INCOME TAX OFFICER, DELHI vs. ARUN KUMAR KANOJIA, DELHI

P a g e | 1 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1413/Del/2025 (Assessment Year: 2014-15) Income Tax Officer Vs. Arun Kumar Kanojia Room No. 304-C, D Block E-218, Street No. 7, East Vikas Bhawan, IP Estate, Vinod Nagar Near Mayur Delhi – 110002 Vihar, Phase II Delhi – 110091 स्थायीलेखासं./जीआइआरसं./PAN/GIR No: AGFPK1359P Appellant .. Respondent

C.O. No.111/Del/2025 (Assessment Year:2014-15)

Arun Kumar Kanojia Vs. ITO, Ward 60(1) E-218, Street No. 7, East New Delhi Vinod Nagar Near Mayur Vihar, Phase II Delhi – 110091 स्थायीलेखासं./जीआइआरसं./PAN/GIR No: AGFPK1359P Appellant .. Respondent Appellant by : Sh. Ved Jain, Adv. Ms. Uma Upadhyay, CA Respondent by : Sh. Om Prakash, Sr. DR Date of Hearing 26.05.2026 Date of Pronouncement 24.06.2026

P a g e | 2 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) O R D E R PER ANUBHAV SHARMA, JM:

This appeal and cross objection preferred by the revenue and assesse against the order dated 15.01.2025 of the Ld. National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No.: ITBA/NFAC/S/250/2024- 25/1072182520(1) arising out of the order dated 26.12.2016 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the ACIT, Circle 3(2)(1), Bangalore for AY:2014-15.

P a g e | 3 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) a seasonal basis directly with farmers, and payments to sundry creditors are also governed by seasonal market conditions and business practices.

P a g e | 4 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15)  Notices under Section 133(6) of the Act, issued to parties returned back.  Cash transactions are instant and completed at the point of sales. Thus, the outstanding amount in terms of cash payment is totally unacceptable.  Assessee provided false addresses of the creditors.

“7.1.1 Now before me in the appellate proceedings, the appellant has filed written submission. I have gone through the written submission and the case clause relied upon by the appellant. The appellant has stated that the details regarding purchase and sale of all the parties were filed during the course of assessment proceedings. It has been stated further that no discrepancy was pointed out by the AO in the Books of Accounts, produced by the appellant during the course of assessment proceedings. The appellant filed additional evidence Rule 46A of the Income Tax Rule. It was sent to the AO for remand proceedings. The AO submitted remand report and it was again sent to the appellant for rejoinder. In the rejoinder, the appellant submitted that the confirmation from various Sundry Creditors along with the ledger accounts were submitted before the AO, but the AO could not point out any mistakes in the ledgers of these parties. The appellant also submitted that the accounts of all the Sundry Creditors have been completely settled till date vide reply dated 21.11.2016. It was further submitted that since the appellant is engaged in the business of flowers and hence the accounts have been settled in cash, NEFT, RTGS and cheque. The appellant has submitted the list also. It was further submitted that since the business is informal and seasonal and hence the addresses of these Sundry Creditors could not be produced. However, it is important to note that it is not the case of the AO and neither is there any evidence on record to suggest that any unaccounted cash has been received back by the assessee from the vendors through any money trail. Hence, the purchases cannot be considered to be bogus. The appellant has relied upon various judgements of Hon. Tribunals and various High Courts. The judgement of Hon. Delhi High Court in the case of CIT vs Ritu Agarwal dated 22.07.2009 helps the case of the appellant as in this judgement, the Hon. Court has held that when purchases, sales and Gross Profits have been duly disclosed and accepted by the AO, the addition cannot be

P a g e | 5 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) made u/s 41(1) of the Income Tax Act. The appellant has also relied upon the judgement of Hon. Allahabad High Court in the case of M/s. Zaz Sons Export Limited vs CIT Kanpur, where it was held that where the payment is made subsequently, the addition cannot be made on account of Sundry Creditors. The appellant has relied upon various judgements of Hon’ble Tribunal on identical issue:- In Sunita Gupta vs ITO 2019, Hon. Tribunal has held that even if the letters are received back has not served, the AO cannot make the addition if he has not doubted the purchases and disturbed the purchases. Hence relying upon the decisions as mentioned above, the addition of the AO is deleted and appeal of the appellant is allowed.”

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in facts and in law in deleting the addition made on account of unverified sundry creditors amounting to Rs.2,60,48,258/-. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in facts and in law treating the details of the sundry creditors submitted by the assessee as genuine when the addresses of the sundry creditors provided by the assessee are false and concocted as no business establishments could be located at the given addresses. 3. That the grounds of appeal are without prejudice to each other. 4. That the appellant craves leave to add/alter/delete/modify any/all the grounds of appeal before or during the course of hearing of the appeal.”

P a g e | 6 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) 10. We have given a thoughtful consideration to the material on record and we find that assesse vide reply dated 15.07.2016 had filed details and documents in respect of closing balance of sundry creditors appearing in its books of account as on 31.03.2014 and the bank statement of payments made to supplier. Balance/ledger account and confirmations of all the suppliers were provided and the copy of same is also available in the paper book from page No. 69 to 81. However, assessing officer has alleged that notice u/s 133(6) have been received unserved while ld. Counsel has demonstrated that creditors had furnished their reply and the copy of same are available at page No. 91 to 116 of the paper book. Assessing Officer without taking into consideration the nature of business of the assesse has erroneously held that cash transaction is not genuine as same are completed at the point of sales while the claim of assesse is that sales are affected in mandi through prevailing trade practices.

P a g e | 7 ITA No.1413/Del/2025 CO 111/del/2025 Arun Kumar Kanojia (AY; 2014-15) the year and were subsequently discharged through identifiable payment modes. Thus the additions were not justified and ld. CIT(A) has duly appreciated the facts and circumstances to give relief to the assesse and the same requires no interference. Grounds raised by the department have no substance. The appeal of the department deserves to be dismissed while the cross objection become academic and accordingly deserve to be dismissed. The appeal and as well as cross objection both are dismissed.

Order pronounced in the open court on 24.06.2026

Sd/- Sd/- (S Rifaur Rahman) (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 24.06.2026 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI