K G CONSTRUCTION,VAPI vs. DCIT, VAPI CIRCLE, VAPI

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ITA 1485/SRT/2025Status: DisposedITAT Surat28 October 2026AY 2021-223 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay of 184 days in filing the appeal, finding the reasons genuine. Since both the assessment order and the order of the CIT(A) were ex parte, the Tribunal deemed it appropriate to remand the matter back to the file of the Assessing Officer for proper verification of details and adjudication of the issues in accordance with the Income Tax Act. The assessee was to be given an opportunity of hearing, following the principles of natural justice. The Tribunal did not decide the merits of the grounds raised by the assessee, as the appeal was allowed for statistical purposes.

What were the facts?

The assessee, K G Construction, filed an appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2021-22. The assessee's income was assessed under Section 147 read with Section 144 of the Income Tax Act, 1961. The Assessing Officer (AO) made additions of Rs. 2,50,000/- for an unsecured loan from Anwar Siroha and Rs. 21,00,000/- from M/s. Aamna Developers, invoking Section 68. An addition of Rs. 10,456/- was made for cash payment to Star Traders under Section 40A(3). Proportionate interest of Rs. 1,11,053/- on loans and advances was disallowed and treated as business expenditure under Section 37(1). The CIT(A) dismissed the assessee's appeal. The assessee contended that both the assessment order and the CIT(A) order were ex parte and requested a remand.

What were the issues?

1. Whether the CIT(A)-NFAC erred in confirming the impugned order passed under Section 147 read with Section 144 of the Act. 2. Whether the CIT(A)-NFAC erred in confirming the addition of Rs. 2,50,000/- on account of unsecured loan from Anwar Siroha by invoking Section 68. 3. Whether the CIT(A)-NFAC erred in confirming the addition of Rs. 21,00,000/- on account of unsecured loan from M/s. Aamna Developers by invoking Section 68. 4. Whether the CIT(A)-NFAC erred in confirming the disallowance of Rs. 10,456/- towards cash payment made on 31.03.2022 by invoking Section 40A(3). 5. Whether the CIT(A)-NFAC erred in confirming the disallowance of interest expenses of Rs. 1,11,053/- by invoking Section 37(1). Assessee's Contention: The assessment order and the CIT(A) order were ex parte, and therefore, the matter should be remanded back to the Assessing Officer. Revenue's Contention: The Ld. Departmental Representative relied upon the assessment order and the order of the CIT(A).

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 68,Section 115BBE,Section 40A(3),Section 37(1),Section 194M

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Respondent: Shri Ashish Kumar, Sr. DR
Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.1485/SRT/2025 (िनधा�रण वष�/Assessment Year: 2021-22) K G CONSTRUCTION DCIT, 18, SAHARA MARKET, 2ND FLOOR, VAPI CIRCLE, VAPI ROOM NO.704, 7TH FLOOR, SILVASSA ROAD, VAPI-396191, GUJARAT Vs. FOURTUNE SQUARE-II, ABOVE TBZ, CHALA, VAPI- 396191, GUJARAT अपीलाथ� (APPELLANT) ��थ� (RESPONDENT)

Permanent Account Number of Assessee: AAHFK8528Q

अपीलाथ� �ारा/Appellant represented by: Shri Suresh K Kabra, CA ��थ� �ारा/Respondent represented by: Shri Ashish Kumar, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 17.08.2026 घोषणा की तारीख / Date of pronouncement: 28.10.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 08.04.2025 for the Assessment Year (in short “AY”) 2021-22.

2.

The assessee has raised the following grounds of appeal: “1. The CIT (A)-NFAC has erred and was not just and proper on the facts of the case and in law in confirming the impugned order u/s. 147 r.w.s. 144 of the Act.

ITA No.1485/SRT/2025 (A.Y. 2021-22) K G CONSTRUCTION vs. DCIT

2 The CIT (A)-NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of Rs. 2,50,000/- on account of unsecured loan taken from Anwar Siroha by invoking the provisions of section 68 of the Act. 3 The CIT (A)-NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of on Rs. 21,00,000/- on account of unsecured loan taken from M/s. Aamna Developers by invoking the provisions of section 68 of the Act. 4 The CIT (A)-NFAC has erred and was not just and proper on the facts of the case and in law in confirming the disallowance towards cash payment of Rs. 10,456/- made on 31.03.2022 by invoking the provisions of section 40A (3) of the Act. 5 The CIT(A)-NFAC has erred and was not just and proper on the facts of the case and in law in confirming the disallowance of the interest expenses Rs.1,11,053/- by invoking the provisions of section 37 (1) of the of Act.” 3. The assessee filed return of income declaring total income of Rs.14,60,970/-. The case was selected for complete scrutiny for the reason that the assessee had shown large receipts u/s194M of the Income Tax Act, 1961 (in short, “the Act”) while the net profit was low. The statutory notices were issued to the assessee and the assessee had filed reply alongwith the details, but could not file the evidences. Therefore, the Assessing Officer (in short ‘the AO’) made addition of Rs.2,50,000/- u/s 68 r.w.s. 115BBE of the Act. The AO further observed that the assessee received loan of Rs.21 Lakhs from Aamma Developers but failed to give the details. Hence, the AO made addition of Rs.21 Lakhs as ‘unsecured loan’ u/s 68 r.w.s. 115BBE of the Act. The AO also made addition of Rs.10,456/- towards cash payment to Star Traders u/s 40A(3) of the Act. The AO disallowed proportionate interest @12% i.e. 1,11,053/- on loans & advances and treated the same as ‘business expenditure’ u/s 37(1) of the Act.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

ITA No.1485/SRT/2025 (A.Y. 2021-22) K G CONSTRUCTION vs. DCIT

5.

The Ld. Authorized Representative (in short “the Ld. AR”) for the assessee submitted that the assessment order as well as the CIT(A) order is ex parte, hence, the matter may be remanded back to the file of the AO.

6.

The Ld. Departmental Representative (in short “Ld. DR”) relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant materials available on record. There is a delay of 184 days in filing the present appeal. The reasons given for delay appears to be genuine. Hence, delay is condoned. Since, both the assessment order as well as the order of the CIT(A) are ex parte, it will be appropriate to remand back this matter to the file of the AO for proper verification of the details and adjudicate the issues as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following of principles of natural justice.

8.

In result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 28.10.2026 Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER //True Copy// Surat; Dated: 28.10.2026 * SKS, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat By order, 5. Guard File HEMA KISHORE Digitally signed by HEMA KISHORE JAKKA JAKKA Date: 2026.10.30 11:56:44 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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