SHUBHA PRAKASH,ARSIKERE vs. INCOME TAX OFFICER, WARD-1 & TPS, , HASSAN

However, the appeal filed before us is late by 310 days for the reason that the date of the appellate order is 19 February 2024 which was stated to be received by the assessee also on the same date however the appeal is filed before us on 6 March 2025. The assessee has filed an application for condonation of delay wherein it was stated that the assessee filed an application for rectification of the appellate order on 22 March 2024 which was received by the assessee on 19th of February 2024. The reason for rectification was that it did not consider the written submissions filed by the assessee. The learned CIT – A passed an order under section 154 read with section 250 of the act on 31st of January 2025 rejecting the rectification application of the assessee and therefore the assessee thereafter filed an appeal against the impugned appellate order on sixth of March 2025. Thus, the assessee was pursuing the remedy available to the assessee for rectification of the appellate order which was not acceded to by the first appellate authority and therefore the assessee preferred an appeal which happened to be late by 310 days.

The learned advocate Sri Sri Hari Kutsa explained the reason for the delay and submitted that it is for sufficient cause and therefore needs to be condoned. He further referred to the affidavit filed by the assessee.

Thus, the learned departmental representative vehemently submitted that the delay in filing the appeal is not because of the sufficient cause and therefore it cannot be condoned.

We have carefully considered the rival contention as far as with respect to the admission of the appeal. We find that assessee has preferred an application for rectification of the appellate order, had these application was considered by the learned first appellate authority, perhaps the decision would have been different, as expected by the assessee, and therefore as an alternative

Briefly stated the facts of the case show that the assessee filed return of income on eighth of June 2021 at the returned income of ₹ 2,328,720 which was selected for complete scrutiny for the purpose of verification of the business purchases and therefore necessary notices were issued. The assessee was directed to substantiate the purchases. The assessee in support of our claim of purchases furnished the party wise purchase details with the name and permanent account No. in most ofthe cases but could not furnish the permanent account No. in some of the parties. Further the purchase bills were also not uploaded during the course of assessment proceedings submitting that it was voluminous. The assessee out of the total purchases of ₹ 30 crores, purchases amounting to ₹ 14,909,080 are made from parties without permanent account No. out of which purchases of Rs. 1,38,67,500 are stated to be from alleged parties and no further details could have been furnished.

After verification of the details a show cause notice was issued. The assessee furnishes the reply to the same and which was considered. The learned assessing officer reached at a conclusion that in respect of purchase of ₹ 1,38,67,500 claimed to be made directly from agriculturists which do not have the permanent account No. is and therefore they were held to be unverifiable. The learned assessing officer therefore held that these purchases could not be held to be genuine. Thus 20% of the impugned purchases amounting to ₹ 2,773,500 are treated as non-genuine and disallowed under section 69C of the act in the assessment order passed under section 143 (3) read with section 144B of the income tax act dated 8 June 2021 determining the total income of the assessee at ₹ 5,102,219.

The learned authorized representative submitted a paper book containing 165 pages wherein the assessee submitted the annual accounts of the assessee which were audited and also the show cause notice replies along with the written submissions dated 18 October 2023. He further referred to his written submission and also a case law compilation containing 11 judicial precedents to support the case that ad hoc disallowance/addition made by the learned assessing officer and confirmed by the learned CIT – A to the extent of even 12.5% is not sustainable.

The learned departmental representative vehemently submitted the list of purchases submitted by the assessee before the assessing officer and submitted that purchases are made on a particular day and therefore cannot be held to be genuine purchases and therefore the addition deserves to be upheld. He specifically referred to the fact that several purchases have been booked on a particular date of a particular month and therefore it cannot be said that genuine purchases or purchases entered into the regular course of business.

We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is an individual engaged in the business of trading in copra, an agricultural commodity traded through the Agricultural Produce Market Committee. Her books of account are duly maintained and audited under section 44AB of the Act. The assessee recorded total purchases of ₹ 300,172,263, of which purchases of ₹ 28.57 crores were made from registered dealers against proper invoices containing dealer details, including permanent account numbers. The balance purchases of ₹

It is not the case of the Revenue that the assessee failed to maintain regular books of account, that the quantitative details do not tally, or that the records are unauthentic; indeed, these details are audited. Despite this addition was made on an ad hoc basis. The position may have been different had the Assessing Officer examined each purchase and found it to be non-genuine. However, in the present case, 20% of the purchases were disallowed despite audited quantitative records supporting the purchases and their corresponding sales. The purchases have been recorded in the books, credited to the respective parties, and reflected in the sales on which profit has been offered to tax. The Revenue has not disputed the purchase details furnished by the assessee. The mere fact that permanent account numbers of some agriculturists could not be furnished does not justify an ad hoc disallowance or addition under section 69C of the Act.

The Assessing Officer disallowed 20% of the purchases, and the learned CIT(A) restricted the disallowance to 12.5%, without assigning any cogent basis. Section 69C cannot be invoked where the expenditure is recorded in the books of account and the source of such expenditure is disclosed as purchases from identifiable parties. The judicial precedents cited before us also substantially support the assessee’s contention.

Thus, both the orders are not sustainable in law. Therefore, we direct the learned assessing officer to delete the disallowance of ₹ 12.5 percent of the purchases amounting to ₹ 1,733,438. Thus ground No. 2 – 7 of the appeal are allowed.

In the result appeal of the assessee is partly allowed