JCIT Vs Vipin Sharma (ITAT Delhi)
GST Turnover Mismatch Explained: ITAT Upholds ₹50.11 Crore Relief to Vipin Sharma
The Delhi Bench of the Income Tax Appellate Tribunal has dismissed the Revenue’s appeal challenging relief of approximately ₹50.11 crore granted to Vipin Sharma on account of a GST turnover mismatch and alleged unexplained purchases.
The Tribunal upheld the CIT(A)’s findings that the turnover difference had been reconciled and that supporting documents substantiated most purchases. It also sustained the restriction of the addition concerning one supplier to the profit element of ₹23.40 lakh.
The decision was rendered by Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra in ITA No.3151/Del/2026, concerning Assessment Year 2021-22.
Background of the Dispute
The Assessing Officer made additions concerning differences between turnover reflected in GST-related information and the income-tax records, together with purchases treated as unexplained.
The Revenue’s appeal challenged deletion of ₹15,71,97,440 towards turnover differences and relief of ₹34,39,14,163 relating to purchases.
The latter relief arose after the CIT(A) restricted an original purchase-related addition of approximately ₹34.63 crore to ₹23,40,827.
The Department also alleged improper admission of additional evidence under Rule 46A, inadequate verification and failure to appreciate discrepancies identified through notices issued under Section 133(6).
The assessee did not appear before the Tribunal, which proceeded ex parte and examined the appeal on the available record.
GST Turnover Required Reconciliation
During the first appellate proceedings, the assessee explained that the GST turnover figure used in the assessment did not correspond directly with turnover recognised in the audited financial statements.
The reconciliation addressed sales reported in a different period, disposal of fixed assets and duties or taxes included in GST reporting.
It also identified sales for July 2020 that had not been included in the figure initially adopted by the Assessing Officer. After this adjustment, GST turnover was stated at approximately ₹56.43 crore.
The assessee then explained the items requiring exclusion or adjustment to arrive at turnover of approximately ₹38.65 crore in the audited financial statements.
Earlier-Year Sales, Fixed Assets and Duties Explained
The reconciliation included approximately ₹6.61 crore of earlier-year sales, which had already been recognised in the financial statements for the preceding assessment year but were reported in the GST return in May 2020.
It also included approximately ₹45.05 lakh from the sale of fixed assets or plant and machinery.
Further differences arose from excise duty, National Calamity Contingent Duty and other taxes, including amounts recovered through debit notes.
The CIT(A) accepted that these items explained why GST-reported values differed from business turnover in the income-tax accounts. The Tribunal upheld that factual conclusion.
The relief therefore followed an examination of the specific reconciliation, rather than a general finding that discrepancies between GST and income-tax records are irrelevant.
Purchase Evidence Examined in Appeal
The Assessing Officer had questioned purchases from several suppliers, relying on non-responses to Section 133(6) notices and discrepancies in certain replies.
Before the CIT(A), the assessee produced supplier confirmations, bills, invoices, transportation details, ledger accounts and payment information.
The appellate findings recorded that most payments had been made through banking channels. They also noted that the Assessing Officer had neither rejected the books nor disputed the corresponding sales.
One discrepancy involved two separate concerns whose transactions had been combined while furnishing details. The assessee subsequently supplied the correct breakup and confirmations.
On these facts, the CIT(A) found that non-receipt of supplier replies did not justify treating the supported purchases as unexplained.
Profit Element Sustained for SNUFF Exim Purchases
The transactions involving SNUFF Exim Pvt. Ltd. required separate treatment because the supplier’s confirmation differed substantially from the purchases claimed by the assessee.
The CIT(A) considered the purchase amount excluding taxes and reduced it by the ₹50,000 confirmed by the supplier, leaving disputed purchases of ₹2,92,60,335.
Although the supplier-related discrepancy remained, the assessee’s manufacturing and trading activity indicated that goods had been procured.
The CIT(A) therefore restricted the addition to an 8% profit element, amounting to ₹23,40,827, instead of disallowing the entire disputed purchase amount.
The Tribunal upheld this partial relief.
Assessing Officer Did Not Respond to Verification Opportunity
A significant factor was that the CIT(A) had forwarded the assessee’s submissions and additional evidence to the Assessing Officer for comments.
The reproduced appellate findings recorded that reminders were also issued. However, no objections or comments were received before disposal of the appeal.
The Tribunal considered that the CIT(A) had examined the details after allowing the Assessing Officer an opportunity to respond. It consequently found no reason to disturb the relief on either issue.
Revenue’s Appeal Dismissed
The Tribunal dismissed the Revenue’s appeal, sustaining full relief on the turnover mismatch and substantial relief on purchases, while retaining the ₹23.40 lakh profit addition.
The order highlights the value of a documented turnover reconciliation and transaction-level purchase evidence.
Editorial note: The first page mentions 11 September 2026 as the pronouncement date, while the operative order and signature page state 11 November 2026.
Cases Discussed
- ACIT v. Swastik Roadlines Pvt. Ltd. — ITAT Agra, ITA No. 182/Agra/2013: Non-response to notices under Section 133(6), without supporting adverse evidence, is insufficient by itself to establish bogus purchases.
- Continental Carbon India Ltd. v. ACIT — ITAT Delhi, ITA No. 5269/Del/2010: Supplier verification, purchase documentation and corresponding sales are relevant when examining the genuineness of purchases.
- CIT v. Nikunj Eximp Enterprises (P.) Ltd. — (2013) 35 taxmann.com 384 (Bombay High Court): Purchases supported by documentary evidence cannot be rejected merely because suppliers fail to respond to notices.
- Smt. Sudha Loylka v. ITO — ITAT Delhi, reported at (2018) 97 taxmann.com, as cited in the order: Considered regarding unexplained purchases and the evidentiary requirements under Section 69C.
- Anis Ahmad & Sons v. Commissioner of Income-tax (Appeals), Kanpur — (2008) 167 Taxman 84 (Supreme Court): Considered regarding the effect of non-appearance or non-response to departmental summons.
- Principal Commissioner of Income-tax v. Tejua Rohitkumar Kapadia — (2018) 94 taxmann.com 325 (Supreme Court): Documentary evidence supporting purchases and corresponding sales is material to the determination of alleged bogus purchases.
- Principal Commissioner of Income-tax v. Hiren C. Parekh — (2023) 153 taxmann.com 470 (Bombay High Court): Addition concerning alleged bogus purchases may be restricted to the profit element in appropriate circumstances.
- Principal Commissioner of Income-tax v. Chokshi Arvindkumar Kapadia — (2023) 156 taxmann.com 192 (Bombay High Court): Profit estimation in respect of disputed purchases.
- Principal Commissioner of Income-tax v. Bharat Copy Centre (P.) Ltd. — (2023) 155 taxmann.com 211 (Bombay High Court): Treatment of purchases where the evidence concerning supplier transactions is disputed.
- Principal Commissioner of Income-tax v. Nitin Ramdeoji Lohia — (2022) 145 taxmann.com 546 (Bombay High Court): Restriction of additions relating to alleged bogus purchases to the appropriate profit element.
- Principal Commissioner of Income-tax v. Jakharia Fabric (P.) Ltd. — (2020) 118 taxmann.com 406 (Bombay High Court): Profit element in purchases from allegedly non-genuine suppliers.
- Samaddar Brothers v. Commissioner of Income-tax — (2023) 148 taxmann.com 453 (Calcutta High Court): Evidentiary burden concerning alleged bogus purchases and related additions.
- Principal Commissioner of Income-tax v. Dhondiram Narayan Limbhore — (2023) 153 taxmann.com 539 (Bombay High Court): Estimation of the profit component in disputed purchase transactions.
- Principal Commissioner of Income-tax v. Jigisha Satishkumar Mehta — (2023) 155 taxmann.com 279 (Gujarat High Court): Restriction of additions to the profit element where purchases are disputed.
- Principal Commissioner of Income-tax v. Surya Impex — (2023) 148 taxmann.com 154 (Gujarat High Court): Estimation of profit on alleged bogus purchases.
- Principal Commissioner of Income-tax v. Rakesh Kailashchand Jain — (2023) 156 taxmann.com 82 (Gujarat High Court): Treatment of alleged bogus purchases and estimation of the profit element.
