Sakshat Jain Vs ACIT (ITAT Delhi)
Delhi ITAT Upholds Section 153C Proceedings but Restricts Addition on Bogus Sales to 1% GP Estimation
The Delhi ITAT partly allowed the assessee’s appeals while dismissing the Revenue’s cross appeals, holding that the initiation of proceedings under section 153C was valid, as the seized material recovered during the search on the K.K. Spun Group specifically pertained to and related to the assessee’s alleged bogus sales transactions. The Tribunal rejected the assessee’s challenge to the absence of a proper satisfaction note, observing that the lower authorities had consistently recorded that the seized material directly related to the assessee.
On merits, the Tribunal upheld the finding that the sales routed through K.K. Spun Group and Giga Pipes were accommodation entries and therefore bogus in principle, relying on the evidence unearthed during the search and subsequent enquiries. However, it disagreed with the quantification of the addition. While the CIT(A) had reduced the commission element to 3%, the Tribunal found that such estimation lacked support from any comparable data and was on the higher side. Considering the overall facts, it held that estimating the profit at 1% of the impugned sales or the gross profit actually declared in the books, whichever is higher, would meet the ends of justice, with a specific direction that the order shall not be treated as a precedent. Accordingly, the assessee obtained partial relief, while the Revenue’s appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These assessee’s instant fours appeals ITA Nos.8309 to 8312/Del/2025 and Revenue’s as many cross appeals ITA Nos. 8682, 8553, 9109 & 8683/Del/2025 for assessment years 2018-19 to 2021-22, arise against the Commissioner of Income Tax (Appeals) [in short, the “CIT(A)”], Delhi’s-23 orders, all dated 09.10.2025, having DINs and orders no. ITBA/APL/S/250/2025-26/1081587654(1),1081587654(1), 1081587654(1) and 1081587654, involving proceedings under section 153C of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
