RINKESHKUMAR LALBHAI PATEL,AHMEDABAD vs. THE ITO, WARD-7(2)(1), AHMEDABAD

PDF · subscribers
ITA 2451/AHD/2025Status: DisposedITAT Ahmedabad08 September 2026AY 2017-188 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged the primary onus by providing details of the third party and evidence that no payments were made by the assessee. The failure of the third party to respond to notices could not be the sole basis for addition in the assessee's hands.

What were the facts?

The assessee's credit cards were used by a third party, Mr. Rana, for his business, with the assessee receiving a 1% commission. The Assessing Officer made an addition under Section 69C for unexplained expenditure, as Mr. Rana did not respond to notices.

What were the issues?

Whether the addition under Section 69C for unexplained expenditure is sustainable when the assessee claims the expenditure was incurred by a third party and provides evidence to support this claim.

Which sections of the Income-tax Act were involved?

Section 69C,Section 147,Section 148,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, C” BENCH, AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL "C” BENCH, AHMEDABAD SHRI DR. B.R.R. KUMAR VICE PRESIDENT SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.2451/AHD/2025 (Assessment Year:2017-2018) Rinkeshkumar Lalbhai Patel B/58, Pulin Society Part-1, Nr. Payal Nagar, Naroda, Ahmedabad-382330, Gujarat PAN:AKXPP2564R …………. Appellant Vs ITO, Ward-7(2)(1), Ahmedabad AaykarBhawan, Income Tax Office, Global Odyssey, 100 Feet Road Anand Nagar Road, Vejalpur Ahmedabad-380015, Gujarat …………. Respondent Appearance For the Appellant/Assessee : Shri HardikVora For the Respondent/Department : Shri Uday Kakne Kishanrao, Sr.DR Date Conclusion of hearing : 15.06.2026 Pronouncement of order : 08.09.2026

O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the Order, dated 18/11/2025, passed by the National Faceless Appeal Central (NFAC), Delhi [hereinafter referred to as the 'CIT(A)'] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 19/02/2025, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'], for the Assessment Year 2017-2018)

2.

The Revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in upholding initiation assessment proceedings u/s 148 of re of the Act.

ITA 2451/AHD/2025 Assessment Year: 2017-2018

2.

On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in upholding reassessment proceedings where notice u/s 148 was issued by jurisdictional AO and not through NFAC as mandated under CBDT Notification No.18/2022. 3. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in sustaining the addition of Rs. 61,92,413/- u/s 69C without independent evidence and verification of ignoring that payments were made by a third party 4. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in sustaining addition despite assessee having disclosed commission income on the alleged amount. 5. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in sustaining addition based on conjectures and attributing non-compliance of a third party to the assessee, despite assessee's cooperation. 6. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) erred in overlooking the assessee's detailed submissions and bank statements demonstrating that no payments were made by assessee towards alleged credit card bills. 7. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in invoking section 115BBE of the Act, which is not applicable in the facts of the present case.” 3. The relevant facts, as emanating from the records, are that the Assessing Officer received information from the ICICI Bank Ltd. and SBI Cards and Payment Services Pvt. Ltd. to the effect that credit-card payments of INR.32,06,550/- and INR.31,93,500/-, respectively, received in respect of credit card issued in the name of the Assessee during the previous year relevant to the Assessment Year 2017-18. Therefore, reassessment proceedings were initiated in the case of the Assessee under Section 147 of the Act. During reassessment proceedings, the Assessee explained before the Assessing Officer that the credit cards were used by Mr. Anil Sureshbhai Rana (PAN AMJPR0411P) [for short ‘Mr. Rana’] for his business, and the Assessee had received commission at the rate of 1% of the transactions. The Assessee filed return in response to notice issued under Section 148 of the Act offering to tax the commission income of INR.64,000 in this regard. Before the Assessing Officer, the Assessee stated that the

ITA 2451/AHD/2025 Assessment Year: 2017-2018 Assessee had never used the credit cards for incurring any expenditure, and that no payments were made by the Assessee towards the outstanding dues of the said credit cards. The Assessee placed before the Assessing Officer the copy of PAN Card of Mr. Rana and requested the Assessing Officer to carry out necessary verification/inquiry from him. The Assessee also requested the two banks to disclose the source of the aforesaid payments, however, no response was received from the banks. The Assessing Officer issued notice under Section 133(6) of the act to Mr. Rana. However, no response was received. Therefore, Assessing Officer concluded that the Assessee had failed to furnish confirmation, return of income, business particulars or bank statements of Mr. Rana, and, after allowing credit for INR.2,07,637 already offered to tax in the return filed under Section 148 of the Act, the Assessing Officer brought the balance of INR.61,92,413/- to tax in the hands of the Assessee as unexplained expenditure under Section 69C of the Act read with Section 115BBE.

4.

In appeal, the Learned CIT(A) confirmed the addition agreeing with the findings of the Assessing Officer.

5.

Being aggrieved, the Assessee has preferred the present appeal on the grounds reproduced in paragraph 2 above.

6.

We have heard the rival submissions and perused the material on record.

Ground Nos. 1 and 2 7. Ground Nos. 1 and 2, challenging the validity of the reassessment proceedings, are dismissed as not pressed in view of the statement made by the Learned Authorised Representative for the Assessee under instructions.

Ground Nos. 3 to 7 8. Ground Nos. 3 to 7 pertain to the addition of INR.61,92,413/- made by the Assessing Officer Section 69C of the Act that was sustained by the

ITA 2451/AHD/2025 Assessment Year: 2017-2018 Learned CIT(A).

9.

The Learned Authorised Representative submitted that the Assessee was only the cardholder and not the person who incurred the expenditure or made credit card payments. In support, the Learned Authorised Representative relied upon the bank statements of the Assessee and copy of PAN Card of Mr. Rana. It was contended that the Assessee had disclosed commission income and furnished the identity particulars of the actual user. The failure on the part of Mr. Rana, who has also used credit cards of other persons, cannot be the sole basis of making addition in the hands of the Assessee under Section 69C of the Act.

10.

Per contra, the Learned Departmental Representative supported the orders of the lower authorities and submitted that the cards were issued in the Assessee's name and that the Assessee failed to substantiate his explanation by producing confirmation or banking evidence from Mr. Rana. Therefore, the order passed by the Learned CIT(A) be sustained.

11.

We have given thoughtful consideration to the rival submissions. Section 69C of the Act gets attracted where the Assessee has incurred expenditure and the source thereof remains unexplained. In the present case the Assessee has consistently taken a stand that the credit cards were used by Mr. Rana and no expenditure was incurred by the Assessee. We are alive to the fact that mere assertion of third-party use does not automatically exonerate a cardholder/Assessee, and therefore, the explanation offered by the Assessee must be tested against the surrounding evidence and preponderance of probabilities. It is admitted position that the Assessee participated in the reassessment proceedings and placed his contentions before the Assessing Officer. The Assessee also furnished copy of PAN Card of Mr. Rana. It is not disputed by the Revenue that the Assessee had sought for independent verification from Mr. Rana for corroborating his contention that the credit cards were

ITA 2451/AHD/2025 Assessment Year: 2017-2018 used by Mr. Rana for his own business and the Assessee had not incurred these expenses. We have gone through the bank statements furnished by the Assessee which show that no credit card payments were made by the Assessee from such bank account. It is not the case of the Revenue that the credit card payments were made from another account maintained/controlled by the Assessee. During the course of hearing the Learned Authorised Representative for the Assessee had relied upon the letters/emails written to the banks and the response received [placed at pages 29 to 52 of the paper-book]. On perusal of the same, we find that the Assessee had requested the banks to give details of payments made towards discharge credit card bills. Therefore, in our view, the Assessee had made bonafide efforts to furnish the relevant details. We note that while the notice issued by the Assessing Officer to Mr. Rana under Section 133(6) of the Act was not complied with, no further steps were taken by the Assessing Officer. During the course of hearing the Assessee had filed supporting affidavit stating, inter alia, as under: “(2) I hereby confirm that I am having SBI credit card number 4032506499033728 and ICICI bank Credit Card number 4477463890357003. These both credit cards has been given by me to the Mr. Anil SureshbhaiRana having PAN AMJPR0411P for the use of his business purpose on 1% commission bases. (3) I have never used these credit cards for my personal or business purpose and never made any payment of credit card from my bank account or any of my relatives' bank account. (4) Mr. Anil Sureshbhai Rana has exclusively used both credit cards and arranged payment from his sources and he had made the following payment: Sr.No. Credit Card Bank Credit Card Amount Number 1 ICIC BANK xx 32,06,550 2 SBI BANK xx 31,93,500 Total 64,00,050

(5) The credit card has been utilised by Mr. Anil Sureshbhai many repetitive transections with the below persons:

ITA 2451/AHD/2025 Assessment Year: 2017-2018 - SOHIL ENTERPRISE - HEENA ANILKUMAR RANA - JAL ENTERPRISE - RISHIT INFOTECH - RONAK AIRCON - JAINAM ENTERPRISE - RAYA PATEL - KHETI ENTERPRIS - RANA STORES - LAXMI SUPERMARKET - DIAMOND TRADERS I do not have any personal or business relation with these persons. (6) I have received 1% commission for the above transections amounting to Rs. 64,000 during the A. Y. 2017-18 from Mr. Anil SureshbhaiRana. (7) Mr. Anil Sureshbhai Rana was residing at 16, ChnadralokBunglows, Ghodasar Canal Road, Ghodasar, Ahmedabad-380050 during the A. Y. 2017-18. At present the Father, Mother and Brother of him is residing at the same address. I have visited many times at his resident address but I never found him and his parents and brother has not provided his present address. (8) Mr. Anil SureshbhaiRana has made such credit card transaction with other persons also the details are as under: Neel Mehta Vodafone store, Hanspura, Ahmedabad, Contact number 81415 18883 Harshjeet Chauhan - Ambalivali Pole, Sahpur, Ahmedabad, Contact number 98241 28047 SohilMansuri - Axis bank Employee, Juhapura, Ahmedabad, Contact number 99791 11311 Dharti Patel - Axis bank Employee - Contact number 98799 26553 (9) I firmly confirm that the above both credit cards were neither used nor any payment was ever made by me.”

12.

The bank statement and the credit card statements of the Assessee support the statements made in the above affidavit. There is nothing on record that suggests that any action has been taken against or in the case of Mr. Rana. In the facts and circumstances of the present case, we find that the Assessee had discharged the primary onus to provide

ITA 2451/AHD/2025 Assessment Year: 2017-2018 the details of person who incurred the expenditure and made payments. As noted hereinabove, the Assessee has maintained a consistent stand and has in support furnished some documents and established that the Assessee had acted diligently and in a bonafide manner. The case before us is not one where the Assessee had completely denied knowledge of all transaction and had not participated in the assessment proceedings. The Assessee had the offered to tax the commission income in return filed in response to notice issued under Section 148 of the Act and had furnished a copy of PAN Card of Mr. Rana at the assessment stage itself. Therefore, it cannot be said that the contentions were not being raised by the Assessee as an afterthought. In the supporting affidavit filed by the Assessee it has been stated that the Assessee had no relationship with transacting parties. There is nothing on record to suggest that the Assessee had incurred the expenditure or enjoyed the benefit thereof, and/or funded the payments of credit card bills. In the facts of the present case, we hold that the failure of Mr. Rana, who is allegedly adopted the same modus operadi to misuse the credit cards of other persons, to respond to notice under Section 133(6) of the Act cannot be taken as sole basis to make addition in the hands of the Assessee under Section 69C of the Act. In our view, in the facts and circumstances of the present case the Assessing Officer has the authority to call for and examine the records of credit card payments and transaction with merchant bankers. Once explanation was furnished by the Assessee which was supported by some documentary evidence, the onus shifted on the Assessing Officer to make further verification/inquiry. On analysis of factual matrix before us, we hold that the addition of INR.61,92,413/- made under Section 69C of the Act in the hands of the Assessee cannot be sustained and is, hereby deleted. Ground Nos. 3 to 6 raised by the Assessee are allowed. Since we have deleted the addition, Ground No. 7 is dismissed as having been rendered infructuous.

13.

Before parting we would like to clarify that while we have deleted the

ITA 2451/AHD/2025 Assessment Year: 2017-2018 addition made in the hands of the Assessee, the Revenue will have such liberty as available under law to take action against Mr. Rana as per law.

14.

In result, the present appeal preferred by the Assessee is partly allowed.

Order pronounced on 08.09.2026.

4.

Sd/- Sd/- (Dr. B.R.R. Kumar) (Rahul Chaudhary) Vice President Judicial Member

िदनांक Dated :08.09.2026 अहमदाबाद Ahmedabad; H.C. PS आदेशक��ितिलिपअ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent. 3. संबंिधतआयकरआयु�/ Concerned CIT 4. आयकरआयु�(अपील) / The CIT(A) 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण/ DR, ITAT, 6. गाड�फाईल /Guard file. आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, अहमदाबाद / ITAT, Ahmedabad

More judgments on Section 69C

All 8,217 judgments and leading authorities on Section 69C →

Recent GST High Court judgments

Search GST case law →