M/s. Kapoor Watch Company Pvt. Ltd. vs JCIT, Central Range-5, Delhi

“Appeal before Hon'ble ITAT in quantum assessment orders: -8. Against the CIT(A) order in quantum appeals, both the assessee as well as revenue filed the appeal before Hon'ble Income Tax Appellate Tribunal (ITAT). The coordinate bench of Hon'ble ITAT vide appeal order dated 18.04.2026 in ITA no. 6825 to 6829/Del/2025 & 6920 to 6921/Del/2025 dismissed the appeal of the revenue. Further the appeal of the assessee in respect of addition of alleged unexplained expenditure as mentioned in paragraph 4 above (in respect of which the CIT(A) has sustained the penalties) has been allowed and the additions made by AO has been deleted. For the ready reference, the findings of Hon'ble ITAT are reproduced as under: -

35.

From the aforesaid discussion and after perusing the order of ld. CIT(A) on all the four categories of transactions doubted by the AO, it is observed that the assessee in the normal course of business has sold the goods to the customers who physically visited the showrooms and purchased the goods and made payment. Once sales have been made and payment is received; the assessee is not under any obligation to examine whether the person who is making the payment is the same person who has purchased the goods or someone else. As a prudent businessman, assessee is concerned with the sales and payment thereof received through banking channel. The AO has not alleged that payments has been received in cash. In some cases where the buyer has not desired to disclose his identity, in the larger interest of the business since the assessee has got the payment through banking channel, their mobile no. or email ID was stated however when the goods were delivered and payment was received through banking channel they cannot be held as dummy or as non-existent.

36.

The assessee has discharged the burden casted upon it to prove the purchases by filing all the relevant details such as purchase and sales bill, all the ledgers, bank statements, quantitative details, GST returns and other relevant information to establish that the purchases and sales as recorded in the books are genuine. It is further observed that the assessee has made specific reply of each and every allegation of the AO with respect to each individual party alleged as the entry operator or the dummy buyers which is available at pages 8 to 79 of the order of Id. CIT(A) where the pointwise rebuttal made by the assessee of each and every allegation made by the AO is replied. It is further observed that revenue has failed to rebut any of the reply filed by the assessee.

37.

In the last one more fact which needs to be considered that the AO has made the addition u/s 69A of the Act. Provisions of section 69A are attracted where the assessee is found the owner of any money, bullion, jewellery or any valuable article or thing which is not recorded in the books of accounts and the assessee has failed to explain the source of the same to the satisfaction of the AO. In the instant case, as observed above, the sole allegation of the AO is that assessee has made cash sales to a person and the sales has been shown in the name of other person from whom the payment is received through RTGS/NEFT etc. and in this entire transaction assessee has received extra profit in cash @ 10% from the original buyer. However, the entire transaction is out of the purview of section 69A Of the Act which is not applicable in this case. Ld. CIT(A) has categorically held that no evidence was found as a result of search that assessee has received cash from sales and therefore we are in agreement with the Id. CIT(A) that the provisions of section 69A of the Act cannot be applied to the facts of the present case.

38.

Under these circumstances, we find no error in the order of Ld. CIT(A) who has rightly deleted the additions made towards undisclosed cash profit @ 10% alleged as received in cash in excess of the sales price recorded in the books of accounts. Accordingly, the order of Id. CIT(A) on this issue is upheld and Revenue's appeal on this issue is dismissed

39.

Now coming to addition of unexplained expenditure in the shape of commission of INR 1,28,96,424/- made u/s 69C of the Act out of which a sum of INR 1,47,300/- was confirmed by Ld. CIT(A) for which assessee is in appeal in Ground of appeal No. 4 and remaining addition is deleted for which Revenue is in appeal before us.

40.

As observed above, while deciding the issue of undisclosed cash profit from the sale alleged as made through dummy buyer, we have observed that the Revenue has failed to bring on record any contrary material found as a result of search from which it could be established that assessee has obtained any such accommodation entry or received any such cash profit thus the question of payment of commission in cash @ 3% does not arise. It is also relevant to state that once we have hold that assessee has never received any amount in cash as has been alleged by the AO that it has received 10% cash over and above the sales recorded from the books of accounts from dummy buyers, it could not be alleged that the assessee has paid commission for such alleged accommodation entries of sales. It is also a matter of fact that the goods sold by the assessee are part of the goods imported from outside India and availability of the stock with the assessee is never in dispute. The sales have been made and the payments have been received through banking channels therefore. We find no infirmity in the order of Ld. CIT(A) who has deleted the addition. Regarding the assessee's appeal confirming the addition of INR 1.47,300/- as commission for accommodation entries of sales of INR 49,10,000/-out of the total addition of INR 1,28,96,424/- made by AO, for the reason that certain persons have admitted to provide accommodation entries to the assessee, It is observed that assessee has not provided any opportunity of cross examine those persons nor the cash profit on the sales made to the extent of such alleged accommodation entries was uphold by ld. CIT(A). Once it is accepted that the sales made is genuine, the question of receiving any accommodation entry does not arise more particularly when no incriminating material was found/seized as a result of search indicating payment of such commission in cash out of the undisclosed sources by the assessee.

41.

In view of all these facts, the additions so confirmed by Ld. CIT(A) is hereby, deleted. Accordingly, Ground of appeal No.4 raised by the assessee is allowed and the appeal of the revenue on this issue is dismissed.

(underlined/emphasis supplied by us

9.

The above finding for A.Y. 2019-20 has been followed for other years also. The findings for A.Y. 2018-19, Α.Υ. 2020-21 and A.Y. 2021-22 as given in Para 52 & 53 of Hon'ble ITAT order is reproduced as under: -

52.

Now we take appeals of the assessee in ITA Nos. 5641, 5643 and 5644/Del/2025 and appeals of the Revenue in ITA Nos. 6826, 6828, 6829/Del/2025 [Assessment Years 2017-18, 2020-21 and 2021-22].

ITA No. 5641, 5643 and 5644/Del/2025[Assessee's appeal]

ITA No.6826, 6828 and 6829/Del/2025 [Revenue's appeal]

[Assessment Years 2018-19, 2020-21 and 2021-221

53.

As admitted by both the parties during the course of hearing, all the issues in all the three appeals of the assessee and of the revenue are same as the additions made by the AO are identical to the additions made in AY 2019-20. The Ld. CIT(A) has also made the similar observations while deleting the additions made by the AO, as has been observed in AY 2019-20. Since, there is no change in the facts and circumstances of the case thus, by following the observations made and conclusion drawn by us in AY 2019-20 while deciding the assessee's appeal in ITA No.5642/Del/2025 and dismissing the appeal of the Revenue in ITA No. 6827/Del/2025 which are Mutatis Mutandis applicable to the facts of the present case. Accordingly, all the three appeals of the assessee are partly allowed and of the revenue are dismissed.

10.

The findings for A.Y. 2022-23 as given in para 55 & 56 of the Hon'ble ITAT order is reproduced as under: -

55.

Now we take appeal of the assessee in ITA No.5645/Del/2025 and appeal of the Revenue in ITA No. 6920/Del/2025 [Assessment Year 2022-23].

ITA No. 5645/Del/2025/Assessee's appeal]

ITA No.6920/Del/2025 [Revenue's appeal]

[Assessment Year 2022-23]

56.

As admitted by both the parties during the course of hearing, the issues raised by the assessee and some of issues in revenue's appeal are identical to the issues in AY 2019-20. Further the Ld. CIT(A) has also made similar observations while deleting the additions made on such issues and there is no change in the facts and circumstances of the case. Thus, by following the observations made and conclusion drawn in ITA Nos. 5642/Del/2025 (assessee's appeal) and in ITA No. 6827/Del/2025 for AY 2019-20 which are Mutatis Mutandis applicable to the facts of the present case of AY 2021-22, the appeal of the assessee is partly allowed and of the revenue of the common issues is dismissed.

11.

The finding for A.Y. 2023-24 as given in para 74 & 75 of Hon'ble ITAT order is reproduced as under: -

74.

Now we take appeal of the assessee in ITA No.5646/Del/2025 and appeal of the Revenue in ITA No. 6921/Del/2025 [Assessment Year 2023-24].

ITA No. 5646/Del/2025 [Assessee's appeal]

ITA No.6921/Del/2025 [Revenue's appeal

[Assessment Year 2023-24]

75.

As admitted by both the parties during the course of hearing, the issues raised by the assessee in ground of appeal No.3 and all the issues raised by in revenue's appeal are identical to the issues in AY 2019-20. Further the Ld. CIT(A) has also made similar observations while deleting the additions made on such issues and there is no change in the facts and circumstances of the case. Thus, by following the observations made and conclusion drawn in ITA Nos. 5642/Del/2025 (assessee's appeal) and in ITA No. 6827/Del/2025 for AY 2019-20 which are Mutatis Mutandis applicable to the facts of the present case of AY 2021-22, Ground of appeal No.3 of the assessee is allowed and all the grounds of appeal of the revenue are dismissed.

12.

In view of the above, it is humbly submitted that the issue involved in the present appeal stands fully covered in favour of the assessee company by the decision of coordinate bench in assessee company's case in the quantum appeal.”