMPL's case have no analogue here. Those reasons were that the corresponding sales had not been disturbed, that the books had not been rejected u/s 145, and that there can be no sale without a corresponding purchase. None of these has any application to an individual Chartered Accountant assessed on unexplained money. He has no sales, no stock and no trading account; his books are not the books in issue.
(d)The Bench made no finding on the s. 132(4) statements or on the retraction. It did not hold that Sh. Kanwar Bir Singh's admission of the 20:80 split was untrue. It did not hold that the assessee's own admission of Rs. 30-35 crore per annum was untrue. The retraction issue was simply not adjudicated.
(e)The evidence personal to this assessee was not before that Bench. The 'DC Expense' workbooks bearing the assessee's own initials; the e-mails on [email protected]; the statements of the assessee's own employees Sh. Sajan Kumar Agarwal, Sh. Sanjay Sharma and Sh. Satya Prakash Gupta; the deposition of Sh. Pradeep Garg that he received. cash from the assessee's office; and the assessee's own s. 132(4) admission none of this formed the subject matter of the VMPL appeal, which was concerned with whether particular payees had responded to s. 133(6).
(f)Each assessee and each assessment is a separate unit. The findings in the assessment of one person do not operate as res judicata or estoppel in the assessment of another: ITO v. Murlidhar Bhagwan Das, (1964) 52 ITR 335 (SC). The Revenue does not contend that the VMPL order is wrong; it contends that it is not on the point.
42.In short: the shareholders succeeded because s. 2(22)(e) was the wrong provision for them, the company succeeded because its payees answered s. 133(6) notices and its books were not rejected. Neither reason is available to the present assessee, and neither reason touches the question whether he received Rs. 1,77,27,315/- in cash.
PRAYER
In the light of the above, it is most respectfully prayed that this Hon'ble Tribunal may be pleased to:
(i)in the appeal of the assessee, dismiss the appeal; and
(ii)in the appeal of the Revenue, set aside the order of the learned CIT(A) to the extent it restricts the addition, and restore the addition of Rs. 1,77,27,315/- made by the Assessing Officer under section 69A of the Act in full; and pass such other or further order as may be deemed fit in the interest of justice.”
The various contentions raised by the revenue in its written submissions above need not be gone into in view of the fact that the issues in dispute is already addressed by the Tribunal in the case of VMPL and in case of three main shareholders of VMPL, which is the foundation / edifice based on which additions were sought to be made in the hands of the assessee herein. When the additions stood deleted in the hands of three shareholders for the very same set of transactions, then there is absolutely no scope for sustenance of the addition qua the same transaction, in the hands of the assessee herein. Hence we hold that the addition made in the hands of the assessee herein does not have any legs to stand in the eyes of law. Accordingly, the Ground Nos. 5 to 9 raised by the assessee are allowed and Ground Nos. 1 to 7 raised by the revenue are dismissed for the Assessment Year 2018-19.
The Ground No. 10 raised by the assessee is with regard to chargeability of interest under section 234A, 234B, 234C of the Act. The Learned AO shall decide the levy of interest under section 234A of the Act after ensuring the fact as to whether the return of income was filed belatedly by the assessee. The levy of interest under section 234B of the Act is consequential in nature. With regard to levy of interest under section 234C of the Act, the law is very well settled that the same shall be charged only on the returned income and not on the assessed income.
As stated in the earlier part of this order, the decision rendered by us for the Assessment Year 2018-19 (being the lead year) shall apply mutatis mutandis for other assessment years also except with variance in figures.
In the result, all the appeals of the assessee are partly allowed and all the appeals of the revenue are dismissed.