PATEL SEW JOINT VENTURE,HYDERABAD vs. DCIT, CIRCLE -6(1), HYDERABAD

आदेश / ORDER

PER SHRI VIJAY PAL RAO, VICE PRESIDENT: This appeal by the Assessee is directed against the Order dated 19.11.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi, passed u/sec.154 r.w.s.250 of the Income Tax Act [in short "the Act"], 1961, for the assessment year 2017-2018.

3 ITA.No.2242/Hyd./2025 3. The learned Authorised Representative of the Assessee has submitted that while passing the original order dated 28.07.2023 the learned CIT(A) has allowed the appeal of the assessee and deleted the addition made by the Assessing Officer u/sec.68 of the Act on account of sundry creditors. However, the Assessing Officer has not passed giving effect order to the said order of the learned CIT(A) on the ground that the learned CIT(A) has not passed any direction or specifically deleted the addition. The learned Authorised Representative of the Assessee has pointed out that the assessee then filed a petition u/sec.154 of the Act for rectification of mistake and seeking specific direction / clarification of the learned CIT(A) regarding the additions made by the Assessing Officer u/sec.68 of the Act however, the learned CIT(A) has dismissed the application/petition filed u/sec.154 of the Act by giving the reasons that in the order of the learned CIT(A) there is no space left blank. The learned Authorised Representative of the Assessee has pointed out that in the application the assessee has reproduced the order of the learned CIT(A) dated 28.07.2023

4 ITA.No.2242/Hyd./2025 however, due to the reason that the entire page could not be accommodated at the space in the application the same was shifted to the next page and the said part of the application is kept blank. However, the learned CIT(A) took the blank space in the application as part of the Order and dismissed the application on technical ground instead of considering the application for rectification of mistake on the facts. He has further submitted that the assessee also requested the Assessing Officer to give effect to the order of the learned CIT(A) but till date the Assessing Officer has not passed any order giving effect to the order of the learned CIT(A) dated 28.07.2023. Accordingly, the learned Authorised Representative of the Assessee has submitted that the impugned order of the learned CIT(A) may be set aside and the application u/sec.154 may be allowed by giving directions to the Assessing Officer to pass a giving effect order by deleting the additions made u/sec.68 of the Act.

5 ITA.No.2242/Hyd./2025 CIT(A) on the application as well as the order passed u/sec.250 dated 28.07.2023.

“5.1. Ground No. 1 and 2: Primarily, the issue for adjudication is unexplained credits of Rs.16,40,09,451/-. The appellant in the balance sheet as on 31/03/2017 has shown "Trade Payables" of Rs.18,07,65,193/- The net payable for the relevant Assessment Year is Rs.16,40,09,451/-, as the opening balance was shown at Rs.1,93,55,743/-. The Assessing Officer has given a finding that no details for this trade payables were furnished till 26/12/2019. However, on 26/12/2019 the Assessing Officer has given a finding that the party wise ledgers for trade payables were given, but no confirmations were produced. In light of these facts the Assessing Officer has treated the entire trade payables as unexplained and made an addition u/s 68 of I.T. Act. In this context after examining the submissions of the appellant and the relevant judgements the following can be inferred.

6 ITA.No.2242/Hyd./2025 The appellant is involved in the business of execution of civil contracts and credits in trade account is essential for this type of business. Also, the initial burden of proof of furnishing the ledger extracts to confirm the identity of the creditors was discharged by the appellant. The ledger extract is the documentary proof and payments were made and received through account payee cheques. The Assessing Officer at this stage had every authority to issue summons to cause necessary enquiries to disprove the existence of the credit. Merely, on the grounds of suspicion credits on trade account cannot be treated as unexplained u/s 68.

The three-test mandatory in this context are:

Of the three above elements no. 1 and 2 were discharged by the assessee and since it is on trade account in the normal course of business activity creditworthiness should have to be disproved conclusively. Without any substantive evidence disallowing trade credits can not be held as justified.

The appellant during the course of appellate proceedings has furnished the ledger extracts and relevant details to prove the credits as genuine. The ratio of decisions in the following cases can be relied upon: Hon'ble Supreme Court of India in the case of PCIT vs D.P. Agarwal [140 Taxmann.com].... held that: "Impugned addition u/s 68 cannot be made without proper scrutiny and enquiry by the Assessing Authorities."

7 ITA.No.2242/Hyd./2025 Hon'ble High Court of Bombay [139 taxmann.com 142]in the case of Vapi infrastructure vs industrial township LLP VS ITO... held that: "Assessing authorities cannot come to conclusion without cogent material and reasons." ITAT Delhi Bench [140 taxmann.com 242]...held that: "No addition u/s 68 is warranted in respect of trade creditors shown by the assessee in the balance sheet when the assessee files the account copies."

5.1. Thus, it is clear that the learned CIT(A) has discussed all the relevant facts in respect of the issue involved in the matter and also given its observation that without conducting the necessary enquiries to disprove the existence of credit, the addition u/sec.68 of the Act cannot be made merely on the basis of suspicion. It is manifest from the impugned order that the concluding finding of confirming or deleting the additions made by the Assessing Officer is missing in the order passed by the learned CIT(A) u/sec.250 of the Act. Due to this incomplete concluding finding the assessee filed petition u/sec.154 of the Act which has been rejected by the learned CIT(A) vide impugned order as under:

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5.2. Thus, the impugned order of the learned CIT(A) is highly arbitrary, improper and unjustified when the assessee has approached the learned CIT(A) to seek the rectification regarding the specific direction to the Assessing Officer but the petition of the assessee was dismissed only on highly technical ground that there was no space kept blank in the order passed u/sec.250 of the Act. Accordingly, in the facts

10 ITA.No.2242/Hyd./2025 and circumstances of the case, we set aside the impugned order of the learned CIT(A) passed u/sec.154 r.w.s.250 of the Act and remanded the matter back to the record of the learned CIT(A) for deciding the petition filed by the assessee u/sec.154 of the Act on merits by giving a concluding finding on the issue of addition made by the Assessing Officer u/sec.68 of the Act, after giving an appropriate opportunity of hearing to the assessee before passing the fresh order.

Order pronounced in the open court on 15.07.2026.

Sd/- Sd/- MADHUSUDAN SAWDIA VIJAY PAL RAO ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 15th July, 2026. VBP

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Copy to: PATEL SEW JOINT VENTURE, PLOT NO.76, H.NO.8-2-293/8 1 2/A/76, ROAD NO.9A, JUBILEE HILLS, BANJARA HILLS S.O. KHAIRATABAD, HYDERABAD-500034, TELANGANA 2 DCIT, CIRCLE -6(1), I T TOWERS, A C GUARDS , MASAB TANK, HYDERABAD-500004, TELANGANA 3 THE Pr. CIT, HYDERABAD 4 THE D.R., ITAT, HYDERABAD A-BENCH, HYDERABAD. 5 GUARD FILE TRUE COPY VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO ASSISTANT REGISTRAR / Date: 2026.07.15 I.T.A.T., HYDERABAD RAO 15:25:11 +05'30'