PRAFULLDAN MOTISING GADHVI,AHMEDABAD vs. ITO WARD 4(2)(1) AHMEDABAD, PRATYAKSHA KAR BHAWAN VEJALPUR AHMEDABAD

ITA 2589/AHD/2026Status: DisposedITAT Ahmedabad08 October 2026AY 2024-256 pages
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What were the facts?

The assessee, Prafulldan Motising Gadhvi, filed a return for Assessment Year 2024-25 declaring an income of Rs. 1,71,52,930/-. The Assessing Officer (AO) noticed a sundry creditor balance of Rs. 44,08,895/- with M/s D & G Enterprise/Vijay Jain. Despite issuing a notice under Section 133(6), no compliance was received, leading the AO to treat the balance as bogus and make an addition under Section 68. Additionally, agricultural income of Rs. 17,91,775/- was disallowed for lack of evidence. The assessment was completed on 13.03.2026 at a total income of Rs. 2,33,53,600/-. The Commissioner of Income-tax (Appeals) [CIT(A)] dismissed the assessee's appeal.

What did the Tribunal hold?

The Tribunal found that a confirmation from M/s D & G Enterprise/Vijay Jain, placed on record before the Tribunal, showed an opening balance of Rs. 82,93,019/- as on 01.04.2023, which was substantially higher than the closing balance of Rs. 44,08,895/-. The Tribunal held that the entire closing balance could not be treated as a credit arising during the year without examining the opening balance and transactions. Since the confirmation was fresh evidence, the factual position required verification at the assessment stage. Therefore, this issue was restored to the file of the Jurisdictional AO for fresh adjudication after examining the confirmation, opening balance, transactions, and other supporting documents. Regarding agricultural income, the Tribunal held that mere ownership of land does not establish agricultural operations or income. As the assessee claimed that relevant evidence was not considered by the CIT(A), this issue was also restored to the AO for examination of evidence and agricultural activity, including a comparison with preceding years' income. The grounds raised by the assessee were allowed for statistical purposes.

What were the issues?

1. Whether the addition of Rs. 44,08,895/- under Section 68 of the Income Tax Act, 1961, in respect of the outstanding trade creditor balance of M/s D & G Enterprise was erroneous, considering the assessee's contention that the balance arose from regular business transactions supported by purchase records, creditor details, banking records, and creditor-authenticated ledger, and that the closing balance did not pertain to the current year due to a higher opening balance. The revenue supported the lower authorities' orders. 2. Whether the addition of Rs. 17,91,775/- by treating agricultural income as taxable was erroneous, considering the assessee's claim of furnishing land records and other material in support of the claim under Sections 2(1A) and 10(1) of the Act. The revenue contended that mere land records do not establish agricultural activity but had no objection if the matter was set aside to the AO for another opportunity. 3. Whether the CIT(A) erred in not admitting additional evidence under Rule 46A of the Income Tax Rules, 1962, specifically the creditor-authenticated ledger account of M/s D & G Enterprise, which was obtained after assessment completion and was material to the issue.

Which sections of the Income-tax Act were involved?

Section 133(6),Section 68,Section 10(1),Section 2(1A),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Keyur Bawish, AR
For Respondent: Shri Arvind Kumar Namdeo, Sr. DR
Hearing: 17.09.2026Pronounced: 08.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal filed by the Assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 30.06.2026 for the Assessment Years (A.Y.) 2024-25 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed his return of income for A.Y. 2024-25 on 27.09.2024 declaring total income of Rs.1,71,52,930/-. The case was selected for complete scrutiny under CASS. In the course of assessment, the AO noticed that the assessee Prafulldan Motising Gadhvi Vs ITO, AY- 2024-25 2 had shown bala

The order continues below.

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