Indo Plastic Co. Vs ACIT (ITAT Delhi)
Addition on Alleged Inflated Purchases Based Solely on Third-party Data Deleted – No Independent Enquiry or Evidence Found Against Assessee
Assessee, a partnership firm engaged in manufacturing automobile components, was assessed u/s 147 based on information from search on M/s Bharat Seats Ltd. (BSL) & M/s Sharda Motor Industries Ltd. (SMIL), where it was alleged that these companies suppressed profits by inflating purchases & returning cash. AO alleged that the Assessee inflated purchases of ₹31.35 lakh (3% of total ₹10.45 crore) & added it as unexplained money u/s 69A, without furnishing incriminating material or conducting any independent enquiry.
CIT(A) upheld the addition relying on departmental communication.
Tribunal noted that the entire proceeding was based solely on third-party information from JCIT (OSD), Central Circle, without providing supporting documents to the Assessee or verifying the alleged transactions independently. It observed that no evidence linked the Assessee to the alleged cash generation or inflated invoices.
Holding that addition cannot rest on presumptions & conjectures, Tribunal deleted the addition in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is emanating from the order of the NFAC, Delhi in Appeal No. ITBA/NFAC/S/250/2025-26/1079549570(1) dated 12.08.2025 relating to assessment year 2020-21.
