Sanjeev Kumar Vs ACIT (ITAT Delhi)
Delhi ITAT Deletes ₹15.90 Lakh Addition: Genuine Sale Cannot Be Treated as Bogus Merely Because Buyer Is an Alleged Accommodation Entry Provider
The Delhi ITAT deleted an addition of ₹15.90 lakh made under section 68, holding that where the assessee had produced audited books of account, stock records, GST returns, GST invoices and bank receipts, the sale could not be treated as bogus merely because the purchaser was alleged to be an accommodation entry provider.
The reassessment was initiated based on information that M/s Sonu Monu Telecom Centre Pvt. Ltd. was engaged in providing accommodation entries and that the assessee was one of its beneficiaries. During reassessment, the Assessing Officer treated the assessee’s sale of ₹15.90 lakh to the said party as unexplained and added the amount under section 68. The CIT(A) confirmed the addition.
Before the Tribunal, the assessee submitted that the proceedings themselves were initiated on incorrect facts. The notice under section 148A(b) alleged bogus purchases, whereas the transaction in question was actually a sale. On merits, the assessee demonstrated that the transaction was duly recorded in the audited accounts, reflected in the GST returns, supported by GST invoices, the stock register evidenced outward movement of goods, and the sale consideration had been received through normal banking channels. It was also pointed out that a confirmation had been furnished in response to the notice under section 133(6).
The Tribunal held that the assessee had produced good and sufficient evidence to establish the genuineness of the transaction. It observed that there is a practical limit to the nature of evidence an assessee can reasonably be expected to preserve and produce. Once the assessee had discharged this burden by furnishing comprehensive documentary evidence, the addition could not be sustained merely because the Revenue suspected the purchaser. Accordingly, the addition was deleted. Since the assessee succeeded on merits, the Tribunal did not adjudicate the legal grounds challenging the validity of the reassessment proceedings.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal arises from order dated 29.01.2026, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC, Delhi.
1.1 In this case, it is seen that information was received from DIT(System)/CBIC that one M/s Sonu Monu Telecom Centre Pvt. Limited was involved in providing accommodation entries by issuing bogus sale/purchase bills to various parties and, allegedly, the assessee was one of the beneficiaries of such bogus entries to the extent of Rs.15.90 lakhs. Thereafter, the Ld. AO initiated reassessment proceedings and issued a notice u/s 148 of the Act. The Ld. AO sought details and evidences pertaining to the transactions with M/s Sonu Monu Telecom Centre. The Ld. AO held that the sales made by the assessee to M/s Sonu Monu Telecom Centre to the tune of Rs.15.90 lakhs was not explained and added the same u/s 68 of the Act.
1.2 The aggrieved assessee approached the Ld. CIT(A) where also he could not succeed and it is seen that at that stage the Ld. CIT(A) has relied mainly on the order of the Ld. AO to confirm the addition.
1.3 Thereafter, the assessee has approached the ITAT with grounds which challenge the assumption of jurisdiction (proceedings initiated on the basis of incorrect information); issuance of notice u/s 148 without any application of mind; and grounds which challenge the addition on merit on the basis that considerable documents have been filed to show that the transaction with M/s Sonu Monu Telecom was genuine.
2. The Ld. AR took us through the orders of authorities below and stated that the assessee is engaged in trading of mobile phones etc., with sales of over Rs.36 crores. It was the submission that the notice u/s 148A(b) of the Act was issued on the incorrect allegation that bogus purchases of Rs.14,20,100/- had been made to inflate expenses. It was the submission that once it was demonstrated that no purchases were made as only sale had been affected, the Ld. AO then doubted the sales. It was the submission that there was no application of mind in processing the information available with the Ld. AO. The Ld. AR relied on several case laws in support of this contention. On merit, the Ld. AR stated that the impugned transaction was duly recorded in the audited accounts of the assessee. The impugned sale was duly reflected in the GST returns and applicable taxes were duly paid on such sale. The Ld. AR presented for our perusal not only the audited accounts of the assessee but also the GST return and GST invoices, along with bank statement in support of his claim that the sale was genuine. It was the further submission that the payment was received against such sale through banking channels only and the allegation that notice u/s 133(6) of the Act issued by the Ld. AO was not responded to by the noticee was unfounded since the confirmed copy of account was duly filed with the Ld. AO.
2.1 The Ld. DR, on the other hand, took us through the finding of Ld.AO and stated that there was no evidence available that the goods had actually been sold physically to M/s Sonu Monu Telecom and the actual movement of goods could not be proved by the assessee. Thereafter, the Ld. DR relied on the findings given by the Ld. AO.
3. We have carefully considered the rival submissions and have gone through the records before us, including the detailed paper book filed by the Ld. AR. f we keep aside the jurisdictional issue for the time being and devote our attention to the addition on merit, we find that the assessee has duly recorded the transaction in his audited books of account, the stock register reflects the outward movement of goods against sale, the sale is duly reflected in the GST return, GST invoices were produced before the Ld. AO and payment of the said sale was received through banking channels. A perusal of such evidences filed before the Ld. AO and the same having been placed before us also, would make it clear that the assessee has done everything in his power to prove the impugned transaction. Ultimately, there is a limit to the kind of evidence that an assessee is expected to maintain with himself and in this case, we find that good and sufficient evidence has been filed before the Ld. AO to prove the transaction. In the result, we find that the impugned addition is not sustainable and the same is directed to be deleted.
3.1 Since the assessee has succeeded on merit, hence, we do not deem it fit to adjudicate on the legal grounds challenging the assumption of jurisdiction.
4. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 05.08.2026
