What did the Tribunal hold?

The Tribunal held that additions made on a notional basis without reasonable justification are bad in law. The CIT(A)'s order upholding these additions was also not sustainable.

The assessee's case was selected for scrutiny, and despite notices, the assessee failed to comply. The AO made additions on a notional basis of 1% of total investments and 12% of loans and advances due to non-compliance.

What were the issues?

Whether additions made on a notional basis without proper justification are sustainable in law, especially when the assessee failed to provide details.

Fabert Dealers Pvt. Ltd. vs I.T.O., Ward - 5(1) | ITAT Kolkata 2026

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

For Appellant: Shri Manoj Kataruka, AR

For Respondent: Shri Arun Kumar Meena, DR

Hearing: 07.04.2026Pronounced: 20.05.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT (A)”] dated 06.10.2025 for the AY 2017-18.

The issue raised in ground no.1 is against the confirmation of addition of ₹15,62,000/- as made by the Ld. AO on notional basis by adding 1% of the total investment as appearing in the balance sheet.

2.1. After hearing the rival contentions and perusing the materials available on record, we find that the assessee filed the return of income on 03.08.2017, declaring total income at ₹3,148/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were duly issued. The assessee failed to comply

The second issue raised by the assessee is against the order of the Ld. CIT (A) upholding the addition of ₹1,56,77,894/-as made by the Ld. AO on notional basis at the rate of 12% of the loans and advances as appearing in the balance sheet.

3.1. After hearing the rival contentions and perusing the materials available on record, we find that when the assessee failed to respond to various notices, the Ld. AO on the basis of amount as appearing in the balance sheet of the assessee in respect of short term loans and advances amounting to ₹13,06,49,118/- made an adhoc disallowances at the rate of 12% by treating the same as undisclosed interest on the loans and advances and added the same to the income of the assessee. The Ld. CIT (A) in the appellate proceedings, restored the issue to the file of the Ld. AO without taking accounts the evidences furnished by the assessee qua the investment, Long term loans and advances, detail of bank statement and submission filed before the Ld. AO, copies of which are available from page no.25 to 33 of the Paper Book. We also observe from the submission dated

In the result, the appeal of the assessee is allowed.

Order pronounced on 20.05.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 20.05.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata

FABERT DEALERS PVT. LTD.,KOLKATA vs. I.T.O., WARD - 5(1), KOLKATA

What did the Tribunal hold?

What were the facts?

What were the issues?

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