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

ITA 345/KOL/2026Status: DisposedITAT Hyderabad01 October 2026AY 2020-217 pages
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What did the Tribunal hold?

The Tribunal noted that the assessee's explanation regarding the adjustment of the security deposit was not fully appreciated by the lower authorities. While the CIT(A) confirmed the addition for lack of corroborative evidence, the Tribunal observed that the assessee had provided further documents after the appeal, including a letter from Apollo Tyres Ltd. accepting that ₹15,00,000/- was balanced as on 31.03.2020. The Tribunal considered it in the interest of justice and fair play to provide one more opportunity to the assessee. 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. The assessee was granted one more opportunity to present their case, with a direction to follow Rule 46A of the I.T. Rules, 1962, and an opportunity for the Ld. AO to be heard 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 ITAT Kolkata against the order of the CIT(A)-NFAC, Delhi for AY 2020-21. The appeal was filed with a delay of 28 days, which the Tribunal condoned due to the assessee's advocate suffering a cardiac problem. The Assessing Officer (AO) reopened the case under Section 147 and observed an outstanding balance of ₹14,68,071/- from M/s Apollo Tyre Ltd. as on 31.03.2020, despite the assessee showing full payment for purchases. The assessee explained this difference as an adjustment of a ₹15,00,000/- security deposit, which was treated as a credit limit. The AO rejected this explanation for lack of evidence and added ₹14,68,071/- as unexplained credit under Section 68 read with Section 115BBE. The CIT(A) confirmed the AO's order, finding the assessee's explanation unsatisfactory due to lack of corroborative evidence.

What were the issues?

1. Whether the appellate authority failed to consider the true purport and nature of the business, relying on surmise and conjecture, thereby passing a bad order? (Mixed law and fact, relying on general principles of natural justice and evidence appreciation). 2. Whether 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., and whether the addition of ₹14,68,071/- as un-exclaimed credit under Section 68 read with Section 115BBE, completed under Section 147 read with Section 144B, is bad in law? (Mixed law and fact, relying on Section 68, Section 115BBE, Section 147, Section 144B). 3. Whether the appellate authority and assessing authority failed to understand the difference in accounting perspective between the assessee and Apollo Tyre Ltd. regarding the ₹14,68,071/- amount, and whether a change in accounting nomenclature should lead to penalty? (Mixed law and fact). 4. Whether the ₹15,00,000/- amount becomes undisputed based on further documents produced in appeal, making the addition under Section 68 not in accordance with law? (Mixed law and fact, relying on Section 68). 5. Whether the appellate authority did not apply its mind, as evidenced by a 'cut', 'paste' order lacking proper reasoning? (Mixed law and fact). Assessee's contentions: The appellate authority failed to consider the business nature and relied on conjecture. The ₹15,00,000/- was a credit limit from the assessee's perspective, not an unexplained credit. Differences in accounting perspectives should not be penalized. Further documents make the ₹15,00,000/- undisputed. The CIT(A)'s order was a 'cut' and 'paste' job without proper application of mind. The assessee relied on the explanation that the security deposit of ₹15,00,000/- was treated as a credit limit, and that Apollo Tyre Ltd. confirmed the ₹15,00,000/- balance as on 31.03.2020 in a letter received after the appeal. The assessee also relied on judgments and documentary evidence submitted before the CIT(A). Revenue's contentions: The Ld. DR relied on the order of the Ld. CIT(A) and requested it be upheld, stating that reconciliation could not be made despite two replies from M/s Apollo Tyres Ltd. The Ld. DR submitted that the AO sent letters twice to M/s Apollo Tyre Ltd., the difference was not reconciled, and the security deposit adjustment was not considered by the Ld. CIT(A).

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 147,Section 144B,Section 250

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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