DCIT Vs Gaadi Web Private Limited (ITAT Delhi)
Vendor Did Not File a Return: Can the Buyer’s Expense Be Disallowed?
A supplier’s failure to file an income-tax return cannot, by itself, make the customer’s expenditure bogus. The Delhi Bench of the ITAT has applied this principle in DCIT v. Gaadi Webprivate Ltd., ITA No. 7992/Del/2025, AY 2023–24, decided on 28 September 2026. It dismissed the Revenue’s appeal against deletion of a ₹2,43,23,025 disallowance under Section 37.
The case is also a reminder that, before questioning whether an expense is genuine, the AO must establish how much was actually claimed as an expense in the relevant year.
How the disallowance arose
Gaadi Webprivate Ltd. operated the Gaadi.com portal, providing information and services relating to used automobiles. It filed its return for AY 2023–24 declaring a loss of about ₹59.12 crore.
Following a survey involving certain other entities, the AO examined transactions reflected in Gaadi Webprivate’s records. One issue concerned JMD Globex Services, in relation to which the AO questioned advertising expenditure of ₹90,01,887. The AO also disallowed ₹2,43,23,025 relating to transactions with five other parties. His principal basis for treating those transactions as non-genuine was that the parties were non-filers of income-tax returns, coupled with his doubts about the JMD transaction.
