Case Law Details
M.R. Overseas Pvt. Ltd. Vs DCIT (ITAT Delhi)
Material Facts
The appeals for AYs 2012-13 to 2014-15, 2017-18 and 2018-19 arose from reassessments under Sections 147 and 143(3). A survey in the case of Mr. Ashok Kumar Gupta allegedly revealed a network providing bogus purchase and sales entries through various entities, with the assessee identified as one of the beneficiaries. The Assessing Officer made additions representing the difference between purchases and sales from those entities and also estimated commission at 3%, which were upheld by the CIT(A).
Procedural History
The assessee challenged both the validity of the reassessment proceedings and the additions sustained by the CIT(A).
Legal Issues
- Whether the reassessment initiated under Sections 147/148 was valid.
- Whether the additions based on alleged accommodation entries and the separate 3% commission addition were sustainable.
Tribunal’s Findings
The Tribunal held that the reassessment was based on tangible material detected during the survey and rejected the challenge to the validity of the reopening.
On merits, the Tribunal observed that the assessment and appellate orders established that Mr. Gupta and his entities were accommodation entry providers. It held that once the purchases and sales were treated as accommodation entries, only a lump sum profit element should be assessed instead of the difference between purchases and sales.
Directions and Final Decision
The Tribunal directed the Assessing Officer to assess the assessee at 1% of its entire turnover as the profit element for all five assessment years, clarifying that the direction should not be treated as a precedent. It further held that the separate 3% commission addition could not survive after estimating income at 1% of turnover and deleted that addition. The appeals were partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These assessee’s five appeals ITA Nos.8837 to 8841/Del/2025 for assessment years 2012-13 to 2014-15, 2017-18 & 2018-19, arise against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s orders, all dated 10.10.2025, having DINs and orders nos. ITBA/NFAC/S/250/2025-26/1081632276(1), 1081632724(1), 1081633026(1),1081633504(1) & 1081633761(1), involving proceedings under section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’); respectively.
Heard both the parties. Case files perused.
2. It transpires at the outset during the course of hearing that the assessee/appellant seeks to canvass its first and foremost substantive legal ground challenging validity of the impugned reopening based on identical set of facts as not sustainable in law. Learned counsel’s case accordingly is that given the fact that both the lower authorities have not set into motion section 148/147 proceedings strictly in tune with the settled law, we ought to quash the same in very terms.
3. It next emerges with the able assistance coming from the Revenue side that the learned departmental authorities had carried out a “survey” action in Mr. Ashok Kumar Gupta’s case who was found to have been providing bogus entries of purchases as well as sales through a well-orchestrated network of entities wherein the assessee was also named as one of the beneficiaries. This made the learned assessing authority to initiate the impugned reopening which finally culminated in his reassessment framed on 27.12.2019, inter alia, not only adding the difference between the purchases and sales sourced from the said entities amounting to Rs.15.43 crores and 16.55 crores; respectively, coming to Rs. 1,11,71,217/- as well as 3% commission estimated thereupon on the foregoing twin heads, amounting to Rs.95,96,667/- (in the “lead” assessment year 2012-13) which stand upheld in the CIT(A)’s lower appellate discussion. There is further no quarrel between the parties that all the remaining cases also involve the very twin additions involving varying sums.
4. We are of the considered view in this factual backdrop that the impugned reopening could not be held as invalid in the eyes of law since based on the relevant tangible material detected during survey. We thus reject the assessee’s instant identical former substantive ground challenging validity thereof in very terms.
5. Next comes the latter identical issue on merits i.e. correctness of both the learned lower authorities’ respective findings assessing the difference between the assessee’s alleged bogus purchases and sales involving various entities controlled by Sh. Gupta as well as the estimated commission thereupon @ 3%; respectively. Suffice to say, it stands fairly established both in assessment(s) as well as lower appellate discussions that Sh. Gupta and all of his entities happened to be accommodation entry providers only. The natural corollary thereof is that the assessee’s both the purchases as well sales transactions declaring their names also meet the same fate as found in the nature of mere accommodation entries only. We conclude in this factual backdrop that once all these purchases and sales are treated as accommodation entries, only a lumpsum commission thereupon could be assessed than the difference (supra) in the impugned five assessment years. We accordingly direct the learned assessing authority to assess the assessee @ 1% of its entire turnover in all these five assessment years as profit element component with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.
6. Coming to the estimated addition of commission component @ 3%, we hereby hold that the same has no legs to stand any more once we have estimated the foregoing 1% commission on the assessee’s entire turnover which shall be deemed to have subsumed the instant latter component as well. Deleted accordingly.
No other ground or argument has been pressed before us.
7. These assessee’s five appeals ITA Nos.8837 to 8841/Del/2025 are partly allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 29th June, 2026
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