INCOME TAX OFFICER, JAIPUR vs. NIHAL KHANDELWAL, JAIPUR

ITA 384/JPR/2026Status: DisposedITAT Jaipur14 October 2026AY 2022-2314 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was justified in deleting the addition of Rs. 1,82,63,955/-. Regarding grounds 1 and 2, the Tribunal found that the CIT(A) had examined the case records and submissions, noting that the alleged lenders were family members who regularly filed income tax returns. The CIT(A) observed that the transactions were settlements of money advanced by the assessee to these parties, and the amounts were transferred through banking channels. The Tribunal agreed with the CIT(A) that there was no material to doubt the creditworthiness of these parties, and the AO had not brought any contrary evidence on record. The Tribunal also noted that the AO had not established cash deposits, round-tripping, or doubtful credit entries in third-party accounts. For grounds 3 and 4 concerning the addition of Rs. 3,39,00,058/-, the Tribunal found that the CIT(A) had meticulously examined the issue, relying on a certificate from the Assistant Commissioner of Customs. This certificate confirmed that the total invoice value for imports and the assessable value, along with taxes paid, tallied with the assessee's recorded purchases. The Tribunal concluded that the CBIC data contained misreported assessable values, and the assessee's books were in consonance with the correct invoice values and taxes paid. Therefore, the Tribunal found no illegality or perversity in the CIT(A)'s order and upheld its findings.

What were the facts?

The assessee, Nihal Khandelwal, engaged in trading gemstones and jewellery, filed a return for assessment year 2022-23. The Assessing Officer (AO) initiated scrutiny due to large import values in export-import data. The AO added Rs. 1,82,63,955/- under Section 69A, doubting the creditworthiness of parties from whom unsecured loans were taken, as their declared income did not commensurate with the loan amounts. Further, the AO added Rs. 3,39,00,058/- under Section 69C for a difference of Rs. 5,21,64,013/- between reported purchases and data from CBIC concerning imports. The National Faceless Appeal Centre (NFAC), Delhi (CIT(A)), deleted both additions. The Revenue appealed this order to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that there was no material to doubt the creditworthiness of parties from whom the assessee took unsecured loans totalling Rs. 1,82,63,955/-, despite their declared income not commensurate with the advances? (Section 69A) 2. Whether, on the facts and in the circumstances of the case and in law, the CIT(A) was justified in ignoring that mere banking channel transactions do not make a transaction genuine, especially when the assessee failed to prove the creditworthiness of the unsecured loan providers? (Section 69A) 3. Whether, on the facts and in the circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Rs. 5,21,64,013/- by ignoring that the assessee provided no justification for misreported invoices totalling Rs. 3,34,47,528/- as per CBIC data, and these invoices were not sent for verification to the jurisdictional AO? (Section 69C) 4. Whether, on the facts and in the circumstances of the case and in law, the CIT(A) was justified in deleting the total addition of Rs. 5,21,64,013/- and admitting additional evidence without calling for a remand report from the AO under Rule 46A? Assessee's Contentions (implied from CIT(A)'s order): The transactions were with family firms, supported by ITR acknowledgements, computation of total income, bank statements, and confirmations. All credit entries were explained, and transfers were through banking channels. The AO accepted identity and genuineness but not creditworthiness without material. For the import issue, the assessee contended that the CBIC data showed misreported invoice values, and a certificate from the Assistant Commissioner of Customs confirmed the correct invoice values and taxes paid, which tallied with the assessee's books. Revenue's Contentions: The unsecured creditors were not in a position to lend heavy loans as evidenced by their income tax returns, thus the impugned order is liable to be set aside.

Which sections of the Income-tax Act were involved?

Section 69A,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR “B” BENCH, JAIPUR

Before: SHRI KULDIP SINGH & SHRI PRAKASH, ACCOUNTANCT MEMBER

PER : KULDIP SINGH, JUDICIAL MEMBER:-

The Appellant, Income Tax Officer by filing the present appeal, sought to set aside the impugned order dated 26.12.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua assessment year 2022-23 on the grounds inter- alia that:- “1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in holding that there is no material to doubt the creditworthiness of the parties from whom the assessee has taken unsecured

I.T.A No. 384/JPR/2026 Page No 2 Nihal Khandelwal

loan totalling to Rs. 1,82,63,955/- ignoring the fact

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →