BASIR KHAN,BIRBHUM vs. INCOME TAX OFFICER, SURI, SURI, BIRBHUM

ITA 345/KOL/2026Status: DisposedITAT Kolkata01 October 2026AY 2020-217 pages
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What did the Tribunal hold?

The Tribunal noted that while the assessee claimed the difference arose due to accounting presentation, this was not supported by evidence. The CIT(A) had confirmed the addition because no reconciliation duly confirmed by Apollo Tyre Limited was produced to demonstrate that the security deposit was adjusted against the payable balance. However, the Tribunal observed that the assessee's explanation regarding the adjustment of the security deposit did not appear to have been fully appreciated. In the interest of justice and fair play, the Bench decided to provide one more opportunity to the assessee to explain the discrepancy. Therefore, the order of the Ld. CIT(A) was set aside, and the appeal was restored to the Ld. CIT(A) for disposal on merits by passing a speaking order. The assessee was granted one more opportunity to make further submissions, and Rule 46A of the I.T. Rules, 1962, was to be followed. An opportunity of being heard was also to be provided to the Ld. AO if required. The grounds taken by the assessee were partly allowed for statistical purposes.

What were the facts?

The assessee, Basir Khan, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, for Assessment Year 2020-21. The appeal was filed with a delay of 28 days, which the Tribunal condoned after being satisfied with the assessee's explanation regarding his advocate's cardiac issue. The Assessing Officer (AO) reopened the case and treated an outstanding balance of ₹14,68,071/- from M/s Apollo Tyre Ltd. as unexplained credit under Section 68 read with Section 115BBE, after the assessee claimed full payment for purchases. The assessee contended that this difference arose from the adjustment of a ₹15,00,000/- security deposit, which acted as a credit limit. The AO rejected this explanation for lack of corroborative evidence. The CIT(A) upheld the AO's order, finding the assessee's explanation unsatisfactory.

What were the issues?

1. Whether the appellate authority erred in confirming the addition of ₹14,68,071/- as unexplained credit under Section 68 read with Section 115BBE of the Income Tax Act, 1961, despite the assessee's contention that it represented an adjustment of a security deposit acting as a credit limit (mixed question of law and fact). Assessee's contentions: - The appellate authority failed to consider the true nature of the business and relied on surmise and conjecture. - The amount of ₹15,00,000/- was in the nature of a credit limit from the assessee's perspective, given the long-term business relationship with Apollo Tyre Ltd. - The difference arose due to a difference in accounting perspective between the assessee and Apollo Tyre Ltd., where ₹15,00,000/- was a credit limit for the assessee and a security deposit for Apollo Tyre Ltd. - Further documents produced in the appeal show that ₹15,00,000/- becomes undisputed. - The appellate order was a 'cut and paste' statement without proper reasoning. Revenue's contentions: - The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same be upheld, noting that reconciliation could not be made despite two replies from M/s Apollo Tyres Ltd.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 147,Section 144B,Section 250,Section 133(6),Section 148,Section 46A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [Ld. 'CIT(A)'] passed u/s 250 of the Act for AY 2020-21 dated 14.10.2025. 1.1 The Registry has informed that the appeal is barred by limitation by 28 days. The assessee has filed an affidavit along with a petition for ITA No(s). 345/KOL/2026 Assessment Year(s)

The order continues below.

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