YASHREE PETROLEUM,MEERUT vs. ITO WARD 1(2)(4), MEERUT

PDF · subscribers
ITA 2735/DEL/2026Status: DisposedITAT Delhi09 July 2026AY 2023-246 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the additional evidence filed by the assessee was crucial and should have been admitted by the CIT(A). Following High Court judgments, the Tribunal admitted the evidence and remitted the matter back to the Assessing Officer for re-examination.

What were the facts?

The assessee firm received a loan of Rs. 1,43,00,000/- and the Assessing Officer added Rs. 1,14,00,000/- as unexplained credits under Section 68 for failure to establish the creditworthiness of the lender. The assessee filed additional evidence before the CIT(A) to prove the source of funds in the lender's hands.

What were the issues?

Whether the CIT(A) erred in not admitting additional evidence filed under Rule 46A to establish the creditworthiness and source of funds of a loan lender.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI

For Appellant: Shri P.S. Kashyap, FCA, Shri Tarun Sharda, Sr. DR
Hearing: 06/07/2026Pronounced: 06/07/2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2735/Del/2026 (ASSESSMENT YEAR: 2023-24) Yashree Petroleum, ITO, Ward-1(2)(4), C/o Kashyap & Co., Meerut. 114/214, City Centre, Vs. Begum Bridge Road, Meerut, Uttar Pradesh- 250001. PAN-AABFY3667L (Appellant) (Respondent) Assessee by Shri P.S. Kashyap, FCA Shri Tarun Sharda, Sr. DR. Department by Date of Hearing 06/07/2026 Date of Pronouncement 06/07/2026

O R D E R PER MANISH AGARWAL, AM: This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi [CIT(A), in short] in Appeal No. NFAC/2022-23/10455786 dated 30.01.2026 arising out of the order passed u/s 143(3) of the Act dated 03.03.2025 for Assessment Year 2023-24.

2.

Brief facts of the case are that the assessee is a firm, engaged in the business of Retail sale of automotive fuel and filed his return of income on 15.10.2023 declaring total income at Rs.1,47,00,606/-. The case was selected for scrutiny under CASS and the AO observed that assessee has taken loan of Rs.1,43,00,000/- from one Shri Latur Singh and has failed to file the details to establish the creditworthiness of Sh. Latur

2 ITA No.2735/Del/2026 Yashree Petroleum vs. ITO Singh. Accordingly, the sum of Rs. 1,14,00,000/- received during the year was added as unexplained credits u/s 68 of the Act in the assessment order passed u/s 143(3) of the Act. 3. Aggrieved by the said order, the assessee filed the appeal before the Ld. CIT(A). During the course of appellate proceedings, assessee filed an application under Rule 46A of Income Tax Rules, 1962 (the Rules) alongwith additional evidences and further explained the circumstances due to which these evidences could not be filed before the AO during the course of assessment proceedings. The evidences so filed were to establish the source of funds in the hands of lender i.e. Shri Latur Singh now deceased. Ld. CIT(A) sought remand report from the Assessing Officer and, thereafter, has not admitted the additional evidences so filed by the assessee and confirmed the additions made. 4. Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various grounds of appeal as per appeal memo.

5.

Since, all the grounds of appeal are with respect to the non-admission of additional evidences filed under Rule 46A of the Rules and confirming the addition of Rs.1,14,00,000/- made u/s 68 of the Act, therefore, they are taken together for consideration.

6.

Heard both the parties and perused the materials available on record. From the perusal of the order of Ld. CIT(A), it is observed that in terms of para 6 of the order, Ld. CIT(A) has discussed the additional evidences so filed which are as under: (i) Confirmation of Ledger Account of Sh. Latur Singh. (ii) Documentary evidence of credit entry in the bank account of Sh. Latur Singh. (iii) Copy of account of Sh. Latur Singh. (iv) Confirmation of son of Sh. Latur Singh

3 ITA No.2735/Del/2026 Yashree Petroleum vs. ITO (v) Copies of the sale deed regarding sale of land by Shri Latur Singh.

7.

As per the assessee all these evidences were obtained from the legal heir of Sh. Latur Singh to establish the source in his hands to advance money to the assessee. The Ld. CIT(A) had not admitted the same by observing that AO had provided many opportunities to the assessee for filing the details and no sufficient and reasonable cause for non-filing these details before the Assessing Officer was tendered.

8.

It is observed that the sole basis for the addition made by the Assessing Officer is on account on failure on the part of the assessee to establish the creditworthiness as well as source of funds in the hands of the Sh. Latur Singh to advance such a huge sum to the assessee. Further the Ld. CIT(A) while confirming the addition alleged that no interest was paid on such loan and no documentary evidences was submitted before the AO. Since, all the relevant evidences were filed as additional evidences before the Ld. CIT(A) which are very crucial and most relevant to decide the issue in hands, therefore, in the interest of justice, Ld. CIT(A) ought to have admit the same.

9.

The hon’ble Karnataka High Court in the case of Sri Shankar Khandasari Sugar Mills vs. CIT reported in (1992) 193 ITR 669(kar.) has made following observation with respect to the admission of the additional evidences: “12. This background to the case has to be appreciated while considering the legality of the appellate authority's order rejecting the order of assessment made by the Commercial Tax Officer produced by the assessee. The appellate authority should have accepted the material produced by the assessee as clarificatory in nature and considered the same to test the fairness and propriety of the estimate of income made by the Income-tax Officer. Though it was belated production of very relevant material, no prejudice (in its legal sense) would have resulted to the Revenue by considering the material produced by the assessee. Consideration of such a material by the appellate authority would have rendered the best judgment assessment a fair proceeding and the resultant assessment order would have been a most rational one.”

4 ITA No.2735/Del/2026 Yashree Petroleum vs. ITO 10. The hon’ble Bombay High Court in the case of Smt. Prabhavati S Shah Vs. CIT reported in (1998) 231 ITR 1 (Bom.) has given a new dimension to the provisions relating to admission of new evidence before the CIT(A). In this case loans taken by the assessee were added u/s 68. Before the CIT(A), the assessee wanted to produce additional evidences in the form of xerox copies of cheques, a certificate from the bank and copies of the bank statements which were not accepted by him holding that he was not obliged to accept additional evidences as the assessee's case did not fall in any of the four exceptions set out in rule 46A(l). The hon’ble Bombay High Court negatived the contention of the CIT(A) and held that under section 250(4), he was empowered to make such further inquiry as he thinks fit and such power being quasi judicial power , it was incumbent on him to exercise the same if the facts and circumstances justify. It further held that if the first appellate authority failed to exercise his discretion judicially and arbitrarily refused to make inquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority. The relevant observations of the Hon’ble court are as under: 5. On a plain reading of Rule 46A, it is clear that this rule is intended to put fetters on the right of the appellant to produce before the Appellate Assistant Commissioner any evidence, whether oral or documentary, other than the evidence produced by him during the course of the proceedings before the Income-tax Officer, except in the circumstances set out therein. It does not deal with the powers of the Appellate Assistant Commissioner to make further enquiry or to direct the Income-tax officer to make further enquiry and to report the result of the same to him. This position has been made clear by Sub- rule (4) which specifically provides that the restrictions placed on the production of additional evidence by the appellant would not affect the powers of the Appellate Assistant Commissioner to call for the production of any document or the examination of any witness to enable him to dispose of the appeal. Under Sub-section (4) of Section 250 of the Act, the Appellate Assistant Commissioner is empowered to make such further inquiry as he thinks fit or to direct the Income-tax Officer to make further inquiry and to report the result of the same to him. Sub-section (5) of Section 250 of the Act empowers the Appellate Assistant Commissioner to allow the appellant, at the hearing of the appeal, to go into any ground of appeal not specified in the

5 ITA No.2735/Del/2026 Yashree Petroleum vs. ITO grounds of appeal, on his being satisfied that the omission of the ground from the form of appeal was not wilful. It is clear from the above provisions that the powers of the Appellate Assistant Commissioner are much wider than the powers of an ordinary court of appeal. The scope of his powers is coterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do. He can also direct the Income-tax Officer to do what he failed to do. The power conferred on the Appellate Assistant Commissioner under Sub-section (4) of Section 250 being a quasi-judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority.

11.

In view of above facts and by respectfully following the judgements of Hon’ble Bombay and Karnataka High court, we hereby admit the additional evidences filed by the assessee before the ld. CIT(A) and in the larger interest of justice, matter is remitted to the file of the AO with the directions to examine the evidences filed by the assessee as additional evidences with respect to the availability of the funds in the hands of the lender late Sh. Latur Singh and decide the issue in accordance with law. With these directions, both the grounds of appeal of the assessee are allowed for statistical purposes.

12.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 06.07.2026.

Sd/- Sd/- - (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 09.07.2026. *PK, Sr. PS*

6 ITA No.2735/Del/2026 Yashree Petroleum vs. ITO Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →