THE ACIT CIRCLE-1(1), RAJKOT vs. ABHYANT CONSTRUCTION PVT. LTD., RAJKOT

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट । In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot. Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member आयकर अपील सं./ITA No. 832/Rjt/2024 [ िनधा�रण वष�/Assessment Year: 2022-23 ] Assistant Commissioner of Abhyant Construction Pvt. Ltd., Income-tax, Circle- 1(1), Rajkot, 3/19, Shop No.2 Chandra Mauli Vs. Room No.502, Aayakar Bhavan, Appartment, Naval Nagar, Race Course Ring Road, Rajkot Rajkot, Gujarat -360005, 360 001 �थायी लेखा सं./जी आइ आर सं./PAN/GIR No.: AASCA6308C (अपीलाथ�/Assessee) (��यथ�/Respondent)

Assessee by : Shri Sukhen K., Ld. AR Respondent by : Shri Ravinder Sindhu, Ld. Sr. DR Date of Hearing : 09/06/2026 Date of Pronouncement : 07/08/2026

:: ORDER :: Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year 2022-23, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Commissioner of Income-tax (Appeals), dated 29.08.2024, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act, on 21.03.2024. 2. The grounds of appeal raised by the Revenue are as follows: 1. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.57,30,35,212/- made on account of unexplained sundry creditors u/s 68 of the Income-tax, Act, 1961 as the genuineness of the transaction and creditworthiness of the trading parties were not established.

ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. 2. The learned CIT(A) has erred in law and fact in seeking a remand report from the assessing officer concerned without communicating the additional evidences admitted during appellate proceedings, in clear violation of provisions of Rule 46A(3) of I.T. Rules, 1962. 3. The learned CIT(A) has erred in law and facts in not giving adequate time and opportunity to the assessing officer by first seeking remand report on 03-07-2024 & then on 07-08-2024 and thereafter, without waiting for any reply, passed the order on 29-08-2024 in a hurried manner. 4. The learned CIT(A) has erred in law and facts in not attaching any grounds of appeal and additional evidences / annexures filled by the assessee while seeking remand reports and merely sought the same on 'Statement of facts' covering letter without any annexures, which is against principles of natural justice as assessing officer was not informed of any grounds of appeal before the Ld. CIT(A). 5. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in accepting additional evidences in violation of Rule 46A of the Income Tax Rule, 1962 without giving proper opportunity to the Assessing Officer. 6. Any other ground that the Revenue may rise before or during the proceedings before the Hon'ble ITAT. 7. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the assessing officer be restored to the above extent. 3. The facts of the case which can be stated quite shortly are as follows: The assessee filed return of income for assessment year (A.Y.) 2022-23, on 20.09.2022, declaring income of Rs.2,11,63,050/-, as Long Term Capital Gain on securities u/s 112A of the I.T. Act, 1961. The assessee’s case was selected under CASS for scrutiny to examine the following issue: (i)Claim of Large Value Refund. (ii)Low net profit shown by construction contractors and claim of large refund. (iii)Large deduction is claimed u/s 80G and the donee entity is not approved u/s 80G.

Accordingly, notice u/s 143(2) of the Act was issued on 02.06.2023 by NaFAC fixing date of hearing on 17.06.2023. Thereafter, notice(s) u/s 142(1) were issued from time to time, and in response to these notices, the assessee supplied the requisite information required for completion of case before the assessing officer.

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. 4. During the assessment proceedings, the Assessing Officer issued a show- cause notice to the assessee, to explain the trade creditors and advances, which is reproduced on page No.5 to 7.

“Your reply received on 22.09.2023 in compliance of the notice 142(1) dated 06.09.2023 is as under: 1. Copy of sale deed(s) of Maruti Enclave Flats for sale consideration of Rs.1,20,00,000/- are enclosed. 2. Details of Short Term Capital Gain: Statement of purchase cost of Rs.19,34,86,380/- and sale cost of Rs.19.34,86.372/- download from security broker "ICICI Securities Limited" enclosed. 3. The details of other expense of Rs.10,06,05,978/- with documentary evidence are enclosed. 4. GST Challan DRC-03 is attached herewith, showing the SGST and CGST payment of Rs.35,700/- each. The payment of any other rate, duty of cess ind. STT and CTT Rs.77,257/- was paid to Rajkot Municipal Corporation for property tax payment and water tax payment, details are enclosed. 5. Copy of CA audit fees invoice of Rs.35,000/- and copy of TDS Challan u/s 194J and TDS return 260 filling receipt are enclosed. 6. We have paid income tax Rs.8,70,07,628/-in FY 2020-21 and out of which advance tax Rs.7,50,00,000/-already paid but even so we had pay Rs. 12,00,760/- advance tax interest keeping that in mind. We had estimated a capital gain and hence the advance tax was paid of Rs.1,00,00,000/- on 15 March, 2022 to avoid interest payable u/s 234C on short payment of advance tax. However, the company has made business loss on account of future & option business which got set off against income from other sources and capital gain and therefore company had claimed a refund later. 7. The details of trading items are enclosed purchase and sales invoices. 6. In response to second show-cause notice, the assessee submitted that some of the creditors are paid in the assessment year itself and balance creditors are going to be paid very soon. The assessee’s reply is reproduced below:

“Your reply received on 05.03.2024 in compliance of the notice 142(1) dated 27.02.2024 is as under:

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. 1. With respect to question No. 1, we would like to state that we had checked with Parag Modi (PAN-ARWPM1107H) proprietor of Jalaram Traders about the reply to 133(6) notice on which he confirmed that he has filed the reply. With respect to the outstanding payment, please find attached balance confirmation as Annexure. We have made payment of Rs.30,00,000/- in FY 23-24 and we are in the process of making the balance payment. 2. With respect to question No.2, we would like to state that we have checked with Binduben Modi (PAN-CXZPM84978) proprietor of Mangaldeep Trading about the reply to notice us 133(6) which she confirmed that she has filed the reply to your good office. With respect to the outstanding payment, please find attached balance confirmation as Annexure. We are in the process of making the payment. 3. With respect to question No 3, We would to inform your goodself that we have deducted and deposited the TDS from the payment to Tushar Modi (PAN- ARWPM0831H) proprietor of Siya Enterprise. The copy of Form 16A is enclosed for your reference. With respect to the outstanding payment, please find attached balance confirmation as Annexure. We are in the process of making the payment. 4. With respect to your question no. 4, we would like to inform you that we are supplier to the Karmabhakti Agro industries Pvt. Ltd. and the position as on 31st March 2022 is as under:

Further we draw your kind attention that no E-way Bill ranuired to be generated in respect of movement of exempted goods under the rule 138(14) of GST Act 2017, hence we are not required to generate E way bill for sale of goods to Karmbhakti Agro Industries Pvt. Ltd. Further, transportation is the responsibility of Buyer and hence the details regarding transportation are not available with us.

“Cause Notice: Assessee submitted its written submission on 12.03.2024 in compliance to Show dated 05.03.2024. Assessee submission is as under :

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. "We refer to your show cause notice ITBA/AST/F/143(3) (SCN)/2023-24/1062046230(1) dated 5th March, 2024 wherein your goodself has asked us to show cause why the proposed variation should not be made. In this regard, we would like to submit the following details/information:- (1) With respect to Parag Modi (PAN-ARWPM1107H) proprietor Jalaram Traders outstanding of Rs. 12,75,82,910/-. As we stated in our earlier submission that we are in the process of making the payment to them, we would like to submit that the entire outstanding payment of Rs. 12,75,82,910/-has been made to Jalaram Traders by 09th March 2024 and there is no any outstanding amount payable to the Jalaram Traders as on date. Bank Statement reflecting the payment is attached herewith. (2) With respect to Binduben Modi (PAN-CXZPM8497B) proprietor Mangaldeep Trading outstanding of Rs. 12,74,91,512/-, as we stated in our earlier submission that we are in the process of making the payment to them, we would like to submit that the entire outstanding payment of Rs. 12,74,91,512/-has been made by 11th March 2024 and there is no outstanding amount payable to the Mangaldeep Trading. Bank Statement reflecting the payment details attached herewith. (3) With respect to point no. 3, Tushar Harishbhal Modi (PAN-ARWPM8931H) Prop. Siya Enterprise outstanding of Rs. 14,31,36,266/-/-, as we stated in our earlier submission that we are in the process of making the payment to them, we would like to submit that the entire outstanding payment of Rs. 14,31,36,266/- has been made by 11th March 2024 and there is no any outstanding amount payable to the Siya Enterprise, Bank Statement reflecting the payment details attached herewith. (4) With Respect to your last point where we failed to provide explanation with documentary evidence regarding sale of food grains to M/s Karmbhakti Agro Industries Pvt. Ltd., we would like to inform to your good office that we have maintained all necessary documents (Day Book. Sales Register, Stock Register etc.) as required by law for sales transaction. Further your good office has advised that no e-way bill issued and, on the sale, so the physical delivery of goods not proved, we would like to bring to your notice that the sale transactions are for exempted goods as per GST and hence E-way Bill is not required to be generated for the movement of goods. Further, we would like to mention that Rs. 17,48,24,524/- is outstanding as customer advances in FY 21-22 against which we have sold the goods worth Rs. 23,07,48,441/- in FY 2022-23 to Mis Karmbhakti Agro Industries Pvt. Ltd. and the above advances of Rs. 17,48,24,524/- settled against sales in subsequent year. The sales ledger reflecting sales to Karmbhakti Ago Industries Pvt Ltd along with the sample invoices of FY 22-23 are attached herewith. Also, the confirmation on the ledger from the above party for FY 22-23 reflecting our transactions are enclosed herewith Further the balance confirmation with the above party is also attached herewith. Also, the responsibility of transportation is with the buyer and we have arranged the Lorry receipts from the buyer and enclosing herewith the copy of the sample Lorry receipts for proving the actual movement of goods. As in all the above cases the parties have replied to your notice u/s 133(6) and given confirmation of transactions entered with us. This proves the genuineness of our purchase and sales transactions. Page 5 of 18

ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. In view of the above, it is requested your goodself kindly to accept the evidence and explanation of the transaction carried out by assessee and not to make any addition on the grounds specified in the Show cause notice. If require, further hearing please be granted before making any adverse decision in the matter. 8. However, assessing officer rejected the above replies of the assessee and held that assessee has not provided any justification/clarification with documentary evidences about outstanding creditors/advances, therefore, assessing officer made addition of Rs.57,30,35,212/- (Rs.17,48,24,524 + Rs.39,82,10,688) in the hands of the assessee.

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. of Rs.12,74,91,512/- (c) Tusar Harishbhai Modi Prop, Siya Enterprise outstanding of Rs.14,31,36,266/-. The assessee has contested these additions before the A.O. by submitting details such as balance confirmation of all parties, ITR details etc. During the appellate proceedings the assessee submitted as under: “The assessee had purchased grains and pulses ("agricultural goods") from the aforesaid parties due to which there is an outstanding payment to Parag Modi (Prop. Of M/s Jalaram Traders), Binduben Modi (Prop. Of M/s Mangaldeep Trading) and Tusar Harishbhai Modi (Prop. Of M/s Siya Enterprises). The entire payment outstanding as on 31 March 2022 to aforesaid parties were paid in March 2024. The copy of the relevant extract of the bank statement showing payment made to Parag Modi of Rs.12,75,82,910, Binduben Modi of Rs.12,74,91,512 and Tusar Harishbhai Modi of Rs.14,31,36,267 is enclosed as Annexure 10. The assessee had such business transactions with all the aforesaid parties in the previous FY 2020- 21 and with Parag Modi and Binduben Modi in subsequent FY 22-23. The details of transaction with aforesaid parties in FY 2020-21 and 2022-23 are enclosed as Annexure 11 and Annexure 12. Sample copy of the invoices for the FY 2020-21 and 2022-23 are also enclosed as Annexure 13. Further, the Chartered Accountant certificate from Parag Modi, Binduben Modi, and Tusar Harishbhai Modi are also enclosed as Annexure 14, 15 and 16 respectively. 3. You have claimed that GST is not applicable in their case. Elaborate Agriculture goods is an exempt supply for the purpose of Goods and Service Tax ("GST") and hence E-way bill is not required to be generated. Since the assessee had sold chana, moung, urad and toor dal. GST is not applicable and E-way bill is not required to be generated. The copy of the GST rate (HSN 0713) of the above agricultural goods having "Nil" rate is enclosed as Annexure 17 (we have Highlighted the relevant HSN code in the attached Annexure 7). Further, as per the E-way bill Rule 138(14), Eway bill is not required to be generated. The relevant extract of Rule 138(14) is reproduced are as under: "(14) Notwithstanding anything contained in this rule, no e-way bill is required to be generated- (a) where the goods being transported are specified in Annexure;

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd.

The copy of the Rule 138(14) is enclosed as Annexure 18. 4. Offer your comment on assessment order point 4.5(iii) of page no. 13 with corroborative evidences. In the assessment order, the Ld. assessing officer has stated that "on perusal of Insight Portal Data the above mentioned entities have not shown any loan/advances / sundry debtors/trade receivable in their respective balance sheet / ITR". In this regard, the assessee submits that the aforesaid parties are subject to tax audit u/s 44AB of the Act and herewith enclosed the relevant extract of ITR of all the aforesaid parties as Annexure 19. From the ITR, your honour may observe that M/s Binduben Parag Modi, Parag Modi and Tushar Hareshbhai Modi have got their accounts audited u/s 44AB of the Act and shown debtors, creditors, etc, in their ITR. In view of the above, your honour may observe that the findings of Ld. assessing officer are baseless and erroneous. 5. Offer your comment on assessment order point 4.5(ii) of page 11 with corroborative evidences. The A.O has brought factual details in the nature of purchase Bills. The Ld. assessing officer has stated that "TDS details as mentioned in the insight portal by the aforesaid parties are different from the amount shown by the assesse as purchases. Such allegation is erroneous due to below reasons: During the AY 2022-23, the assessee has deducted tax u/s 194Q on the purchases (after giving the exemption of Rs. 50 Lakhs) from the aforesaid parties are as under:

From the screenshot of the insight portal obtained from Mangaldeep Trading and Jalaram Traders,

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. your honours may observe that purchases reflecting in insight portal is matching with purchases shown by the assesse. The screenshot of insight portal of Mangaldeep Trading and Jalaram Traders are enclosed as Annexure 20. From the assessment order, your honour may observe at page 12 of the assessment order that purchases shown in the insight portal of M/s Siya Enterprise are same as shown by the assesse. Hence there is no deviation pointed out by the Ld assessing officer in assessment order in the case of purchases from Siya Enterprise. Further, the Ld. assessing officer has stated in the order that "from the perusal of purchases bills submitted by the assessee with respect to M/s Siya Enterprise and in compliance to notice u/s 133(6), it has been found that M/s Siya Enterprise has issued bills from serial number S/01 to 5/78 continuously to the assessee and does not sell anything from the period 01.01.2022 to 31.01.2022 to any other entity which confirmed the suspicion that M/s Siya Enterprise is only a shell/paper entity". In this respect, the assessee would like to submit that M/s Siya Enterprise had made sales to other parties as well. M/s Siya Enterprises is using different prefix for its different customer with a Serial No. starts from 1. Like in the case of M/s. Abhyant, prefix used as "S", in the case of Asha Trader, prefix used as "A" with Serial No. starts from 1 and for Madhav Agri Trade, prefix used as "GB". We hereby attached the sample sales invoices raised by M/s Siya Enterprise to its customers M/s Madhav Agri Trade and M/s Asha Traders as Annexure 21. Hence, there were a continuous sales invoices number to the assessee during the period 1 January 2022 to 31 January 2022. Further, from the copy of ITR of the Siya enterprise (Prop. Tushar Modi) wherein your honour may observe that that total sale of Siya Enterprise is much higher than the sales of Rs. 4,66,54,322/- made to the assessee. The Ld. assessing officer erred in treating the M/s Siya Enterprises as Shell/paper entity. The copy of ITR of the Siya Enterprises is enclosed as Annexure 22. 11. From the perusal of the facts, the ld.CIT(A) noticed that the assessee holds a status of a company and filed his return of income regularly with getting his books of account audited yearly. In this year also it is noted that the assessee has filed his return of income on time and declared an income of Rs. 2,11,63,050/-. The assessee deals with" business of general importer and exporters, general merchant, commission agent, manufacturer agent and representative, manufacturers, processors and distributors and dealers in grain and pulses, commodities, articles, products." as shown in Memorandum of Association dated 18.11.2019. The assessee has purchased grains and pulses from the aforesaid parties the entire payment outstanding as on 31.03.2022 were paid in march 2024, in support the assessee submitted relevant extract of bank statement. It is also noted that the assessee was doing same business transaction with all the aforesaid parties in Financial Year

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. (F.Y.) 2020-21 and F.Y 2022-23, in support the assessee submitted the ledger account as well as sample copies of invoices for the F.Y 2020-21 and F.Y 2022-23. Further, the assessee also submitted the confirmation certificate for the aforesaid parties. The assessee has also proved that agricultural goods is an exempt supply for the purpose of GST. It is also noted that aforesaid three parties are subject to tax audit u/s 44AB of the Income Tax Act and there ITR and audited accounts were submitted. The assessee has also matched the TDS deducted u/s 194Q on the purchases with the Insight Portal of the respective parties. Further it is noted that the A.O. has examined this issue u/s 133(6) of the Act in the case M/s. Siya enterprises and noted discrepancies in the numbering of bill, for this issue the assessee submitted sample sale invoices of other parties in the books of M/s. Siya enterprises. The A.O. has not pointed out any defects with the books of account, bank statements and the audited balance sheet and also has not rejected the books of account. In view of the above factual details, the ld.CIT(A) deleted the addition of Rs.39,82,10,688/-.

ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. transport receipts, your honour may observe that the details as per sales invoices are matching with transport receipts. (b) Further, assessee provided the copy of balance confirmation letter from the above company i.e. M/s KarambhaktiAgro Industries Pvt. Ltd issued on 10.04.2023 by the above said company which is also not co-relate with the outstanding balance on 31.03.2022 as a sundry creditor. The assessee vide its reply dated 12 March 2024 had submitted that as on 31 March 22 amount of Rs. 17,48,24,524/- is outstanding as customer advances payable to KarmabhaktiAgro Industries Pvt Ltd (Karamabhakti). During the FY 2022-23, the assessee had sold goods worth of Rs. 23,07,48,441/- to Karmabhakti and the above advances of Rs. 17,48,24,524/- got adjusted against the sales in subsequent year. In order to prove the facts, the assessee had submitted the ledger confirmation as on 31 March 23 dated 10 April 23 which shows that as on 31 March 2023, the amount of Rs.5,57,04,007 was actually receivable from customer. Thus, the ledger confirmation issued on 10th April 2023 is as on 31 March 2023 which obviously shall not match with Outstanding balance as on 31 March 2022. The copy of the ledger confirmation as 31 March 2023 issued on 10 April 2023 is enclosed as Annexure 24. Thus, your honour may observe that the Ld. assessing officer has misunderstood the facts and made the addition of Rs.12,48,24,524/- on the assumption that the same has not been repaid/adjusted against subsequent sale. (c) Assessee submitted the sale invoice without any vehicle number and hence, failed to prove physical delivery of goods to M/s KarambhaktiAgro Industries Pvt. Ltd. So the sales to above said company remain unexplained and unverified. Further, in compliance to notice u/s 133(6) the M/s KarambhaktiAgro Industries Pvt. Ltd. submitted a ledger account of the assessee in its books of accounts. On perusal of the same it has been revealed that the bills issued by the assessee to M/s Karambhakti Agro Industries Pvt. Ltd. is in continuation serial order (AB/1 to AB/234) during the period 01.01.2021 to 31.01.2021 which shows the in-genuineness of the sale. As mentioned above in point 3 that the assessee is in the business of dealing of agricultural goods which is exempt from GST and Eway bill is not required to be prepared for such transportation of agricultural goods. Therefore, the vehicle number has not mentioned in the invoices as the same is not mandatory. Further, the transportation of goods is the responsibility of the buyer of goods, therefore it is practically difficult to mention vehicle number in the sales invoices. To prove the actual delivery of goods, we had requested the sample transport receipt from the buyer and as mentioned above in subpoint a. of point 6, the assessee had submitted the transport receipts during assessment proceeding vide submission dated 12 March 2024. Further, the Ld. assessing officer has contended that it has been revealed that the bills issued by the assessee to M/s KarmabhaktiAgro Industries Pvt. Ltd. is in continuation serial order (AB/1 to AB/234) during the period 01.01.2022 to 31.01.2022 which shows the in-genuineness of the sale. In this regard, the assessee submits that it had only one customer M/s KarmabhaktiAgro Industries Pvt. Ltd during the FY 2021-22 and therefore, there is running bills which are in continuation serial order. As per the prevailing standard practice, the invoices need to be in serial order which the assessee has maintained. Hence, the Id. assessing officer allegation is without any evidence & is completely baseless. In view of the above, the assessee prays that the addition made by Ld. assessing officer should be deleted. We request your honour to kindly take the above on

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. records and oblige. The assessee request for a video conferencing in the matter. In the event, any further clarifications are required, we will be glad to furnish the same. in case your honour requires any further information, we would be pleased to furnish the same." 13. From the perusal of the above facts, which were also before the assessing officer, the ld.CIT(A) noted that the assessee holds a status of a company and filed his return of income regularly with getting his books of account audited yearly. The assessee has submitted details of goods, and sale and it is noted that these details have been audited as per the provisions of Accounting standards. The assessee has submitted the ledger confirmation as on 31.03.2023 which shows that as on 31.03.2023 the amount of Rs. 5,57,04,007/- was receivable from customers. The assessee had also submitted the transport receipts during assessment proceedings which was rejected by A.O. as the bills issued by the assessee to Ms. Karambhakti Agro Industries Pvt Ltd is in continuation serial order. For this the assessee have submitted that during the F.Y. 2021-22, he has only one customer, that is, Karambhakti Agro Industries Pvt Ltd. Further, the assessee has also submitted sample copies of bill of supply for different products like urad, chana etc with transport bills. In view of the above factual details, the ld.CIT(A) deleted the addition of Rs.17,48,24,524/-. 14. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before this Tribunal.

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. during the appellate proceedings, the assessee has submitted additional evidences, therefore, matter may be restored back to the file of the assessing officer for fresh adjudication.

ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. made by the assessee. The assessing officer has not disallowed the purchases, however, treated the sundry creditors, as unexplained, which is not acceptable, as these creditors are linked with purchases made by the assessee and since the purchases were considered genuine by the assessing officer, therefore, corresponding creditors should not be treated unexplained. Moreover, the sundry creditors were paid partly during the assessment year itself under consideration and some creditors were paid subsequently by banking channel and the evidence of payment of creditors are clearly evident with the bank statement. Some creditors have opening balances, which should not be added in the assessment year under consideration. Since, the creditors have been repaid in the assessment year itself and some of the creditors were repaid in subsequent years, therefore, no addition should be made in the hands of the assessee. Besides, the advance is taken by the assessee, during the course of doing the business, were adjusted against the sales made by the assessee. Hence, the advance has been fully explained with help of the bank statement and the confirmations and the adjustment against the sale made by the assessee. Besides, books of accounts of the assessee, were rejected by the assessing officer and assessing officer treated the creditors as unexplained without rejecting the book of accounts of the assessee, which is not acceptable, at all. Besides, the assessee has paid the interest and the TDS were deducted on the interest payment to creditors. Therefore, creditor should not be bogus, as the assessee has paid the interest in relevant cases, and TDS were also deducted on the interest payment. The Learned Counsel for the assessee also submitted that assessing officer made the addition under section 68 of the Act which is not applicable to the assessee and hence entire assessment order is vitiated on this account. Therefore, learned Counsel for the assessee contended that order passed by the learned CIT(A) should be upheld.

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. 18. We have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessee is involved in the business of trading of agricultural commodities. During the assessment u/s 143(3), the Assessing Officer made an addition of Rs.57,30,35,212/- u/s 68 of the Income Tax Act, treating trade creditors and customer advances as unexplained cash credits. On appeal, the Ld. CIT(A) deleted these additions after considering the factual evidence and bank records. We note that assessing officer made addition on account of outstanding sundry creditors Rs.39,82,10,688/- and customer advances Rs.17,48,24,524/-, totaling to Rs.57,30,35,212/-.We note that assessing officer has made an addition on the outstanding trade creditors, in respect of the following creditors, Viz: (i)Jalaram Traders, Rs.12,75,82,910/-, (ii) Magaldeep Trading - Rs.12,74,91,512/-, and(iii)Siya Enterprises Rs.14,31,36,266/-. However, the assessee had paid the entire outstanding balance of creditors during the assessment year itself and in subsequent years, through RTGS by March 2024. Bank statements confirming these payments were placed on record during assessment proceedings. The copy of Bank statement is also filed before the Bench. 19. We note that assessing officer has made an addition on account of advances received of Rs.17,48,24,524/- in FY 2021-22 from regular customer, M/s Karmbhakti Agro Industries Pvt. Ltd. Such advances have been subsequently adjusted against actual sales of Rs. 23,07,48,441/- in the financial year (FY) 2022- 23. To prove such square off, subsequent sales ledger and balance confirmation dated 10th April 23 which shows that as on 31 March 2023 the amount of Rs.5,59,23,917/- (23,07,48,441 – 17,48,24,524) was actually receivable from customer and hence it is evident from the fact that outstanding customer advances

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. of Rs. 17,48,24,524/-, as on 31st March 2022 had been adjusted against the subsequent sale to M/s Karmbhakti Agro Industries Pvt. Ltd. The confirmation was filed during the assessment proceeding. 20. We note that the alleged creditors represent trade liabilities arising from purchases which the Assessing Officer himself accepted as genuine. Section 68 applies where “any sum is found credited in the books” and the assessee fails to satisfactorily explain the nature and source of such credit. A trade creditor arising from a genuine purchase is conceptually different from a cash credit or loan received by the assessee. The credit entry in the supplier's account represents the corresponding liability for goods purchased; it is not, by itself, a receipt of money by the assessee. We note that Hon’ble Delhi High Court in the case of CIT v. Ritu Anurag Agarwal, ITA No. 325/2008, explained the position of sundry creditors stating that the principle was that where the purchases, sales and trading results were accepted by the Assessing Officer, and the outstanding creditors related to those purchases, an addition under section 68 could not be sustained merely in respect of the outstanding sundry creditors. The Co-ordinate Bench of ITAT Ahmedabad in the case of M/s Shital Builders v. ITO, Ward-9(1), Ahmedabad, ITA Nos. 1653 & 1853/Ahd/2013, Assessment Year 2009-10, order dated 20.01.2023 held that issue of sundry creditors relating to purchases, the addition unsustainable, where the Revenue had accepted the corresponding trading results and the assessee had furnished supporting material. Where sundry creditors represented purchases. The assessing officer had not disallowed the corresponding purchases and had accepted the trading results. Once the purchases and trading results were accepted, the outstanding creditors relatable to such purchases could not be treated as unexplained cash credits under section 68 of the Act. That is, if the creditors represented purchases, and the purchases themselves had not been

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. disallowed, there was no basis for making an addition of the corresponding creditors under section 68 of the Act. 21. We also note that these Sunday creditors were paid in the assessment year itself, and some of the creditors were paid in subsequent years, therefore, no addition should be made in the hands of the assessee. For this reliance is placed on the judgement of Hon’ble High Court of Gujarat in the case of Ayachi Chandrashekhar Narsangji, [2014] 42 taxmann.com 251 (Gujarat) wherein it was held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. The Hon’ble High Court of Gujarat in the case of Shanti Enterprise, [2016] 71 taxmann.com 275 (Gujarat) held that where deposits was made with assessee represented booking amount received toward construction and same was done through banking channel and copies of account of depositor were duly filed, section 68 would not apply.We find that the outstanding sundry creditors represent trade liabilities arising on account of purchases made by the assessee. The Assessing Officer has not disputed or disallowed the corresponding purchases and has also not disturbed the trading results. Further, substantial payments against the said liabilities were made during the year under consideration and the remaining liabilities were discharged in the subsequent year through banking channels. The ledger accounts, purchase invoices and evidence of payments establish the existence and discharge of the trade liabilities. In these circumstances, the mere fact that certain purchase liabilities remained outstanding as at the end of the relevant previous year cannot, by itself, justify treating the same as unexplained credits under section 68 of the Act. Considering these facts and circumstances, we find that there is no infirmity in the order of the learned CIT(A). In the wake of above delineation, we see no error in the

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ITA No.832/Rjt/2024 [ AY 2022-23 ] ACIT v. Abhyant Construction Pvt Ltd. conclusion drawn by the CIT(A) in this regard, therefore, we dismiss the appeal of the revenue. 22. In the result, appeal filed by the revenue is dismissed. Order is pronounced in the open Court on 07/08/2026.

Sd/- Sd/- [ Shri Sonjoy Sarma ] [ Dr. Arjun Lal Saini ] �याियक सद�य/Judicial Member लेखा सद�य/Accountant Member //True Copy// िदनांक/Date: 07/08/2026 राजकोट/Rajkot Copy of the order forwarded to :  The assessee  The Respondent  CIT  The CIT(A)  DR, ITAT, RAJKOT  By order Guard File

Private Secretary ITAT, Rajkot

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