KRUNAL BHARAT BHA vs. AR,AHMEDABADVS.THE INCOME TAX OFFICER WARD2(1)(2), AHMEDABAD

ITA 332/AHD/2026Status: DisposedITAT Ahmedabad30 September 2026AY 2015-165 pages
AI SummaryAllowed

What were the facts?

The assessee, Krunal Bharat Bhavsar, is appealing an order dated 30.09.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, for Assessment Year 2015-2016. The Assessing Officer (AO) added Rs. 6,35,000/- to the assessee's income as unexplained investment under Section 69 of the Income-tax Act, 1961. This addition was based on information received from the DDIT (Inv.), Unit-1(2), Delhi, indicating that the assessee made a cash payment of Rs. 6,35,000/- to M/s. Kiran Motors Ltd. on 08.05.2014 for the purchase of a vehicle. The AO considered the source of this payment unexplained. The Ld. CIT(A) upheld this addition, stating the source remained unexplained.

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 6,35,000/- as unexplained investment under Section 69 of the Act was not sustainable. The Tribunal noted that the AO made no independent enquiry and the Ld. CIT(A) failed to deal with the assessee's specific plea that the payment was made on behalf of a customer from funds received from him. The assessee's explanation that he is a car dealer who paid Rs. 6,35,000/- on behalf of his customer, from whom he received Rs. 6,60,000/-, supported by his bank statement and vehicle history report, was not examined or rejected with contrary material. The Tribunal found that the payment was funded by the customer's money and made in the course of the assessee's trading activity, not as an investment for his own account. The only income arising to the assessee was the margin of Rs. 25,000/-, which was below the taxable limit. Therefore, the conditions of Section 69 were not satisfied. The Tribunal directed the AO to delete the addition. The issues regarding reopening, penalty, and interest were not explicitly decided as the primary addition was deleted.

What were the issues?

1. Whether the addition of Rs. 6,35,000/- as unexplained investment under Section 69 of the Act is required to be deleted, considering the assessee's contention that the payment was made on behalf of a client for a car purchase and not an investment for his own account. 2. Whether the reopening of the case after 4 years without any tangible material on record is bad in law and illegal. 3. Whether the penalty initiated under Section 271(1)(c) and Section 271F, and interest charged under Sections 234A, 234B, 234C, and 234D, are required to be dropped or deleted. Assessee's Contentions: - The assessee is a car dealer and the payment of Rs. 6,35,000/- to Kiran Motors Limited was made on behalf of his client, Shri Anil Pankaj Parmar, for the purchase of a vehicle. The assessee received Rs. 6,60,000/- from the client, making it a purchase for sale and not an investment. The assessee's income is only the margin or commission, which is below the taxable limit. The RTO report does not state the assessee is the owner of the car. The assessee relied on his bank statement and the RTO vehicle history report. - The AO reopened the case after 4 years without tangible material. - The assessee has not suppressed facts or concealed income, thus penalty and interest are unwarranted. Revenue's Contentions: - The revenue relied on the information from the Investigation Wing that the assessee paid cash to M/s. Kiran Motors Ltd. and the Ld. CIT(A) upheld the addition, stating the source remained unexplained.

Which sections of the Income-tax Act were involved?

Section 69,Section 271(1)(c),Section 271F,Section 234A,Section 234B,Section 234C,Section 234D,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri Jaimin Shah, AR
For Respondent: Shri Drop Singh Meena, Sr. DR
Hearing: 07.07.2026Pronounced: 30.09.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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This appeal has been filed by the Assessee against the order dated 30.09.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2015- 2016. ITA No.332/AHD/2026, AY-2015-16 Krunal Bharat Bhasar - 2–

2.

The Assessee has raised the following grounds of Appeal:-

01.

That the Ld. CIT(A), NFAC has erred both in law and on facts while rejecting the appeal of the appellant without considering facts and documents on records and the

The order continues below.

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