Jammu Pigments Limited Vs DCIT (ITAT Delhi)
Summary: The Delhi ITAT allowed the appeals of Jammu Pigments Limited for AYs 2012-13 and 2017-18, deleting additions made on account of alleged bogus accommodation-entry purchases. For AY 2012-13, the Assessing Officer had made an addition of ₹5,82,81,686 under Section 69C, principally relying on the Investigation Wing report and the supplier’s non-compliance with notices. The Tribunal found that the assessee had produced substantial documentary evidence, including purchase documents and government-issued J&K toll records establishing movement of goods across the border, and noted that the Assessing Officer had not rejected the books of account. Following the co-ordinate Bench decision in the assessee’s own case for AY 2018-19 in ITA No.6296/Del/2025 dated 08.07.2026, the Tribunal directed deletion of the entire ₹5,82,81,686 addition. The challenges to reopening under Section 147 and the denial of deduction under Section 80-IB were consequently treated as academic and kept open. For AY 2017-18, the Tribunal followed the same reasoning and directed deletion of the ₹6,00,07,130 purchase addition relating to Metal Impex, Proprietor Naveen Tayal. It also deleted the consequential ₹6,00,071 addition under Section 69C representing alleged 1% commission for obtaining accommodation entries, holding that the hypothesis failed once the underlying purchases were held to be genuine business purchases. Both appeals were accordingly allowed.
SEO Title: ITAT Delhi Deletes ₹11.89 Crore Bogus Purchase Additions, Citing Toll Records
SEO Description: ITAT Delhi deletes ₹11.89 crore bogus-purchase additions after toll records and documents established actual movement of goods.
Delhi ITAT Deletes ₹11.89-Crore Bogus-Purchase Additions: Toll Records Proved Actual Movement of Goods
The Delhi ITAT held that purchases made by Jammu Pigments Limited could not be treated as bogus accommodation entries when the assessee had produced substantial evidence such as purchase invoices, transport documents, VAT/CST records, stock records and government-issued J&K toll receipts establishing the actual movement of goods.
For AY 2012-13, the Assessing Officer had made an addition of ₹5.82 crore under Section 69C, primarily relying upon the Investigation Wing’s report and the supplier’s non-compliance with notices. The Tribunal observed that the lower authorities had ignored the documentary evidence, particularly the toll records showing that the goods had actually crossed the Jammu & Kashmir border. The assessee’s books of account had also not been rejected. Following its decision in the assessee’s own case for AY 2018-19, the Tribunal directed deletion of the entire addition.
Similarly, for AY 2017-18, the Tribunal deleted the alleged bogus-purchase addition of ₹6 crore. Once the purchases were accepted as genuine business purchases, the consequential addition of ₹6 lakh, representing an estimated 1% commission for obtaining accommodation entries, had no foundation and was also deleted.
The legal challenges to the reopening and the issue relating to Section 80-IB deduction were left open as academic. Accordingly, the assessee’s appeals for both assessment years were allowed.
List of Cases Discussed / Relied Upon
- Jammu Pigments Limited – ITA No.6296/Del/2025, AY 2018-19, dated 08.07.2026 — the co-ordinate Bench decision in the assessee’s own case involving nearly identical facts, in which movement of goods through J&K toll entities was considered evidence that the goods had actually moved across the border.
FULL TEXT OF THE ORDER OF ITAT DELHI
These two appeals filed by the assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, both dated 18.02.2026 and 11.02.2026 arising out of assessment orders both dated 22.12.2019 and 19.03.2025 passed under section u/s 147 r.w.s 143(3) and 147 r.w.s. 144B of the Income-tax Act for the Assessment Years 2012-13 and 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
2. Since, both the appeals are of the same assessee therefore the same were heard together and for the purposes of convenience are being adjudicated by this common order.
ITA No.3906/Del/2026 (Assessment Year 2012-13)
3. The assessee has raised following grounds of appeal in ITA No.3906/Del/2026 for Assessment Year 2012-13:-
1) On the facts and in the circumstances of the case and in law the initiation of re-assessment proceeding and order passed u/s 147 of Income Tax Act dated 22/12/2019 is bad in law, perverse, void ab initio and deserves to be annulled and Ld. CIT (A)-30, New Delhi erred in not annulling the initiation of proceeding and subsequent proceedings including the order passed u/s 147 of the Act.
2) On the facts and in the circumstances of the case and in law the ld. CIT(A)-30, New Delhi erred in confirmation the addition of Rs. 5,37,15,938/- (subject to verification of correctness of quantum of addition by A.O.) made by Ld. A.O. u/s 69C of the Act on account of alleged bogus purchases by summery rejecting the elaborate submission and evidences filed by the assessee more so when the addition was made without having any positive material in hand OR/and based on irrelevant material OR finding which have no bearing in the case of Appellant and the same does not prove that the purchases made by the Appellant from party are not genuine and overlooking the vital fact that purchases is supported by sufficient evidence like toll receipts, transport receipts, purchase bills, stock registers etc.
3) On the facts and in the circumstances of the case and in law the ld. CIT(A)-30, New Delhi erred in confirming the action of Ld. A.O. in not allowing the deduction u/s 80IB of the act on a/c of disallowance of purchases made u/s 69C of the Act whereas the alleged bogus purchases were related to industrial unit eligible for deduction.
4) The appellant prays for leave to Add, to amend, to delete, OR modify all OR any grounds of appeal on OR before the hearing of appeal.
4. Brief factual matrix of the case is that order u/s 143(3) of the Act was passed on 27.03.2015 determining returned income of Rs.79,954/- as the assessed income. The assessee is engaged in the business of manufacturing and trading of lead ingots, zinc oxide and other non-ferrous metal products and transport business. The ld. Assessing Officer received information from the Investigation Wing that assessee had taken accommodation entries from one Misawa Impex Pvt. Ltd. for the AY 2012-13. Upon examination of assessment records, the ld. Assessing Officer noted that assessee had shown purchases of Rs.5,27,75,136/- from the said Misawa Impex Pvt. Ltd. in the AY 2012-13. It was further noted from the bank account of said Misawa Impex Pvt. Ltd. bearing no.911020025200169 that an amount of Rs.5,82,81,686/- was paid by the appellant assessee to Misawa Impex Pvt. Ltd. (in short ‘MIPL’) through RTGS. The ld. Assessing Officer concluded that the assessee had doctored its accounts to conceal full and true disclosure of material facts. Consequently, notice u/s 148 dated 31.03.2019 was issued to the assessee. During the assessment proceedings, the ld. Assessing Officer examined the matter and reproduced the reasons recorded, extract of report of Investigation Wing on pages -4 to 23 of his order. The ld. Assessing Officer conducted enquiries u/s 133(6), which remained initially un-complied. The ld. Assessing Officer issued a show-cause dated 18.12.2019 asking the assessee as to why alleged purchases of Rs.5,82,81,686/- from MIPL be not disallowed. The appellant filed a response dated 21.12.2019. The ld. Assessing Officer rejected the explanation of the assessee regarding the genuineness of the purchases, proceeded to add the same u/s 69C of the Act. Before the ld. Assessing Officer, the assessee had submitted that while making purchases from MIPL, assessee had paid VAT, CST and Toll taxes across the borders, goods were transported through Krishna Transport Company, payments were made using banking channels. The ld. Assessing Officer, however, considering the report of the Investigation Wing and non-compliance of MIPL, concluded that the assessee was indulging in accommodation entries. The ld. Assessing Officer also proceeded to disallow the assessee’s claim made u/s 80IB of the Act.
5. The ld. Counsel for the assessee vehemently argued against the action of the ld. Assessing Officer. In support of its contentions, a voluminous paper book was filed comprising documents, which were available before the ld. Assessing Officer and ld. CIT(A). It is the case of the ld. Counsel that the assessee has done genuine transactions and that the allegation of accommodation entry is purely based upon pre-conceived motions. The ld. Counsel submitted that the lower authorities have missed a critical point that the goods crossed through State of Jammu & Kashmir, where the movement of goods was meticulously recorded in the toll records evidenced by toll receipts issued by State Authority. In support of its contentions, the ld. Counsel invited our attention to detailed documents placed on page no.122 to 165 of its paper book for AY 2012-13. It was contended that in view thereof, no allegation of bogus purchases is tenable. It was submitted that in view thereof the conclusion of ld. CIT(A) in para-9 of his order that the assessee had failed to produce independent evidence of actual moment of goods is totally incorrect. The ld. Counsel also argued that the ld. Assessing Officer has not rejected the books of accounts. On the issue of disallowance u/s 80IB, the ld. Counsel reiterated the arguments taken before the ld. CIT(A). The ld. Counsel further place reliance upon decision of this Tribunal in assessee’s own case for AY 2018-19 in ITA No.6296/Del/2025 dated 08.07.2026, where, on nearly identical facts, relief was accorded to the assessee by deleting the addition made by the ld. Assessing Officer.
6. The ld. DR contested that the facts for AY 2018-19 are different and hence the reliance on the decision of this Tribunal is premature. The ld. DR also submitted that no original bills, toll receipts were produced and that there were discrepancies in the bills produced.
7. We have heard rival submissions in the light of material placed on records. We have noted that the case of the assessee is that the goods purchased were moved through J & K Border to its facilities located in J & K. The documents produced by the assessee through its paper book (supra), allude sufficient evidences supporting the case of the assessee qua genuineness of purchases. We have also noted that a co-ordinate Bench of this Tribunal in ITA No.6296(supra), had examined nearly identical facts where purchases were reportedly made from Shri Anant Rastogi and Shri Ramesh Bansal aggregating to Rs.1,35,13,965/-. It was clearly observed therein that the movement of goods through J & K toll entities clearly evidences that the goods had actually moved across the border. We have also noted that in spite of the documents comprising toll movement provided, the ld. CIT(A) concludes their non-production, we have also noted that the ld. Assessing Officer has also not given any consideration to the said documents. Accordingly, in consideration of documents placed by the assessee in pages 122 to 165 of its paper book for year under consideration as well as in respectful compliance to the order of the Tribunal in ITA No.6296(supra), we are of the considered view that no case of any addition is made out in the case of the assessee. We accordingly direct the ld. Assessing Officer to delete the addition of Rs.5,82,81,686/- made u/s 69C of the Act. The ground of appeal No.2 raised by the appellant on the issue are allowed.
8. As we have allowed ground of appeal no.2 deleting the addition of Rs.5,82,81,686/- made u/s 69C of the Act, grounds of appeal no.1 and 3 raised by the assessee have become academic and kept open.
9. In the result, the appeal of the assessee in Ita No.3906/Del/2026 for AY 2012-13 is allowed.
ITA No.3907/Del/2026 for AY 2017-18
10. The assessee has raised following grounds of in ITA No.3907/Del/2026 for AY 2017-18
1) On the facts and in the circumstances of the case and in law the initiation of reassessment proceeding and order passed under section 147 of Income Tax Act dated 19.03.2025 is bad in law, perverse, void ab initio and deserves to be annulled and Ld. CIT Appeal 30, New Delhi erred in not annulling the initiation of proceeding and subsequent proceedings including the order passed under section 147 of the Act.
2) On the facts and in the circumstances of the case and in law the ld. CIT Appeal 30, New Delhi erred in confirmation the disallowance of purchases of Rs. 6,00,07,130 made by Ld. A.O. by alleging the assessee made non genuine purchases from Shri Naveen Tayal Prop. Metal Impex. The disallowance was made and confirmed by Ld. CIT Appeal 30, New Delhi more so when the addition was made without having any positive material in hand OR/and based on irrelevant material OR finding which have no bearing in the case of Appellant and the same does not prove that the purchases made by the Appellant from party are not genuine and overlooking the vital fact that purchases is supported by sufficient evidence like toll receipts, transport receipts, purchase bills, stock registers etc.
3) On the facts and in the circumstances of the case and in law the ld. CIT Appeal erred in sustaining the addition of Rs. 6,00,071 as unexplained expenses under section 69C of the Income Tax Act 1961 by alleging that the Appellant had incurred 1 percent commission on availing the accommodation entry from M/s Metal Impex, Proprietor Naveen Tayal and further erred in taxing the addition of Rs. 6,00,071 under section 115BBE of the Act.
11. Rival parties concede that ground of appeal no.2 of this appeal is identical to ground of appeal no.2 in ITA No.3906/Del/2026. Accordingly applying the principles of mutatis mutandis, we direct the ld. Assessing Officer to delete the addition of Rs.6,00,07,130/- and allow the ground of appeal no.2.
12. Through ground of appeal no.3, the assessee has contested the decision of ld. Assessing Officer to add an amount of Rs.6,00,071/- as unexplained expenses u/s 69C of the Act by concluding that assessee might have paid a commission of 1% to obtain the entry of Rs.6,00,07,130/-. As we have held the impugned purchases to be genuine business purchases, the hypothesis raised by the ld. Assessing Officer fails. The ld. Assessing Officer is directed to delete the impugned addition of Rs.6,00,071/-. The assessee succeeds in ground of appeal no.3 as well.
13. As the assessee has succeeded in ground of appeal no.2 and 3 qua merits of the addition, the legal challenge raised through ground of appeal no.1 (supra) has become in fructuous and hence kept open.
14. In the result, the appeal in ITA No.3907/Del/2026 is allowed.
15. Finally, both the appeals of the assessee are allowed.
Order pronounced in the open court on 25th August, 2026.
