CHETAN PATEL, RAJNANDGAON, RAJNANDGAON vs. ITO, WARD-1, RAJNANDGAON, RAJNANDGAON

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ITA 712/RPR/2025Status: DisposedITAT Raipur15 June 2026AY 2022-236 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence filed by the assessee and found that the CIT(A) did not provide sufficient time for compliance. Therefore, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) for a fresh decision.

What were the facts?

The assessee, a Tendu Leaves trader, received advances from several parties. The Assessing Officer treated a significant portion of these advances as unexplained credit under Section 68 and taxed them at a higher rate. The CIT(A) dismissed the assessee's appeal without providing adequate opportunity.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal in violation of natural justice and whether additional evidence should be admitted for adjudication.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 250,Section 133(6),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI AVDHESH KUMAR MISHRA, AM

For Appellant: Shri S. R. Rao, Advocate
Hearing: 10/04/2026

Per Avdhesh Kumar Mishra, AM: This appeal for Assessment Year (‘AY’) 2022-23 filed by the assessee is directed against the order dated 30.10.2025 of Commissioner of Income Tax (Appeals), [CIT(A)], National Faceless Appeal Centre (NFAC) passed under section 250 of the Income Tax Act, 1961 (‘Act’).

2.

The appellant assessee has raised following grounds of appeal:

“1. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals), NFAC, has erred in dismissing the appeal in violation of principles of natural justice, without providing adequate and reasonable opportunity of being heard.

2.

In the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals), NFAC has erred in confirming addition made u/s.68 of the Income-tax Act, 1961 of Rs.5,40,29,000/-treating advance received from regular customers as unexplained credit and charged to higher rate of tax u/s.115BBE of the Act.

3.

In the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) NFAC has erred in not appreciating that ld. Assessing Officer has selectively issued notice u/s.133(6) of the Act to only one party and not issuing such notice to other parties whose outstanding balances were treated as unexplained.

4.

In the facts and circumstances of the case and in law, the Id.. Commissioner of Income Tax (Appeals) NFAC has erred in not following the law laid down by Hon'ble Juri ictional High Court in the case of Nitesh Kumar Goyal vs. ITO in TAXC 63 of 2022 dated 12/02/2025 and wrongly perverse finding that appellant did not discharge onus, especially when appellant has given PAN, Postal Address and other details of the corresponding parties.

5.

The impugned order is bad in law and on facts.

6.

The appellant reserves the right to add, alter, omit or amend all or any of the grounds of appeal in the interest of justice.”

3.

Facts, in brief, required for adjudication of this appeal are that the assessee is a Tendu Leaves trader. He filed his Income Tax Return (‘ITR’) of the relevant year on 05.11.2022 declaring income of Rs.14,26,820/-. The case was picked up for scrutiny. During the course of assessment proceedings, the Ld. Assessing Officer (‘AO’) noticed that the assessee had received the advance of Rs.5,71,79,000/- from following parties:

(i) 5no. Bidi : Rs.31,50,000/- (ii) A and A Associates : Rs.1,18,83,000/- (iii) Aryaman Vyas : Rs.15,00,00/- (iv) Deva Bidi Leaves Co : Rs.50,00,000/- (v) Shiv Trading Co : Rs.2,86,60,000/- (vi) Vyas and Company : Rs.69,86,000/-.

Therefore, the Ld. AO show-caused the assessee to explain these advances otherwise the same should be taxed under section 68 of the Act. In response, the assessee filed submissions, which are found scanned on page 07 to 12 of the assessment order. However, the Ld. AO was not fully satisfied with the explanations of the assessee on the reasoning that (i) No sale had been made to 5 parties against the receipt of claimed purchase advances from such parties even after 2 years from the date of receipt of advances, (ii) The assessee failed to submit any corroboratory proof of refund of the claimed purchase advances to those whom goods had not been sold after receipt of advances and (iii) The copies of agreements entered between the assessee and these parties were stereotyped having similar language, font, etc. Further, all such advances were claimed to have been refunded in FY 2023-24. Out of the above 6 parties from whom advances received, only 5no. Bidi Factory admitted the transactions from the assessee during the courses of assessment proceedings in response to notice under section 133(6) of the Act. Therefore, the Ld. AO asked the assessee to explain the advances of 5 parties, namely, M/s A and A Associates, M/s Aryaman Vyas, M/s Deva Bidi Leaves Co., M/s Shiv Trading Co. and M/s Vyas and Company. But the assessee did not submit the requisite details (1st para after scanned notice on page 15 of the assessment order) such as the copies of ITRs, details explaining the creditworthiness of these 5 parties during the course of assessment proceedings; therefore, the Ld. AO taxed the advances of Rs.5,40,29,000/- received from these 5 parties under section 68 r.w.s. 155BBE of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal on the reasoning that the assessee had failed to file the requisite details explaining the creditworthiness of the above mentioned 5 persons and genuineness of transactions.

4.

Before us, the assessee has raised one additional ground as under: “In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), NFAC has erred in upholding issuance of notice dated 01.06.2023 u/s 143(2) of the act without complying to the CBDT Instruction F.No.225/157/2017/ITA-II dated 23.06.2017 and so the notice issued u/s 143(2) is not valid as per law.”

5.

Further, the assessee filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 for admission of additional evidence on 26.02.2023, which contained the ITR details, etc. of five persons whose creditworthiness were not explained during the course of assessment proceedings. It was submitted by Shri S. R. Rao, Ld. Counsel representing the assessee that the said additional evidence should be admitted as it went to the core of the matter. Our attention was drawn to the fact that the Ld. CIT(A) vide hearing notice dated 28.10.2025 asked the assessee to submit documentary evidences establishing the creditworthiness of the above mentioned 5 persons. Thereafter, the appellant assesse was in the process of collating the required details, documents, etc., but the Ld. CIT(A) passed order on 30.10.2025. Thus, the Ld. CIT(A) did not provide sufficient time to comply with. Therefore, the dismissal of the appeal was against the principles of natural justice. He therefore, prayed for remitting the matter back to the file of Ld. CIT(A) to decide the issue afresh/denovo.

6.

Shri Ram Tiwari, Ld. CIT-DR vehemently argued the case and prayed for dismissal of the appeal. He further submitted that the Ld. CIT(A) had given sufficient opportunities of being heard to the assessee but assessee did not comply with. Therefore, the present appeal is liable to be dismissed. But on our specific query, he did not raise any objection for admission of additional evidence submitted vide Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. 7. We have heard both parties at length and have perused the material available on the record. We find force in the submission of the Ld. Counsel that the additional evidence filed under Rule 29 of the ITAT Rules will go to core of the matter as these evidence touch all three limbs of section 68 of the Act; identity & creditworthiness of persons who advanced the sums and genuineness of transactions under reference. Therefore, these additional evidence are admitted for adjudication of this case. Since this additional evidence have been filed for the first time before us; therefore, we are of the considered view that the additional evidence should, first of all, be examined on merit by the Ld. CIT(A). Therefore, keeping in view the facts of the case, application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and above observations/ discussions, we without offering any comment on merit of the case, find impugned order deem fit to set aside and remand the matter back to the file of the Ld. CIT(A) for deciding the case afresh/denovo, in accordance with the law after considering the above mentioned additional evidence and also other evidence, if filed by the assessee during the remitted appellate proceedings. We therefore, order accordingly. Needless to say that the appellant assessee has to cooperate in remitted appellate proceedings.

8.

In the result, the appeal of assessee is allowed for statistical purposes as above.

Order pronounced in the open court on 15/06/2026. (PARTHA SARATHI CHAUDHURY) (AVDHESH KUMAR MISHRA) "ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER रायपुर / Raipur; िदनांक Dated 15/06/2026 HKS, PS

आदेशकी "ितिलिप अ"ेिषत / Copy of the Order forwarded to : 1. अपीलाथ"/ The Appellant

2.

""थ"/ The Respondent

3.

The Pr. CIT, Raipur (C.G.) 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड" फाईल / Guard file.

आदेशानुसार/ BY ORDER, Hem Kumari //// Shrivastava, Shrivastava, PS, PS, ITAT, ITAT, Raipur Date: 2026.06.15 Raipur 15:59:40 +05'30' (Private Secretary) आयकर अपीलीय अिधकरण, रायपुर / ITAT, Raipur

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