Surender Gupta Vs DCIT (ITAT Delhi)
Bogus Purchases Case: Delhi ITAT Restricts Addition to 11% GP (Net of GST), Rejects Revenue’s Full Disallowance Plea Only Profit Element Taxable—ITAT Delhi Refines GP Rate & Grants GST Adjustment in Search Case
Delhi ITAT ‘G’ Bench in Surender Gupta vs DCIT (ITA Nos.1670–1672/Del/2025 & 2871–2873/Del/2025; AYs 2018-19, 2019-20 & 2020-21; order dated 24-12-2025) partly allowed assessee’s appeals and dismissed Revenue’s cross-appeals, holding that in cases of accommodation-entry based bogus purchases, only the embedded profit element can be brought to tax, not the entire purchase value.
Search proceedings u/s 132 led to assessments u/s 153A wherein AO made multiple additions on alleged bogus purchases from entities controlled by Sanjay Jain group, including (i) purchases of ₹45.25 lakh, (ii) ₹34.33 lakh from a party treated as non-existent, and (iii) ₹1.07 crore merely on the ground that vendors disclosed low income. CIT(A) accepted that purchases from Sanjay Jain–controlled entities were not genuine but restricted the addition to 12.5% GP, while deleting other additions in full.
ITAT upheld CIT(A)’s finding that mere low income of suppliers or non-service of notice u/s 133(6) cannot justify full disallowance, especially where invoices, bank payments, GST records, e-way bills and confirmations were on record. Tribunal relied on Vrindavan Farms (Del HC) and Karam Chand Rubber Industries (ITAT Delhi) to sustain deletion of ₹1.07 crore and ₹34.33 lakh additions.
