LUKMAN MAVLI,UDAIPUR vs. ITO, WARD-2(1), UDAIPUR, UDAIPUR

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ITA 1101/JODH/2025Status: DisposedITAT Jodhpur02 June 2026AY 2018-194 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the purchase was recorded in the books and the payment was made through the bank, it could not be considered unexplained expenditure under Section 69C. The incorrect debiting to a wrong head was a clerical error, not a lack of explanation.

What were the facts?

The assessee made an import purchase and paid for it via bank transfer. However, the purchase was incorrectly debited to a wrong account in the books. The assessee had opted for the presumptive tax scheme under Section 44AD.

What were the issues?

Whether an expenditure recorded in the books with an incorrect debit head, but with a explained source of payment, can be treated as unexplained expenditure under Section 69C, especially when the assessee is under the presumptive tax scheme.

Which sections of the Income-tax Act were involved?

Section 69C,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

For Appellant: Shri PC Parwal, CA (Virtual)
For Respondent: Shri Bhawani Shankar Mathur, DCIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 1101/Jodh/2025 (Assessment Year – 2018-19) Lukman Mavli ITO, Ward-2 (1), Kalani & Co. LLP, Chartered Udaipur Accountants, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur - 302015 PAN No. BDTPM 0004 P Assessee by Shri PC Parwal, CA (Virtual) Revenue by Shri Bhawani Shankar Mathur, DCIT-DR (Virtual) Date of Hearing 20 / 05 / 2026 Date of Pronouncement 02 / 06 / 2026 ORDER DR. MITHA LAL MEENA, A.M.: This appeal by assessee is filed against the order of National Faceless Appeal Centre Delhi [hereinafter referred to as NFAC/CIT(A)] dated 10.10.2025 where the appellant has challenged addition in purchases u/s 69C where the assessee has filed return of income under the presumptive tax scheme u/s 44AD of the Act.

2.

We have heard both the sides, perused the material on record and the impugned order. Admittedly, the appellant assessee has made an import purchase from Bradshield International Ltd. on 04.01.2018 of Rs. 2,83,744/- for

2 ITA No. 1101/Jodh/2025 Asst. Year: 2018-19 which invoice was raised on 13.01.2018 (APB Pgs. 6-7) and the payment was also made vide invoice dated 04.01.2018, on the same date (APB Pg. 8) but it was incorrectly debited to the account of M/s Poonia & Brothers (APB Pg. 11) instead of debiting it to the Import Purchase account. The AR contended that the complete documentary evidence of the purchase was filed before the authorities below and that this purchase by mistake was not debited to the trading account but had it been debited, the profit and loss account would have been reduced. The AR further contended that since the assessee has filed a return opting presumptive tax scheme u/s 44AD of the Act, thereby declaring income of Rs. 2,15,640/- which was more than that would have been declared in the books of accounts after considering the above purchases and as such, there was no tax loss to the Government. The Ld. AR argued that the payment for the purchases made through the bank account and duly recorded in the books, though under an incorrect head and, therefore, same cannot be consider as an unexplained expenditure so as to attract Section 69C of the Act.

3.

The Ld. DR did not controvert the factual contention raised by the ld. Counsel for the assessee as regards to the applicability of Section 69C of the Act to the given facts and circumstances of the present case and that the assessee filed return opting presumptive tax scheme u/s 44AD of the Act.

3 ITA No. 1101/Jodh/2025 Asst. Year: 2018-19 4. Admittedly, the appellant assessee has made payments against purchase through the bank accounts which are duly recorded in the books of account though under incorrect head and, therefore, by no stretch of imagination, it can be consider as an unexplained expenditure so as to attract Section 69C of the Act. It is settled law that Section 69C applies where assessee has incurred any expenditure and he offers no explanation about the source of this expenditure or explanation offered is not satisfactory. In the present case, since the assessee has recorded the purchase in the books of account and the source of such purchases is also explained except it is debited to an incorrect head. We, therefore, of the considered view that the impugner order is perverse to the facts on record as the expenditure against the disputed purchases is duly recorded in the books of account of the assessee, and satisfactory explained by the assessee.

5.

Considering the peculiar facts of the case, we hold that the expenditure of Rs. 2,15,640/- towards the disputed purchase stands explained and as such invocation of Section 69C of the Act by the lower authorities is unwarranted. Accordingly, the addition of Rs. 2,85,328/- made by the AO u/s 69C of the Act, is deleted.

6.

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

4 ITA No. 1101/Jodh/2025 Asst. Year: 2018-19 Order pronounced in the open court on 02/06/2026.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 02/06/2026. Nimisha Sr. PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

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