Income Tax Appellate Tribunal - Delhi
Acit, Central Circle - 04, New Delhi vs Jagatjit Industries Limited, New Delhi on 18 February, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. Naveen Chandra, Accountant Member
ITA No. 83 & CO 97/Del/2018 : Asstt. Year: 2011-12
ITA No. 84 & CO 98/Del/2018 : Asstt. Year: 2012-13
ITA No. 85/Del/2018 : Asstt. Year: 2013-14
ACIT, Vs M/s Jagatjit Industries Ltd.,
Central Circle-4, 5th Floor, Bhandari House, 91,
New Delhi Nehru Place, New Delhi-110019
(APPELLANT) (RESPONDENT)
PAN No. AAACJ1525E
Assessee by : Sh. M. K. Madan, CA
Revenue by : Ms. Monika Singh, CIT-DR
Date of Hearing: 03.02.2026 Date of Pronouncement: 18.02.2026
ORDER
Per Bench:
These Re venue's three appeals along with assessee's cross objec tions in former tw in cases ITA Nos. 83 to 85 /Del/2018 and CO Nos. 97 & 98/Del/2018, for assessment years 2011-12 to 2013-14, arise against the CIT(A)-23, New Delhi's co mmon order dated 31.10.2017, in case Nos. 294, 295 & 303/2016-17, in proceedings u/s 153 A r.w.s. 143(3) of the Income Tax Act, 1961 (in short "the Act"), respectively.
2. Heard both the parties at length. Case files perused. 2 ITA Nos. 83, 84 & 85/Del/2018
CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
3. It transpires during the course of hearing that there are two issues only which arises for our apt adjudic ation i.e . one each sought to be canvassed at the Revenue's and the assessee's behest i.e. allowability of alleged bogus purchase amounting to Rs.65,71 ,159/- and Rs.41,30,525/-; respectivey which was rejected in the Assessing Offic er's ide ntical assessments a nd deleted in the lower appellate discussion. The Revenue has filed it' s former twin appeals ITA No. 83 & 84/Del/2018 seeking to revive the same before the tribunal. It's third appeal ITA No. 85/Del/2018 as well as assessee's twin cross objectio ns; as the case may be, canvas s yet another common/identical issue of disallowance rebate(s) and discounts involving various alleged discrepancy/offered to various party(ies) in sales and marketing etc.
4. It is in this factual backdro p that we first of all proceed to decide the above former issue of correctness of the assessee's purchase claim amounting to Rs.65,7 1,159/- and Rs.41 ,30,525/- in assessment years 2011-12 and 2012-13, respectively. A combined perusal of the case rec ords indicates that the learned assessing authority appears to have gone by the alleged incriminating statement of one Sh. Ashok Kumar Gupta (propr ietor of the assessee's supplier M/s Delhi Agro 3 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
Overseas) wherein he had admitted as having provided bogus billings in question. There is further no issue betwee n the parties that a ll these cases have emanated fro m the learned departmental authorities' search actio n conducted on M/s Jaswant Group of ca ses on 06.05.2014 which included the assessee as well. The Assessing Officer there after initiated section 153A procee dings and framed assessment(s ) on 30.12.2016 thereby disallowing the assesse e's purchases allegedly as bogus ones on the ground that it had availed accommodatio n entries to the very effect.
5. We now advert to the CIT(A)'s lower appellate discussion which suggests that Sh. Ashok Kumar Gupta had given three state ments (para 6.3.1 at page 60) i.e . dated 22.08.2014 u/s 153A and 20.12.2016 and 16.08.2017 in section 131 process initiated at the Revenue's behest. The assessee pleaded before the learned CIT(A) that the Assessing Officer had nowhere provided cros s-examination opportunitie s before disallowing it's purchases. The CIT(A) sought a remand report. And tha t the Assessing Officer then allowed the assessee to cross-examine Sh. Ashok Kumar Gupta where from no clear cut indication supporting it's purchase claim appears to ha ve come . The Assessing Officer further depute d the departmental inspec tor(s) 4 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
to carry out on the separate verificatio n wherein it was inter alia noticed that the above supplier firm stood closed 3-4 years back, it ran a small scale business w ithout even having a godo wn as we ll.
6. Faced w ith this situatio n, the assessee filed it's all documentary evidence of having made the impugned payments by banking channels, confirmation of account(s) as well as abse nce of any abnormality in GP ratio which le d the le arned CIT(A) to de cide the impugne d bogus purchas e disallow ance issue against the depar tment.
7. We have given our thoughtful consideration the Revenue's and the asse ssee's respective vehement submis sions. Learned counsel more particularly seeks to buttress the point tha t Mr. Gupta had nowhere supported the Re venue's case all along which could result in disallow ance of the ass essee's bogus purchase. The fact however remains that the assessee's cross- examination availed before the Assessing Offic er in remand proceedings a lso could not successfully prove it's pur chase claim as genuine as well. This is further coupled with the fact that various recent judicial precedents (2025) 173 taxmann.com 592 (Guj.) Ravjibhai Becharbhai Dhamelia vs. ACIT; (2024 ) 160 5 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
taxmann.com 110 (Bom) PCIT Vs. Hitesh Mody (HUF), (2024) 160 taxmann.com 93 (Del) PCIT Vs. Forum Sales (P) Ltd.; (2025) 172 taxmann.com 283 (Bom) PCIT Vs. Kanak Impex (India) Ltd; (2025) 178 taxmann.com 424 (Del. - Trib.) DCIT Vs. Kohinoor Foods L td.; and (2025) 177 taxmann.com 836 (Delhi-trib.) D CIT Vs. Tirupati Matsup (P.) Ltd. have a lready decided the instant issue of bogus purchases with divergent views as well. And also that the assessee's corresponding book result and sa les turnover etc. have nowhere been disputed. Faced with this situation and keeping in mind these peculiar facts and circumstances of the case, we deem it appro priate that a further lump sum GP @5% of the assess ee's purc hases herein would meet the ends of justice with a rider that the same shall not be treated as a precedent. We orde r accordingly. Necessary computation shall follow as per law. These Revenue's for mer tw in appeals ITA Nos. 83 & 84/Del/2018 partly succeed in foregoing terms.
8. Next co mes the latter issue of disallowance of the assessee's rebate and discount claims made o n "protective" basis in all these three assessment years. Learne d CIT-DR could hardly dispute that the Assessing Officer' s asses sment 6 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
discussion at page 19 para 6.7 had first made the impugned prote ctive addition than observed that the corresponding substantive addition ought to be made in the hands of Mr. Sanjay Dugga l etc. Meaning thereby that the learned lower authorities have first made protective addition than a substantive o ne which itself is not sustainable in law going by (2010) 39 SOT 414 (Mum.) Suresh K. Jajoo vs. AC IT and (2021) 133 taxmann.com 316 (Gauhati-Trib.) ITO Vs. Keshava Nanda Kakati deciding the very issue against the department as follow s:
"This is an appe al pre ferre d by the Revenue agains t the order of Ld. CIT(A), Guwahati- 2 dated 30.09.2019 for assessment yea r 2016-17.
2. The sole gro und ra ised by the Revenue is as unde r:
"That in the fact and circumstances of the c ase and law in matter, the Ld. CIT(Appeals) is not justified in dele ting the protective addition made by the Assessing O fficer of Rs. 1,51,56,830/- for the A.Y . 2016-17."
3. From perusal of the aforesa id ground raised by the Revenue , it is tak en no te that the Revenue is aggrieved by the ac tion of the Ld. CIT(A) who de leted the protec tive addition made by the AO o f Rs . 1,51,56,830/-.
4. Brief fact of the case as noted by the AO is that the assessee has filed the re turn o f income on 2.03.2018 showing total inco me of the assessee at Rs . 4,62,800/-. The AO note d that the case was selected for s crutiny thro ugh CASS and reason for scrutiny selec tion "subs ta ntial cash deposit in the bank ac count". The assessee pursuant to the notice u/s 142(1) o f the Ac t, in this regard brought to the notice of the AO that the savings ba nk a cco unt no. 33727278376 has been ope ned 7 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
for the purpose of Junio r Co lle ge and 2 ITA No. 460/Gau/2019 Keshava Nanda Kakati, A.Y . 2016- 17 duly reflec ted about the same in the return of income of the Society o f Education (Alpha Be ta Colle ge) for the year under cons idera tio n which runs the Junio r Co lle ge ; and the sums de posi ted/withdrawn in the bank account are not perta ining to him and so he is not maintaining any deta ils of the cas h de posits or w ithdr awals in the s aid bank account. It w as bro ught to the notice o f AO that the deposit/w ithdr aw al of sums are re flected in the book s of Junio r College and he was not in a positio n to produce the books of the Junior Colle ge during his assessm ent proceedings because the Junior College is manage d by M/s Society of Education and, there fore it w as submitted before the AO that it is not just and pro per to consider the sum credite d in the Savings Bank Account (supr a) as his o wn.
5. After rece ipt of the reply from the assessee, the AO noted tha t there were withdr awals amounting to Rs. 94,55,938/- by the members on various dates . According to him , the asses see could not prove that the said bank account was e xclusively used fo r the purpose o f colle ge and that the gross recei pt shown by the as sessee socie ty (A.Y. 2016-17) do es not match with the cash depo sits as claimed by the as sessee. The refore , the AO was of the opinion tha t the total credit made in the said bank account amounting to Rs. 1,51,56,830/- need to be treated as "income from other sources" in the hands of the assessee and adde d to the total income of the assessee on prote ctive basis to safe guard the i nte rest of revenue a nd he a lso observe d in the assessment o rder that the substantive addition would be made by the respective AO of M/s Society o f Education (Alpha Be ta Colle ge) and that the information re gar ding this is being passed to the that AO of the college and thus he made protec tive assess ment in the hands of the assessee to the tune o f Rs.1,51,56,830/- .
6. Aggr ieved the assessee pre ferre d an a ppeal be fore the Ld. CIT(A) who was ple ased to hold that in the abse nce of a ny prior substantive addition in the case o f M/s. Society o f Educa tion, no protective assessment c ould have been ma de by the AO in the hands of assessee and, therefore, the action o f the AO is bad in law and, therefore, he deleted the same.
8 ITA Nos. 83, 84 & 85/Del/2018
CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
7. Aggrieved by the aforesaid action of the Ld. CIT(A), the revenue is before us.
8. We have he ard both the parties and pe ruse d the records . We note tha t the Ld. CIT(A) has made a catego ric al finding of fact that there was no s ubs tantial addition of such an amount (Rs. 1,51,56,830/-) made prio r in the case of M/s. Society of Education and this finding of fact has not been rebutte d/controve rte d or assailed by the revenue before us by filing spec ific ground to this e ffect in this appe al. From a perusal of the grounds of appea l raised by the revenue (supra), it is clear that the rev enue has only assaile d the dec isio n of the Ld. CIT(A) in deleting the pro tective addition made by the AO to the tune of Rs. 1,51,56,830/-. A nd it c an be very well see n that the basis for deletion resorted by Ld CIT(A) to dele te the pro tective asse ssment in the hands of assessee was because there was no substantial addition in the hands o f M/s. Socie ty o f Educ at ion. T his crucial fac t has not been rebutted/ controvered/ass ailed before us . Therefore, this finding of fact of Ld CIT (A) crys tallizes (i.e. no substantive addition in the hands of M/s. Society o f Education) and, the refore , we do not find any infirmity in the order passed by the Ld. CIT(A) on this iss ue on deletion of protective additio n without substantial a dditi on. We also take note that the Ld. CIT(A) to come to such a decisio n has taken no te of relev ant decisions of this Tribunal which reads as under:
"I n the c ase o f IT O vs. Fussy Financial Ser vices Private Limited [I.T .A. No.44/DEL/ 2014 dated 05/06/ 2017, it was held/ aver red, as follows, by the Hon'ble ITAT-Delhi:
We fur the r note that the analysis of the investm ent account reveal that the company has made investment of Rs.5,04,01,000/. The statement given by S h. PN J ha assumes importance wherein he categorically adm itted that the company was doing the business o f investment and finance and during the yea r the bank accounts of the company ha ve been used to pro vide the accommodation entr ies. The a ddition of Rs.3,17,67,951/- made by the Assessing Office r on protective basis, which is not sustainable in the eyes of law, because in this case the AO himself state d in the assess ment orde r that the Department is loo king after the case s of beneficiaries and the amounts channelize d thro ugh this group wo uld be taxe d in the hands of the beneficiaries , the amount of total credits of Rs.3,17,67,951/ - made in its bank 9 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
account with Kota k Mahindra B ank , KG Marg, New Delhi, during the yea r is added to the income of the assessee on protec tive basis. In this case we find that AO has not made any substantive assessme nt. There may be Substantive assessment w ithout any pro tective assessment, but there canno t be any pro tective assessment without there being a substantive assessment.
In the case of M.P. R amchandr an vs. DCIT [129 TTJ 190 at page 195], it was held/ave rre d, as follows , by the Hon'ble ITAT:
"I n orde r to gi ve a diffe rent co lour, the ld. DR contended that this disallowa nce was made on protective basis o nly and hence cannot be equated with the substantive disallo wance. We have note d abo ve abo ut the validity and presumption o f the pro tective assessment in gene ral. Pro tective asses sment cannot be independent of substantive assessment. Thus protective assessment is always s uccessive to the substantive assessment. There may be a substa ntive assessment w itho ut any pro tective assessment but the re canno t be any protective assessment without there being a substantive assessment. In simple words the re has to be so me substantive assessment/addition first whi ch enables the AO to make a protective assessment/addition. Substantive addition/assessment is made in the hands of the person in whose hands the AO prima facie holds the opinion that the income is rightly taxable. Having do ne so and with a view to pro tect the interes t of the Revenue , if the A O is not sure that the person in whose hands he had made the substantive addition rightl y, he embarks upon the pro tective assessment. Thus the protec tive assessment is basically based o n the doubt of the AO as distinct from his belief whic h is there is the substantive assessment."
In the c ase o f Grego ry & N ichol as vs . ACIT [I.T .A. No.5102/Mum/2006 & IT(SS)A No.24/Mum/2009 dated 01/03/ 2007], it was he ld/averred, as fo llo ws, by the Hon'ble ITAT (Mumbai):
"21. In the case of Suresh K. Jaj u (2010) 39 SOT 414(Mum), E-Benc h of the Tribunal at page 532 to 533 held as follow s:
"The AO made the following observations:10 ITA Nos. 83, 84 & 85/Del/2018
CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
"As the assessee has already offere d this income in assessment year 2001-02, the same is assesse d in this ye ar to protect the interes t o f the reve nue ."
Whethe r the abo ve observations are e nough to conclude tha t the assessment of the capital gains as long-term capital gain in assessm ent year 2001- 02 by the Assessing Officer was only a protective assessment? We have already see n the ratio laid down by the Hon' ble Supreme Court in the case of Lalji Ha ridas (supra) w herein the Hon'ble S upreme Court w hile recognizing the conce pt of pro tective assessment has very clearly laid down that the re must be an exhaustive enquiry and the question as to who is liable to pa y (in this case which year the capita l gain is to be assessed and whethe r as long- term capital gain in assessment year 2001- 02 or short term capital gain in a ssessment ye ar 2000-
01) should be de termined after hearing objections. He should dete rmine the question in the case o f one person (in this case of the o the r person (in this case in other year) in whose case assessment has to be made protectively. Thus, protec tive assessment has to be done only after s ubs tantive assessment is done. An assessment can be conside red as protective only when there is substantive assessment. Thus, substantive assessment has to pre cede protective assessment." In the c ase of G.K. Consulta nts Ltd. vs. ITO [ITA No.1502/Del/2013 dated 27/ 06/ 2014], [upheld in CIT vs. G.K. Co nsulta nts Ltd., 2016 (6) TMI 136 Delhi High Court], it was held/ave rre d, as fo llows, by the Hon' ble ITAT Delhi:
"19. On care ful conside ration o f above contention, we are o f the vie w that there may be a substantive assessment witho ut any protective assessment but there cannot be a ny pro tective assessment/additio n without substantive assessment/addition, meaning thereby there has to be so me substantive assessment/addition first w hich enables the AO to make a protective assessment/additio n. In the present case , the AO proceede d to make protec tive assessment by wa y of reopening of assessment o f the assessee appellant company w itho ut being a substantive assessment on the date of ass umption 11 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
of jurisdiction u/s 147 o f the Act which is not permissible as pe r decisio n of ITAT, Mumbai in the case of M.P. Ramachandaran vs. DCIT (supra) and Suresh K J ajo vs ACIT (supra)." [Emphasis given by us]
9. I n the light o f the aforesaid decision o f the Tribunal and based o n the discussion, we do not find any infirmity in the action of Ld. CIT(A) to have deleted the protec tive assessment in the hands of the ass essee when the fact was that the re w a s no substanti ve addition in the hands of M/s. Society of Educ ation o r other assessee's and ergo the s ame is confir med.
10. In the result, the appeal of the reve nue is dismisse d."
9. We accor dingly deleted the impugned "protective" addition of rebate & discounts made in the assessee's hands, in very terms. We thus upho ld the learned C IT(A) findings gra nting relief to the a ssessee in A.Y. 2013-14 forming subject matter of adjudication in Revenue's third appeal ITA No. 85/Del/2018; and, at the same time , it's twin cross o bjections CO Nos. 97 & 98/Del/2018 (A.Ys. 2011-12 & 2012-13) also succeed in very terms. The impugned rebate and discount disallowance in other words shall henceforth be deemed to have been deleted in totality in other words.
10. No other ground or argument has been pressed before us.
11. To sum up, the Revenue's twin appeals ITA Nos. 83 & 84/Del/2018 are par tly allowed, it's last appeal ITA No. 12 ITA Nos. 83, 84 & 85/Del/2018 CO Nos. 97 & 98/Del/2018 Jagatjit Industries Ltd.
85/Del/2018 is dismissed and the assessee's cr oss objections CO Nos. 97 & 98/Del/2018 are allowed in above terms. A copy of this common order be placed in the re spective case files. Order Pronounced in the Open Court on 18/02/202 6.
Sd/- Sd/-
(Naveen Chandra) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 18/02/2026
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR