SANJAYBHAI KHUBCHANDBHAI THAKKAR,PATAN - GUJARAT vs. INCOME TAX OFFICER, WARD-1, PATAN - GUJARAT

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER & SHRI GANGADHAR PANDA, ACCOUNTANT MEMBER I.T.A. No.2316/Ahd/2026 (Assessment Year: 2020-21) Sanjaybhai Khubchandbhai Vs. Income Tax Officer, Thakkar, Ward-1, Plot No. 54/34, Nava Ganj Patan Bazar, Patan, Gujarat-384265 [PAN No.ASEPT2093G] (Appellant) .. (Respondent) Appellant by : Shri Suresh Gandhi, AR Respondent by: Shri Manish Kasodekar, Sr. DR Date of Hearing 04.08.2026 Date of Pronouncement 03.09.2026 O R D E R PER GANGADHAR PANDA - ACCOUNTANT MEMBER: The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi dated 15.05.2026 under Section 250 of the Income Tax Act, 1961 relates to A.Y. 2020-21. 2. The assessee has raised the following grounds of appeal: “1. The learned CIT(A) has erred in law and on facts in dismissing the appeal of the assessee merely on legal issue of non-compliance to the notices within a very short period of time and without discussing the merits of the case in respect of the addition of Rs. 32,55,000/- u/s. 69C of the Act for alleged unexplained expenditure for purchases made by the assessee from the party namely Adarsh Traders, merely on surmises and conjecture, without proper consideration and appreciation of the facts of the case. In view of the facts and in law, the learned CIT(A) ought to have taken into consideration the merits of the case while deciding the appeal and

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 2– accordingly, the order passed by the learned CIT(A) is required to be quashed. 2. The learned CIT(A) has erred in law and on facts in not according proper and reasonable opportunity to the assessee to file the submission with supporting documentary evidences, in support of the appeal filed and grounds of appeal taken therein and thereby the order passed by the learned CIT(A) is in gross violation of the principles of natural justice. Accordingly, the impugned order is required to be set aside to the file of the learned CIT(A) to adjudicate the same on merits of the issue involved. 3. The learned CIT(A) has erred in law and on facts in dismissing the appeal in limine for non-prosecution/non-compliance, without adjudicating the issues arising in the appeal on their merits. 4. That the impugned Appellate Order passed by the learned CIT(A) is in direct violation of the mandatory provisions of Section 250(6) of the Income Tax Act, which requires the appellate authority to state the points for determination and pass a speaking order with reasons. 5. The learned CIT(A) has failed to appreciate that his powers are co- terminus with those of the Assessing Officer (AO). He ought to have decided the appeal on the basis of material available on record instead of summarily dismissing it due to non-compliance by the assessee. 6. The assessee prays that the order of the learned CIT(A) be set aside, and the matter be restored to the file of the CIT(A) to adjudicate the issues afresh on merits, after affording the assessee a reasonable opportunity of being heard.” 3. The Assessee is an individual and proprietor of M/s. Sanjay Trading Co. and filed his return of income for Assessment Year (A.Y.) 2020-21 on 22.10.2020 declaring total income of Rs. 26,39,710/-. The Assessing Officer treated the said GST information as falling within the scope of Explanation 1(i) to Section 148 of the Income-tax Act, 1961, as applicable with effect from 01.04.2021.

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 3– 4. As per the information, the Assessee, had allegedly undertaken bogus purchases amounting to Rs. 32,55,000/- from M/s Adarsh Traders, Bajrang Nagar, Akbarpur Road, Rura, Kanpur. It was stated that the information in respect of M/s Adarsh Traders had been received from the Office of the Commissioner of Central GST, Kanpur, according to which the said concern was a fake/non-existent entity allegedly involved in passing fraudulent Input Tax Credit through fake invoices and e-way bills without actual supply of goods. It was further reported that field enquiry conducted at the registered address of the said concern, as mentioned in GSTIN-09FCYPM1039L1ZS, revealed that the concern was not existing and was not traceable at the registered place of business. On the basis of such information, the Assessing Officer observed that a bogus concern existing only on paper and that the purchases recorded by the Assessee from the said concern were not supported by actual physical movement or delivery of goods. Accordingly, Notice under Section 148A(b) of the Act was issued to the assessee, and after considering assessee’s reply the AO passed order under Section 148A(d) on 18.04.2024 to initiate re-assessment proceedings by issuing notice under Section 148 of the Act. 5. Accordingly, taking into account the details filed by the assessee during re-assessment proceedings, a show-cause notice dated 06.03.2026 was issued by the AO proposing to treat the amount of Rs. 32,55,000/- as unexplained expenditure under

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 4– Section 69C of the Income-tax Act, 1961, read with Section 115BBE of the Act, and to add the same to the total income of the Assessee. However, the Assessing Officer did not accept the explanation furnish by the Assessee and held that the Assessee had failed to satisfactorily establish the genuineness and veracity of the transactions. 6. The Assessing Officer observed that the Assessee had failed to establish the genuineness of the expenditure claimed towards purchases from M/s Adarsh Traders and treated the amount of Rs. 32,55,000/- as unexplained expenditure under Section 69C of the Act. Consequently, against the income of Rs. 26,39,710/- declared by the Assessee, the total assessed income was determined at Rs. 58,94,710/-. The Assessing Officer principally relied upon the information received from the Office of the Commissioner of Central GST, Kanpur, regarding the alleged non-existence of M/s Adarsh Traders, treated the entire purchase amount of Rs. 32,55,000/- as unexplained expenditure under Section 69C of the Act, after observing that the assessee had not satisfactorily established the actual movement and delivery of the goods or the confirmations of the supplier. The assessment was completed under Section 147 read with Section 144B of the Income-tax Act, 1961, and separate penalty proceedings under Section 271AAC of the Act were also initiated in respect of the addition made under Section 69C of the Act.

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 5– 7. Aggrieved by the assessment order the assessee filed appeal before the Ld. CIT(A). 8. The Ld. CIT(A), noted during the course of reassessment proceedings that the Assessing Officer had made an addition of ₹32,55,000/- under section 69C of the Act on account of alleged bogus purchases of mustard seeds. However, the Ld. CIT(A) did not adjudicate the substantive grounds challenging the addition of ₹32,55,000/- under section 69C of the Act on merits in respect of the alleged bogus purchases from M/s. Adarsh Traders. Further, since the assessee did not respond to the notices issued by the Ld. CIT(A) dated 10.04.2026, 29.04.2026 and 08.05.2026 the Ld. CIT(A) noted that there has been non-compliance on the part of the assessee during the appellate proceedings. The Ld. CIT(A), therefore, treated the appeal as infructuous and dismissed the same on account of non-compliance/non-prosecution. 9. Aggrieved against the appellate order the assessee filed the appeal before the Tribunal. 10. The Ld. DR has placed relied on the order of the lower authorities. 11. We have heard the rival contentions and perused the material available on record. 12. The Learned Counsel for the assessee has contended that the impugned purchases of mustard seeds from M/s Adarsh

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 6– Traders were genuine and were duly recorded in the regular books of account. It has been submitted that the entire quantity purchased from M/s Adarsh Traders was subsequently sold to Gokul Agro Resources Ltd. In support of the genuineness of the transactions, the assessee claims to have furnished before the Assessing Officer various documentary evidences, including the ledger account of M/s Adarsh Traders, purchase invoices, gate passes, Adatliya, transport documents/LR, e-way bills, bill pass notes, details of transporters, copies of GSTR-1 and GSTR-3B, sales invoices, bank statements etc. evidencing payments made to M/s Adarsh Traders, and reflecting the inward and outward movement of mustard seeds. It has been further submitted that the corresponding sales have not been disputed by the Assessing Officer. Accordingly, the assessee raised an alternative ground that, without prejudice, if the purchases are held to be not fully verifiable, only the profit element embedded in such purchases ought to be brought to tax, particularly when the corresponding sales have been accepted. 13. Having considered the facts and circumstances of the case, we find that the addition of Rs. 32,55,000/- under Section 69C has been made primarily on the basis of the information received from the Central GST authorities regarding M/s Adarsh Traders being a non-existent/fake concern. At the same time, the assessee has stated that substantial documentary evidence was furnished

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 7– before the Assessing Officer to establish the purchase and movement of mustard seeds. 14. We also note that the assessee has not effectively participated in the appellate proceedings despite opportunities being afforded to him. Nevertheless, considering that the addition involves a substantial amount of Rs. 32,55,000/- and that the assessee claims to have furnished documentary evidence before the Assessing Officer which requires verification. Considering the nature of the addition involved and the specific documentary evidence stated to have been furnished by the assessee before the Assessing Officer, we are of the considered view that the matter requires examination on merits and verification of the documents that the interest of substantial justice will be served if the matter is restored to the file of the Assessing Officer for fresh examination. 15. Accordingly, the impugned assessment order, insofar as it relates to the addition of Rs. 32,55,000/- under Section 69C of the Act, is set aside to this limited extent and the issue is restored to the file of the Assessing Officer for de-novo consideration. The Assessing Officer shall examine and verify all the documentary evidences furnished by the assessee. The assessee is also directed to extend full cooperation and furnish all requisite details within the time allowed by the Assessing Officer. In the result, the

ITA No. 2316/Ahd/2026 Sanjaybhai Khubchandbhai Thakkar vs. ITO Asst. Years –2020-21 - 8– grounds relating to the addition of Rs. 32,55,000/- under Section 69C are allowed for statistical purposes.

Sd/- Sd/- (RAHUL CHAUDHARY) (GANGADHAR PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 03/09/2026 Tanmay, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad