INCOMET TAX OFFICER, JAMNAGAR vs. KETAN GORI, JAMNAGAR

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 126/RJT/2026 [ �नधा�रण वष�/Assessment Year: 2022-23 ] Income Tax Officer Ketan Gori Aaykar Bhawan, Jamnagar-361001 Prop Deep Metal Plot No 3009 Gidc Vs. Gujarat Phase Iii Dared Jamnagar, Jamnagar- 361004, Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AHPPG5892A (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri Sagar Shah, Ld. AR Respondent by : Shri Sanjay Kumar, Ld. CIT(DR) Date of Hearing : 04/08/2026 Date of Pronouncement : 05/08/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the revenue, pertaining to Assessment Year (AY) 2022-23, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 24.11.2025, which in turn arises out of an order passed by assessing officer u/s. 143(3) of the Act, dated 26.03.2024.

ITA No. 126/RJT/2026 ITO v. Ketan Gori under CASS on the ground that the assessee had made substantial purchases from suppliers who were non-filers of Income-tax Returns. During the course of assessment proceedings, the assessee furnished replies along with supporting documents in response to the notices issued by the Assessing Officer. On verification of the details, the Assessing Officer noticed discrepancies between the purchases claimed by the assessee and the corresponding figures reflected in the GST data (GSTR-1). To verify the genuineness of the purchases, the Assessing Officer issued notices under section 133(6) of the Income-tax Act, 1961, to seven suppliers selected from the list of non-filers of Income-tax Returns. However, none of the said parties responded to the notices, as a result of which purchases aggregating to Rs.3,88,18,897/- remained unverified. Thereafter, the Assessing Officer issued a further notice calling upon the assessee to substantiate the purchases from the aforesaid parties. Although the assessee submitted a detailed reply along with supporting documents, the Assessing Officer held that the assessee had failed to satisfactorily establish the genuineness of the purchases, particularly with regard to the seven suppliers. The Assessing Officer also observed that the assessee failed to produce evidence demonstrating the actual delivery of goods and could not reconcile the discrepancies between the purchases reflected in its books and those appearing in the GST records. Consequently, the Assessing Officer completed the assessment under section 143(3) of the Act by treating the difference in the unverified purchases amounting to Rs.3,71,13,180/- as unexplained expenditure under section 69C of the Income-tax Act, 1961. Accordingly, vide assessment order dated 26.03.2024, the Assessing Officer determined the total assessed income at Rs.3,90,74,290/-.

Page 2 of 7

ITA No. 126/RJT/2026 ITO v. Ketan Gori documents such as GSTR-9 of the suppliers. However, the Assessing Officer failed to consider these submissions or examine the reconciliation furnished by the appellant. Although the Assessing Officer concluded that the actual delivery of goods was not established, the appellant had produced e-way bills, bill-T form, transport receipts, invoices and transporter details (such as New Jay Mataji Transport and Rajit Logistics). The Assessing Officer neither examined these documents nor pointed out any specific defects therein. The Ld. CIT(A) observed that it is a settled principle of law that the genuineness of a claim cannot be rejected merely because the supplier failed to respond to notices issued under section 133(6) of the Act, particularly where the assessee has produced sufficient documentary evidence in support of the purchases. With regard to the addition under section 69C of the Act further noted that that the source of expenditure was never disputed by the Assessing Officer. Therefore, invocation of section 69Cof the Act was not justified. The Assessing Officer’s principal objection was the difference between the figures appearing in the appellant’s books and those reflected in the GST data. During the assessment proceeding in response to the show-cause notice, the appellant furnished a detailed reconciliation explaining that the figures in its books were GST-inclusive, whereas the figures appearing in the GST returns were exclusive of GST. Despite this explanation and supporting evidence, the Assessing Officer proceeded to make the addition without examining the reconciliation. The Ld. CIT(A) further observed that the Assessing Officer had not disputed either the identity of the suppliers or the genuineness of the transactions. The addition was made solely because of the difference between the GST data and the figures recorded in the books of account. According to the Ld. CIT(A), had the Assessing Officer genuinely doubted the transactions or the identity of the parties, the entire purchases would have been treated as non-genuine. Instead, the Assessing Officer accepted the existence of the transactions and based the addition only on differences arising from GST-inclusive

Page 3 of 7

ITA No. 126/RJT/2026 ITO v. Ketan Gori and GST-exclusive figures. The Ld. CIT(A) held that the Assessing Officer failed to appreciate the reconciliations and explanations submitted by the appellant and ignored the documentary evidence placed on record, including purchase invoices, bank statements, ledger accounts, ledger confirmations, e-way bills, bill-T, transporter documents and Table 8A of GSTR-9. It was also observed that the Assessing Officer did not identify any specific defect in the documents furnished by the appellant nor rebut the reconciliation statement submitted during the assessment proceedings. In view of the above findings, the Ld. CIT(A) held that the appellant had successfully explained the discrepancies and established the genuineness of the purchases. Consequently, the grounds of appeal challenging the addition were found to have merit and appeal was allowed,

Page 4 of 7

ITA No. 126/RJT/2026 ITO v. Ketan Gori available on record, the Ld. CIT(A) recorded a categorical finding that the Assessing Officer had neither pointed out any specific defect in the evidences furnished by the assessee nor rebutted the reconciliation submitted by it. Therefore, it was submitted that the order of the Ld. CIT(A) does not call for any interference.

Page 5 of 7

ITA No. 126/RJT/2026 ITO v. Ketan Gori addition without examining or rebutting the explanation offered by the assessee. It is further evident from the assessment order that the Assessing Officer has nowhere disputed the identity of the suppliers, the banking channels through which payments were made or the genuineness of the books of account maintained by the assessee. The addition has been made primarily because certain suppliers did not respond to notices issued under section 133(6) and because of differences between the figures reflected in the GST records and those recorded in the books of account. In our considered opinion, merely because third parties fail to respond to notices issued under section 133(6), no adverse inference can automatically be drawn against the assessee when the assessee has discharged the primary burden cast upon it by producing complete documentary evidence in support of the purchases. We also find considerable force in the finding of the Ld. CIT(A) that the invocation of section 69C of the Act itself was unwarranted. Section 69C contemplates a situation where the source of expenditure remains unexplained. In the present case, the Assessing Officer has nowhere disputed the source of expenditure or the payments made by the assessee. Therefore, the very foundation for invoking section 69C of the Act is absent. The Ld. DR could not point out any factual error, perversity or legal infirmity in the findings recorded by the Ld. CIT(A). Except reiterating the reasoning adopted by the Assessing Officer, no material has been brought before us to demonstrate that the documentary evidence relied upon by the Ld. CIT(A) was either false or incapable of verification. It is also not the case of the Revenue that the Ld. CIT(A) admitted any fresh evidence in violation of Rule 46A of the Income-tax Rules. The Ld. CIT(A), being the final fact-finding authority at the first appellate stage, has appreciated the evidence on record and has assigned cogent reasons for deleting the addition. The findings recorded by him are based upon appreciation of evidence and are neither arbitrary nor perverse. We, therefore, do not find any justification to interfere with the well-reasoned order passed by the Ld. CIT(A). Accordingly, we

Page 6 of 7

ITA No. 126/RJT/2026 ITO v. Ketan Gori uphold the order of the Ld. CIT(A) deleting the addition made under section 69C of the Act. The grounds raised by the Revenue are dismissed.

Order pronounced in the open court on this 5th day of August, 2026.

Sd/- Sd/- [ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member राजकोट/Rajkot िदनांक/ Date: 05/08/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

Page 7 of 7