Kanta Devi Jalan Legal Heir of Late Ved Prakash Agarwal Vs Ward 43(8) (ITAT Delhi)
Bogus Purchase Bills, Accepted Sales: Delhi ITAT Restricts Addition to 1% GP
The accommodation-entry allegation
Information from a search on Hitesh Jain led the Income Tax Department to reopen the assessment of Late Ved Prakash Agarwal for assessment year 2012–13. Jain had reportedly admitted that he issued bogus bills through concerns under his control in return for commission, without actual sales or purchases. The Department treated transactions reflected in Agarwal’s books as accommodation entries.
The Assessing Officer (AO) added ₹97,50,663 under Section 68 as unexplained credits. He also estimated commission at 3% of those transactions, adding ₹2,92,520 under Section 69C. The reassessed income rose to ₹1,05,18,690, against ₹5,31,810 determined in the original assessment. The CIT(A) upheld the additions, finding the dealings with the named concerns to be accommodation entries. The appeal before the Delhi ITAT was pursued by Kanta Devi Jalan as legal heir of the deceased assessee.
Accepted sales and disputed purchases
The assessee argued that the AO had not rejected the books of account and that the sales arising from the trading activity had been accepted. The assessee also objected to reliance on third-party statements without an opportunity to cross-examine the persons concerned, and said that the AO should have made further enquiries before treating the transactions as bogus.
