JCIT(OSD), CENTRAL CIRCLE, DEHRADUN, DEHRADUN vs. ASHWANI KHURANA, HAIDWAR

IN THE INCOME TAX APPELLATE TRIBUNAL (DEHRADUN BENCH “DB’’ : DEHRADUN)

BEFORE SH. YOGESH KUMAR US, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 23/DDN/2026 (AY 2020-21) ASHWANI KHURANA, Vs. DCIT, CENTRAL CIRCLE, 61-B, NANDPURI, ARYA DEHRADUN, NAGAR, JWALAPUR, AAYAKAR BHAWAN, HARDWAR, 13-A, SUBHASH ROAD, UTTARAKHAND-249407 DEHRADUN-248001 (PAN: AJTPK3416E) UTTARAKHAND (APPELLANT) (RESPONDENT) ITA No. 36/DDN/2026 (AY 2020-21) JCIT (OSD), DEHRADUN Vs. ASHWANI KHURANA, 51/2, RAJPUR ROAD, VILLAGE IBRAHIMPUR, DEHRADUN, UTTRAKHAND JWALAPUR, HARIDWAR, -248006 UTTARAKHAND -249407 (PAN: AJTPK3416E) (APPELLANT) (RESPONDENT) Assessee by Sh. Pradeep Gupta, CA Revenue by Ms. Poonam Sharma, CIT(DR) Date of hearing: 11/03/2026 Date of Pronouncement: 05/06/2026

ORDER PER MANISH AGARWAL, AM : These are cross appeals filed by the Assessee as well as Revenue directed against the order of the Ld. Commissioner of Income Tax

(Appeals-3), Noida [hereinafter referred to as “CIT(A)”] dated 07.11.2025 arising out the order of the DCIT, Central Circle, Dehradun dated 28.3.2025 passed u/s. 153C of the Income Tax Act, 1961 (hereinafter referred as Act) for the assessment year 2020-21. 2. The revenue’s ground no. 1 and 2 are with respect to deletion of additions of Rs. 18,00,000/- and Rs. 2,50,000/- respectively received on account of unsecured loans from M/s Om Paper Product, which was deleted by the CIT(A). 3. Heard the parties and perused the material on record. The CIT(A) after considering the submissions vide para 7.3 of his order has deleted the addition by holding as under:- “7.3 Grounds of Appeal Nos. 2 & 3 In the said grounds of appeal, the appellant has challenged the additions of Rs. 18 lacs u/s 68 and Rs. 2.5 lacs u/s 69A made by the A0 during the assessment proceedings. The addition of Rs. 18 lacs have been made by the A0 on the basis that there was a difference of Rs. 18 lacs in the loan received from Om Paper Products viz. a viz. the entries recorded in the books of accounts. The appellant has stated that the complete details were filed before the AO during the assessment proceedings wherein, it was clarified that the assessee is a proprietor of M/s. Packwell Overseas (i.e. the case under consideration) and partner in Om Paper Products with whom the assessee has financial transactions. The appellant has stated that the assessee received a sum of Rs. 40 lacs from his partnership concern during the year under consideration. Further, as per appellant, the assessee deposited a sum of Rs. 22 lacs in his capital account of partnership firm in the capacity of the partner. The A0 treated the difference of RS. 18 lacs as unexplained credit in the hands of the assessee. From the perusal of the above facts, it is evident that the AO has not differentiated between the 2

funds of Rs. 40 lacs received by the assessee in the nature of unsecured loan from his partnership concern and the deposit of Rs. 22 lacs in the capital account of the said firm. These two transactions are in different league and cannot be arithmetically subtracted to reach any unexplained income. The unsecured loan of Rs. 40 lacs received from M/s. Om Paper Products is supported by its confirmation and bank account statement. In above circumstances, the addition made by the AO (Rs. 18 lacs) by subtracting the deposit made by the assessee in capital account of his partnership firm (Rs. 22 lacs) from the unsecured loan received by him from the same partnership firm (RS. 40 lacs) is without any legal or factual footing and is liable to be deleted. Further, the AO has made an addition of Rs. 2.5 lacs u/s 69A by stating that the source of the said credit remained unexplained. The appellant has stated that complete details were filed before the A0 explaining the above transaction. As per appellant, the receipt of Rs. 2.5 lacs was from M/s. Om Paper Products in which the assessee is a partner and the said transaction is clearly reflected in the ledger account of the assessee in the books of Om Paper Products. The contentions of the appellant on the above issue are found to be correct and the addition made is liable to be deleted. Accordingly, these grounds of appeal are allowed.” 4. Before us, Revenue failed to controvert the findings of the CIT(A) wherein, after considering the confirmations and further considering the capital gain of the assessee in the partnership firm, Ld. CIT(A) has reached to the conclusion that this transaction is disclosed in the books of account and therefore, no addition is required to be made. We find no error in the order of the Ld. CIT(A), hence, we uphold the same and accordingly, the action of the Ld. CIT(A) in deleting the aforesaid additions is hereby upheld, resultantly, the ground no. 1 and 2 raised by the Revenue are dismissed.

reflected in the same. Moreover, payment of Rs. 8 lacs is also reflected in the ledger of Om Packaging Industries in the books of accounts of the assessee, wherein, vide entry dated 13.12.2019 payment of Rs. 8 lacs has been made. In above circumstances, it is seen that the above transactions are duly recorded in the books of accounts of the assessee and no adverse opinion can be drawn merely on the basis that the cash has been withdrawn by the assessee from his bank account. The assessee has clearly stated that the cash of Rs.7 lacs was withdrawn during the year for petty cash expenses and payment of Rs. 8 lacs was made to a sister concern. As the transactions are clearly recorded in thế books of accounts, no addition u/s 69C is warranted in this case. Hence, the addition is liable ta be deleted and this ground of appeal is allowed.” 6. Before us, the revenue has failed to controvert the findings of the Ld. CIT(A), more particularly when the assessee has produced the cash book where all the payments made therefrom towards the petty cash expenses were never doubted. Moreover, the confirmation of M/s Om Packaging Industries to whom Rs. 8 lacs paid was filed before the lower authorities. It was not an unexplained expenditure, as the transactions were duly recorded in the books of account, therefore, no addition is required to be made. We find no error in the order of the Ld. CIT(A), hence, we uphold the same and accordingly, the action of the Ld. CIT(A) in deleting the aforesaid addition is hereby upheld, resultantly, the ground no. 3 raised by the Revenue is dismissed. 7. Ground No. 4, 5 & 6 are with respect to deletion of additions of Rs. 20,13,363/- being 20% of the sales of Rs. 1,00,66,817/- made to Boxrite India. The addition of Rs. 10,63,142/- being made on the basis of sales made to Pritam International Pvt. Ltd. Further, addition of Rs. 19261073/- was made u/s. 69 on account of purchases alleged as bogus

from Tirupati Traders. With respect to sales made to Boxrite India, assessee has filed all the details with respect to the sales made, however, the AO made the addition by holding that notice u/s. 133(6) was sent to the parties, were received returned back as ‘unserved’. Similarly, in the case of M/s Triupati Traders, the notice was issued through ITI wherein, he found that no firm was existed in the radius of 500 meters of the said address. Therefore, the AO treated the sale/ purchase from that party as unexplained. Likewise, in the case M/s Pritam International, the notice u/s. 133(6) was received back unserved, therefore, the AO treated the same as unexplained and made the addition. The Ld.AR submits that with respect to the sales made to M/s Boxrite India, assessee has filed ledger accounts as well as e-way bills and further submits that the sales have been made after charging GST as per law. Merely the party has not responded or notice was not served /issued u/s. 133(6), hence, it cannot be said that the party is not in existence. Ld. AR further submits that mobile number and email was provided. However, no effort was made by the AO for making verification through such information. Ld. AR submits that asssese has already disclosed sales in the books of accounts and disclosed the profit thereon. However, the AO further made the addition of 20% sales as unexplained money. Ld. AR further drew our attention at page no. 11 of the Ld. CIT(A)’s order wherein the parties have confirmed the purchases made from the assessee. Ld. AR submitted that the sales made to Boxrit India was genuine and no addition could be made. With respect to purchase of Tirupati Traders, Ld. AR submits that during the course of assessment proceedings assessee has filed ledger account, invoices, e-way bills along with stock register. The assessee also provided GST certificate of the said party and it was submitted that the party was carrying out its business under the proprietorship of Shree

Ram Mittal and GST certificate was requested. However, it was in operation when the purchases were made by the assessee. As per GST portal, the firm GST registration was cancelled since May, 2023 whereas the purchases were made in AY 2018-19 and the business of the firm closed on 17.5.2023. Due to this gap, the party was not appearing, however, the assessee filed the confirmation of the said parties and submitted the entire transactions which were carried out under GST and declared under GST Act, e-way bills and details of payments made through banking channel, thus no addition should be made. Regarding the sales made to Pritam International Pvt. Ltd., similar argument was put-forth by the Ld. AR, copy of the ledger account, e-way bills were submitted and the profits have already been disclosed in the books of account and confirmations have been filed and therefore, requested that no addition should be made. Ld.AR submits that CIT(A) after considering the aforesaid facts, has deleted the addition and requested for confirmation of the same. 8. On the other hand, Ld. CIT (DR) vehemently supported the order of the AO and submitted that despite of making enquiries, the parties were non-existent and the notice received back unserved, therefore, she requested for the restoration of the additions made by the AO. 9. Heard the parties and perused the material available on record. During the appellate proceedings Ld. CIT(A) has issued notice u/s. 133(6) to the parties and received the submission from them which was forwarded to the AO for his comments, however, despite of reminders given to the AO, AO has not made any reply to the particulars provided by the CIT(A).

dated 19.02.2025 (received on 20.02.2025) to produce the said party on 21.02.2025 which was not feasible for the assessee. As per appellant, the AO considered the sales as bogus and applied a rate @ 20% to the sales made whereas, the assessee has submitted the complete details before the A0. The appellant also produced copy of an Email sent by the assessee to the AO wherein, the Boxrite India had confirmed the transactions with the assessee. The appellant stated that the copy of the sale bill, e-way bills, confirmed ledger account and bank statement of the appellant clearly show that the transaction with M/s. Boxrite are genuine. During the appellate proceedings, the appellant was directed to file necessary evidences in support of genuineness of the transactions with Boxrite India. In response, the appellant filed copy of PAN, copy of lease deed of M/s. Boxrite India, copy of ITR, audit report and other annexures along with the evidences already discussed above.

Similarly, the A0 made addition of Rs. 1,92,61,073/- u/s 69 by stating that the purchases made from M/s. Tirupati Traders are not genuine. The reasoning of the AO has already been discussed in the brief facts above. The appellant has stated that the copy of the ledger, invoice and e-way bills along with the stock register were produced before the A0 during the assessment proceedings. Further, as per appellant, the payment was made through the banking channel. The appellant has further stated that the allegation of the A0 that no such entity was found during the local enquiry by the ITI is not sufficient to make addition in the hands of the assessee as on being contacted M/s. Tirupati Traders told the assessee that their firm had been closed and the GST registration was cancelled since 17.05.2023. The appellant stated that the transactions with the said entity pertain to FY 2019-20 and the firm closed its business on 17.05.2023 and hence, the enquiry conducted by the ITI on 17.02.2025 carries no relevance. As per appellant, the address of the said entity is clearly mentioned on the cancellation certificate issued by the

GST Department, Dehradun. The appellant further stated that the notice u/s 133(6) was reverted due to no current address of the said entity. The appellant further stated that the AO was requested to issue online notice through PAN database so that the appropriate reply could be received. As per appellant, during the assessment proceedings, the assessee himself followed up with Tirupati Traders and requested the said entity to send the required documents to the email ID of the AO. As per appellant, the said information was sent by M/s. Tirupati Traders directly to the email ID of the A0 on 25.02.2025 and screenshot of the same has been reproduced by the assessee in the written submissions. During the appellate proceedings, the appellant was directed to file necessary evidences in support of genuineness of the transactions with Tirupati Traders. In response, the appellant filed copy of PAN, copy of Aadhaar, copy of ITR with computation along with the evidences already discussed above. In above circumstances, the appellant pleaded that the addition made by the A0 is liable to be deleted. Similarly, the AO made the addition of Rs. 10,63,142/- on the basis of sales made to Pritam International Pvt. Ltd. by considering the said sales as bogus and estimating the addition @20% of the total sales of Rs. 53,15, 710/-. The appellant stated that the ledger account, sale bill and e-way bill were provided to the AO but the AO did not consider the contentions of the appellant on the basis that no response was filed to notice u/s 133(6). The appellant further stated that the AO was also requested to issue summons to the said entity to produce the balance required documents like, ITR, Aadhaar and audited balance sheet. Further, as per appellant, the assessee could not produce the said party on 21.02.2025 as desired by the AO vide issue of notice dated 19.02.2025 received on 20.02.2025. The appellant further stated that just because the notice u/s 133(6) was returned undelivered, it cannot be said that the sales were made without delivery of goods when all the supporting documents were provided to the AO. The appellant further stated that the assessee at his own 10

end, requested the said entity to share copy of confirmation and ITR acknowledgment along with memorandum of association over email of the AO. The assessee reproduced the part of the said screenshot of the email in his written submissions. During the appellate proceedings, the appellant was directed to file necessary evidences in support of genuineness of the transactions with Pritam International Pvt. Ltd. In response, the appellant filed copy of PAN, Copy of lease deed of the business premise and copy of ITR acknowledgment along with computation and other evidences already discussed above. In above circumstances, the appellant pleaded that the addition made by the AO is liable to be deleted. Enquiry U/s 133(6) In view of the allegations levied by the AO in the assessment order regarding the transaction with Boxrite India, Tirupati Traders and Pritam International Pvt. Ltd., enquiry u/s. 133(6) was conducted with the said entities by issuing notices u/s 133(6). Notice to Pritam International Pvt. Ltd. was issued at the Roorkee Address based on MCA data being the address where the books of accounts are to be maintained. Notice was issued to M/s. Tirupati Traders based on- the address mentioned in the ITR. Similarly, notice was issued to Boxrite India based on the address mentioned in the ITR. Vide the above notices, the said entities were directed to confirm, if any, transactions were made with the assessee concern during the year under consideration. The notices u/s 133(6) were also issued via ITBA portal to ensure that the notices are delivered and served on the email to cover the circumstances of any change of address made by the said entities. The notice issued in physical copy to M/s. Tirupati Traders came back undelivered for the reason that the said firm had already closed its business in the year 2023 and the GST registration had also been cancelled. But response of the said entity was received on the basis of the notice issued via the ITBA portal on the email of the said entity. Replies were filed by the said entities which have already been reproduced above in the body of the order. The replies of 11

the said entities confirm the transactions made with the assessee concern. Opportunity to the AO In view of the evidences collected during the enquiry u/s 133(6) from the above three entities and information desired from the assessee during the course of appellate proceedings, the information/evidences so collected were shared with the AO vide email dated wherein, it was directed as under: "In the above case, the AO had made addition of Rs. 20,13363/- by disallowing 20% of the sales made to Boxrite India, addition of Rs. I,92,61,073/- on account of alleged bogus purchases from Tirupati Traders and addition of Rs. 1063 142/- by disallowing 20% of the sales made to Pritam International Pvt. Ltd. The reasons for. making the said disallowances included non responsiveness to notices issued u/s 133(6) to the above entities during the assessment proceedings. During the appellate proceedings the appellant submitted that the transactions with the above entities are genuine and the disallowances made by the AO are uncalled for. The submissions of the appellant on the above issues are attached for ready reference (Grounds of appeal No. 5 to 7). To verify the contentions of the appellant, notices u/s 133(6) were issued to the above entities via their PAN database on the ITBA. The replies received from the said entities are attached along with this e-mail. It is directed to offer your comments, if any, on the above matter and send your report on or before 06.08.2025, so that pending appeal can be disposed-off. Permission is granted u/s 250(4) to conduct necessary enquiry if deemed fit." Reminder was issued to the AO vide this office email dated 28.08.2025 & 17.09.2025. No objections have been filed by the AO till the date of finalization of appeal.

In view of the above discussion, it is apparent that the assessee has filed sufficient details regarding the transactions made with the above entities during the assessment proceedings. Moreover, the evidences collected during the appellate proceedings clearly show that the above entities have confirmed the transactions with the assessee. The evidences collected were duly shared with the AO in the interest of natural justice but no objections have been raised by the AO with respect to the said evidences. The said three entities have clearly confirmed the transactions made with the assessee. In view of the above discussion, the additions made by the A0 on an estimate basis @ 20% of the sales made to Boxrite India and Pritam International Pvt. Ltd. and disallowance of purchases made from M/s. Tirupati Traders are not found to be sustainable and the same are liable to be deleted. Accordingly, these grounds of appeal are allowed.” 11. Before us, the Revenue has simply relied upon the observations made by the AO and further no details/evidences were filed to controvert the findings of the Ld. CIT(A). Looking to the entirety of the facts, we find no error in the order of the Ld. CIT(A), hence, we uphold the same and dismiss the ground raised by the revenue. 12. The last ground raised by the revenue is with respect to the deletion of addition of Rs. 69,70,000/- made u/s. 68 of the Act. 13. Heard both the parties and perused the material on record. The CIT(A) in para 7.7. of his order has made a table as per which all the funds have been received in preceding assessment years and no fresh funds were received during FY 2019-20 relevant to assessment under appeal. The provisions of section 68 could be applied on the fresh credits received during the year. Once it is established that no fresh credit was received during the year, the provisions of section 68 cannot be invoked on the opening balance appearing in the balance sheet. 13

Therefore, we do not find any error in the order of the Ld. CIT(A) in deleting the addition made by the AO, hence, we uphold the same and reject the ground raised by the revenue. 14. In the result, the revenue appeal is dismissed. Assessee’s Appeal (ITA No. 23/DDN/2026

through Ashoka Foam Pvt. Ltd. of Rs. 28,22,02,657/- on which GP of more than 12.20% was achieved whereas on the direct sales, GP at 1.33% could be achieved. It is submitted that the said amount was paid due to the fact that assessee achieved better GP. Assessee has also filed confirmation from Ashoka Foam Pvt. Ltd. and further submits that the payments were made through banking channel, therefore, it cannot be said that this amount is unexplained money of the assessee, rather they had made payment which is duly recorded. He therefore, requested for deletion of addition made by the AO. 17. On the other hand, Ld. CIT(DR) vehemently supported the orders of the AO and CIT(A) on this issue and submitted that assessee has failed to establish that the goods were sold through Ashoka Foam Pvt. Ltd., more particularly when the parties to whom goods have been sold were situated within the distance of 10 km whereas the Ashoka Foam Pvt. Ltd. was situated at Bareilly which is 277 km away from the business premises of the assessee. It is not acceptable that the sales had been made to the local parties through M/s Ashoka Foam Pvt. Ltd. which was not exists at the local market. Ld. CIT(DR) further submitted that the assessee has failed to produce any evidence whether the TDS was deducted on such commission, how the said amount was verifiable from the books of accounts of the assessee. It is therefore, requested to confirm the addition. 18. Heard the parties and perused the material available on record. From the facts of the case, it is observed that in the WhatsApp chat taken from the mobile of Shri Deep Chand Singhal, it was admitted by him that he is arranging loans through various entities and charging commission and in this process certain funds were provided to the

assessee which were received from M/s Ashoka Foam Pvt. Ltd. and Sh. Deep Chand Singhal has been benefited in the shape of commission. Before us, the claim of the assessee is that this amount is not loan, but the payment of the commission. Both the facts are contrary to each other, more particularly if the amount of Rs. 96,57,638/- is the commission payable, necessary entries should have been made in the books of accounts on account booking of the commission expenses and assessee should deduct the TDS thereon. Nowhere in the arguments, assessee has made this claim that the commission was booked in the books of account and TDS was deducted which clearly shows that the entire story concocted by the assessee is an afterthought, just to justify the transaction of the funds received from M/s Ashoka Foam Pvt. Ltd. Accordingly, we find no error in the order of the Ld. CIT(A), hence, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 2 raised by the Assessee. 19. As regards ground no. 3 is concerned, since we have already upheld the action of CIT(A) in sustaining the addition of Rs. 96,57,639/-, hence, action of the Ld. CIT(A) with respect to sustaining the addition of Rs. 72,433/- on account of commission paid to Sh. Deep Chand Singhal is also upheld. 20. As regards ground no. 1 is concerned. We have heard the parties and perused the material available on record, it is the claim of the assessee that AO has not provided the legible copy of seized material. However, it is observed that seized material was supplied later and assessee has made the replies. Since the assessee was finally provided the copies of the material, after the order of the Jurisdictional High

Court, this ground has become academic and thus need no be adjudicated. Resultantly, the assessee’s appeal is also dismissed. 21. In the result, both the appeals filed by the assessee as well as revenue stand dismissed in the aforesaid manner. Order pronounced in the Open Court on 05.06.2026.

Sd/- Sd/-

(YOGESH KUMAR US) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER

SR Bhatnagar Date: 05.06.2026