DCIT CIRCLE SANGLI, SANGLI vs. BHARAT ELECTRICAL CONTRACTORS AND MANUFACTURERS PRIVATE LIMITED, SANGLI

Whether on the facts and the circumstances of the case and in law the Ld. CIT(A) has grossly erred in accepting the additional evidence and at the same time remanding the matter to the Assessing Officer for verification, which is contradictory and legally untenable. If the evidence was.considered complete and reliable, the Ld. CIT(A) ought to have adjudicated the matter conclusively under section 250 of the Act.

Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in setting aside the addition of ₹11,29,91,920/- made by the Assessing Officer under section 68 of the Income-tax Act, 1961, without appreciating that the assessee had failed to furnish complete and verifiable reconciliations, confirmations, and supporting evidence during the assessment proceedings despite multiple opportunities provided under sections 142(1) and 133(6) of the Act.

Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that significant discrepancies and mismatches in the balances of creditors were duly established by the Assessing Officer through independent verification under section 133(6), and the assessee did not discharge its statutory onus of proving the identity, creditworthiness, and genuineness of the creditors and related transactions, as required under section 68 of the Act.

The appellant craves to add, amend, alter or delete the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal.

The brief facts of the case are that, the assessee is a private company and has filed the return of income for the A.Y. 2022- on 04.11.2022 disclosing a total income of Rs. 1,11,44,420/-. Subsequently, the case was selected for scrutiny and notice under Section 143(2) and u/sec142(1) of the Act are issued to the assessee along with questionnaire to substantiate the claims made in the return of income filed. And the assessee has complied with the details and information. The Assessing Officer (A.O) in the course of assessment proceedings find that, the assessee is engaged in the manufacturing activities of various electrical spare parts. Further on perusal of the audited financial statements and agreements, the A.O find that the assessee has installed wind mill and generating power and is claiming deduction under Section 80IA(4)(iv)(a) of the Act. The AO has dealt on the provisions of 80IA of the Act, agreements, contracts, central and state government authorities permissions and was not satisfied with the power purchase agreement and disallowed the claim of deduction u/sec80IA(4)(iv)(a) of the Act of Rs.31,22,718/-..On the second disputed issue, the A.O on perusal of the ledger account of creditors, debit and credit outstanding balances has issued notice u/sec 133(6) of the Act on the ten creditors, whose PAN are available with A.O on random check basis and received replies and the A.O has considered these replies and found discrepancies in quantities traded and values and made addition of Rs.1,29,91,920/- and similarly in respect of other creditors, where no reply was received, the A.O has made an addition of Rs.10,00,00,000/- and all aggregating to Rs.11,29,91,920/- u/sec68 of the Act and assessed the total income of Rs. 12,72,58,878/- and passed the order under Section 143(3) r.w.s. 144B of the Act dated 21.03.2024. 3. Aggrieved by the order, the assessee has filed the appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statement of facts, submissions of the assessee and findings of assessing officer and has deleted the disallowance under Section 80IA of the Act. Whereas in respect of the creditors outstanding liability/ balances added u/sec68 of the Act. the CIT(A) directed the A.O to verify the claim and allow the relief and the CIT(A) has allowed the assessee appeal. Aggrieved by the CIT(A), the Revenue has filed the appeal before the Hon'ble Tribunal.

At the time of hearing, the Ld.DR submitted the CIT(A) has erred in admitting the additional evidences furnished by the assessee without providing fair opportunity to verify and examine the evidences by the assessing officer and deleting the addition in violation of Rule 46A of the I T rules . Further the CIT (A) has erred in overlooking the factual aspects that the assessee could not file nor explained the transactions of creditors with evidences in spite of providing adequate opportunities by the A.O in the assessment proceedings and prayed for allowing the revenue appeal. Per contra, the Ld.AR supported the order of the CIT(A) with factual paper book.

We heard rival submission and perused the material record. The Ld.DR submitted that the CIT(A) has erred in deleting the addition u/sec68 of the Act based on the additional evidences filed by the assessee in the appellate proceedings for the first time and the assessing officer was not provided opportunity to examine and verify the evidences and thereby violated the provisions of rule46A of the IT rules. Further the assessee could not file nor explained the transactions of creditors with confirmations, reconciliation in spite of providing adequate opportunities by the A.O in the assessment proceedings. We find the assessee has submitted the evidences and explanations on difference in closing balances of creditors and also closing balances include the carry forward balances of the previous years. The Ld. DR submitted that these submissions/evidences were not filed before the AO. We find the CIT(A) has considered submissions and evidences filed by the assessee in support of the claim of creditors balances and deleted the addition with directions to the Assessing officer dealt at Page 19 Para 5.2 to 5.3 of the order read as under: “ 5.2 Grounds 2 and 3 challenged the addition of Rs. 11,29,91,920 under Section 68 of the Income Tax Act, made by the Assessing Officer (AO) on account of unexplained credit balances in the assessee's books. During the assessee provided comprehensive details of all creditors, including opening and closing balances, yearly transactions, and supporting documentation (Annexures 10A to 10J). The AO issued notices under Section 133(6) to ten randomly selected creditors; four responded with ledger confirmations, while six did not respond For the four respondents, the Ld.AO identified discrepancies between the closing For the four respondents, balances in the assessee's books and those confirmed by the creditors, resulting in an addition of Rs. 1,29,91,920. For the six non-responding creditors, the AO made an ad-hoc addition of Rs. 10 crore, totaling Rs. 11,29,91,920. The assessee explained that the differences arose mainly due to payments made via Letters of Credit (LCs), which are recorded as contingent liabilities by the assessee but as receipts by creditors upon discounting with banks. Full reconciliations and supporting documents were provided, demonstrating that all balances were explained. Following is the summary of reconciliations in respect of the 10 sundry creditors offered by the appellant.

Further Ld.AR submitted that, subsequent to the CIT(A) directions to the Assessing Officer(A.O) on the disputed claim, the A.O. has passed the order granting relief to the assessee on addition of creditors balances u/sec68 of the Act after verification of facts and evidences in accordance with the CIT(A) directions vide order passed u/sec143(3) r.w.s250 of the Act dated 29.01.2026 and placed the copy of order on record and was not disputed by the revenue. We find the revenue has challenged the CIT(A) order on the admitting the additional evidences and no opportunity was granted to the Assessing Officer to verify and examine the evidences. Whereas the CIT(A) has directed the assessing officer to verify the claim and reconciliation and grant relief, which was not available to the assessing officer in the assessment proceedings. Since, the A.O after due verification of facts and evidences has granted relief to assessee and passed the order u/sec143(3) r.w.s 250 of the Act dated 29.01.2026 and the issues raised in the revenue appeal are complied. And the Ld.DR could not controvert the findings of the CIT(A) with any new cogent evidence. We are of the view that the CIT(A) order is reasoned and conclusive. Accordingly, we do not find any infirmity in the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue.

In the result, the appeal filed by the revenue is dismissed. Order pronounced on the open Court on 09th September 2026. MANISH BORAD PAVAN KUMAR GADALE (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Pune, Dated: 09th September, 2026 Abhishek Mohan Abhishek Mohan Mohan Date: 2026.09.09 16:32:21 +05'30' आदेशकीप्रतितितिअग्रेतिि / Copy of the Order forwarded to : अिीिार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

The Pr. CIT concerned. 4. तिभागीयप्रतितिति,आयकरअिीिीयअतिकरण, “A” बेंच, पुणे/ DR, ITAT, “A” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////