Shankar Lal vs Income Tax Officer, Ward-34(1), Delhi

PERSHRI ANUBHAV SHARMA, JUDICIAL MEMBER:

These appeals preferred by the Assessee against the order of the Ld. National Faceless Appeal Centre, (NFAC), Delhi (hereinafter referred to as the First Appellate Authority or 'the ld. FAA' for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 147 r.w.s 144 r.w.s 144B of the Income-tax Act, 1961 (hereafter referred to as 'the Act'). Further details of the orders of the lower authorities are as under: -

statement of the assesse was also there and the same reflected the corresponding receipts. It was pointed out that the assesse has a turnover of over 9 crores and very small part of it has been doubted. We also find substance in the contentions of ld. Counsel that the impugned order of ld. AO does not reflect that assesse was given any opportunity to cross examine the vital witnesses whose statements became subject of drawing conclusions. The assessment order reflects that merely the findings of investigation wing have been relied to concluded that M/s Mamta Trading Co. proprietorship concern of Smt. Sudha Jain was dummy concern. Ld. CIT(A) has sustained the order observing that assesse had failed to establish genuineness of transaction by providing third party evidences such as transportation document weighment slips or confirmation from the alleged suppliers. However, with regard to the evidences of assesse no conclusion were drawn to show that the evidences of assesse were not considerable.

In the aforesaid circumstance we are of the considered view that when assesse pleads thatif at all, its sales are to be considered to be bogus it is only the commission income which could have been added as otherwise the financials of the assesse with regard to sales etc. have not been doubted. Thus, it is only the profit embedded in unsubstantiated purchases, corresponding to such sales, which can be subject to taxation. Reliance is placed on decision of Hon'ble Bombay High Court in the case of Pr. CIT v. S.V. Jiwani[2022] 145 taxmann.com 230/[2023] 290 Taxman 178, Hon'ble Bombay High Court in the case of Pr. CIT v. S.V. Jiwani[2022] 145 taxmann.com 230/[2023] 290 Taxman 178 and decision of Hon’ble Delhi High Court in PCIT Versus Jotinder Steels and Tubes Ltd ITA 504/2-25 order dated 23/07/2026.

Accordingly we are inclined to sustain the ground No. 8. The appeal of the assesse for both the years is sustained. The impugned additions are modified with a direction to the ld. AO to add the additional income of commission @ of 0.5% on the impugned purchases. In the aforesaid terms the appeals are allowed.