M/s. Bansal Jewellers vs ITO

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-NFAC, Delhi [‘CIT(A)’ in short] dated 29.10.2025 arising from the assessment order dated 29.05.2023 under section 147 of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2016-17.

The grounds raised by the assessee are as under :

Brief facts of the case are that assessee is a firm dealt mainly in gold and jewellery articles. The assessee has filed original return of income on 17.10.2016 declaring total income at Rs.16,980/- as per the provisions of section 139. The AO subsequently received information that the assessee had made bogus purchases of Rs.1,80,61,337/- from M/s Magnum Tradex Pvt. Ltd., a company floated by one Shri Rajeev Singh Kushwaha, an entry operator who used to control a number of concerns. The assessee filed its return of income u/s 148 of the Act on 14.02.2023.

The AO passed an order u/s 147 r.w.s. 144 making an addition of Rs.1,80,61,337/- as unexplained expenditure u/s 69C. Aggrieved, assessee was in appeal before CIT(A) who gave partial relief by observing that instead 50% of the purchases be treated as unexplained expense u/s 69C and brought to tax. Aggrieved, assessee is before us.

At the outset, learned Counsel of the assessee stated that addition of Rs.90,30,668/- u/s 69C of the Act by presuming that 50% of purchases made from M/s. Magnum Tradex Pvt. Ltd. as bogus purchases is not warranted. Per contra, the ld DR relied on the orders of the CIT(A).

We have heard both the parties and perused the material available on record. We find assessee has explained that the purchases made from M/s. Magnum Tradex Pvt. Ltd. as genuine by furnishing the tax invoice, GST returns, Bank Statement and yearly and monthly stock summary. AO has held the purchases from M/s. Magnum Trades Pvt. Ltd. as bogus and has added 100% which was reduced to 50% by the CIT(A).

In the instant case, we find that the assessee has attempted to prove the entire purchase from M/s Magnum Tradex Pvt Ltd as genuine. Although the assessee, prima facie, appears to have discharged its onus of explaining the purchase, it’s contentions to prove the purchase, hardly deserves to be accepted in entirety especially when the assessee could not prove the physical movement of goods. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that M/s Magnum Tradex Pvt Ltd is genuine, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the purchase, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 5 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 is partly allowed.

In the result, appeal of the assessee in ITA No. 8718/DEL/2025 is partly allowed.