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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
The captioned appeal preferred by the assessee is against the order of the learned Commissioner of Income-tax (Appeals)-26, Delhi dated 30.09.2025 arising out of Assessment order passed under section u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 29.03.2025 by the JCIT (OSD), CC-13, New Delhi (herein refereed as the Assessing Officer or AO) concerning Assessment Year 2023-24.
None appeared on behalf of the assessee. We heard the ld. DR at length who assisted us with the facts of the case and relied on the orders of the Assessing Officer. Case records carefully perused and considered.
Brief facts of the case are that the assessee is a Company incorporated on 24.04.2009 under the Company Act, 1956 (now known as Companies Act, 2013). Assessee filed its return of income for the A.Y. 2023-24 declaring a total Income of Rs.1,96,86,590/- on 26.10.2023. The case was selected for scrutiny and the learned AO passed assessment order, assessing the income of the company at Rs.2,06,93,890/- with an addition of Rs.10,07,300/-on account bogus purchase, as against the declared gross total income of Rs.1,96,86,590/-. Aggrieved, assessee was in appeal before the learned CIT(A). The CIT(A) dismissed the appeal of the assessee.
Aggrieved, assessee is in appeal before the Tribunal with the following grounds:
“1.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act without appreciating that the same was without jurisdiction and barred by limitation and, therefore, the said notice u/s 143(2) along with assessment order passed on the foundation of such notice are liable to be quashed.
2.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act determining income of the appellant Company at Rs. 2,06,93,890/- as against declared income of Rs. 1,96,86,590/-.
3.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act by making addition of Rs. 10,07,300/- on account of alleged non-genuine purchases u/s 28 of the Act.
4.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act without appreciating the fact that the findings and conclusions recorded by the Ld. Assessing Officer in the impugned order of assessment are factually incorrect, contrary to the evidences and replies on record and overlooking the submissions of the appellant company.
5.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act without considering the material on record and with a pre-determined mindset.
6.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act without appreciating that the same was passed in gross violation to the principle of natural justice, without affording a proper opportunity of being heard and without affording an opportunity of cross examination to the appellant company, thereby making the impugned order bad in law.
7.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company by confirming the order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act by computing the tax liability as Rs. 24,94,223/- in the impugned computation for the period under consideration by ignoring the facts and material available on records.
8.That the Ld. CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant Company without adjudicating the ground on initiation of the penalty, as initiated u/s 270A of the Act, in the impugned order dated 29.03.2025 passed by the Ld. Assessing Officer under section 143(3) of the Act.
9.The Appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.
10.That all the grounds are without prejudice to each other.”
We have heard the ld. DR and have perused the relevant material on record. In the instant case, the assessee had shown purchase of Rs. 3,66,29,200/- and Rs. 2,20,93,500/- from M/s Kabir Ventures Private Limited and Kabir Bajaj, Prop. Dia Trading Co. respectively. It was further gathered that the aforesaid vendors had purchased their material from entities, which were not genuine and not filing any ITRs; meaning the bogus purchase were layered through Layer 1 (L1) and Layer 2 (L2) entities. During, the assessment proceedings, the AO made independent enquiries (including field visit and GST enquiry) and noted that these layer 2 entities were non-existent at their registered places of operation. The AO has considered the purchase from these parties as bogus and has considered profit elements of 3.5% on such bogus purchases as income of the assessee which was confirmed by the CIT(A).
We find that in the instant case, the assessee has attempted to prove the entire purchase as genuine which hardly deserves to be accepted in entirety especially when the AO found that the purchases were made from non-filers and non-genuine entities. Be that as it may, it is deemed appropriate, in larger interest of justice, the profit embedded in the such bogus purchases be restricted to 2.5% of the bogus purchase which 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 is partly allowed.
In the result, appeal of the assessee in ITA No. 7885/DEL/2025 is partly allowed.