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Facts
The assessee, proprietor of M/s. K.K. Enterprise, declared total income of ₹49,88,800/- for AY 2021-22. The case was selected for scrutiny due to purchases from non-filers. The AO added ₹13,87,48,767/- as unexplained expenditure.
Held
The Tribunal held that the AO did not provide sufficient opportunity to the assessee to prove the genuineness of purchases. The Ld.CIT(A) wrongly refused to admit additional evidence.
Key Issues
Whether the Ld.CIT(A) erred in refusing to admit additional evidence and upholding the addition made by the AO without providing adequate opportunity to the assessee?
Sections Cited
69C, 133(6), 142(1)
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 12.03.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2021-22.
The main grievance of the assessee is against action of the Ld.CIT(A) refusing to admit additional evidences filed by the assessee quoting Rule 46A of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules‘) and thereafter, confirming the action of the AO making addition of ₹13,87,48,767/- as unexplained expenditure u/s.69C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘).
The brief facts are that the assessee is an individual, proprietor of M/s. K.K. Enterprise who filed her return of income (RoI) on 11.02.2022 declaring total income at ₹49,88,800/-. The case of the assessee was selected for complete scrutiny for the reason (i) business purchases assessee has made from suppliers who are non-filer(s) of ITR or they have filed non-business ITR or reflected a substantially lower turnover in ITR. During the course of assessment proceedings, the AO asked assessee to furnish details of suppliers from whom assessee had made substantial purchases and after receiving reply from the assessee along with documents to support the purchases [viz., purchase register, copy of ledger accounts, details of sellers, GST returns & bank account statement, etc], the AO is noted to have issued notices u/s.133(6) of the Act to them to verify the genuineness of purchases; and then, acknowledges that some suppliers had confirmed the transaction with the assessee. But since same sellers didn’t respond, the AO issued show cause notice to assessee dated 16.12.2022 proposing to add ₹18,27,26,824/- [purchases made from ‘11’ parties as in-genuine]. Pursuant thereto, the assessee filed reply along with certain evidences on 22.12.2022 and the AO is noted to have gone through the reply and is noted to have accepted the purchases made from ‘6’ parties amounting to ₹4,39,78,057/-. But, the AO didn’t accept the genuineness of purchases made from remaining ‘5’ parties to the tune of ₹13,87,48,767/-, since the assessee didn’t file any confirmation or other documents to substantiate the genuineness of the transactions and thereby, the same was added u/s.69C of the Act as unexplained expenditure by passing the assessment order on 30.12.2022.
Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld.CIT(A)/NFAC wherein the assessee filed additional evidences to substantiate the purchases from other suppliers which were duly uploaded viz., ‘pdf’ documents (i) GST status of the so- called suppliers & (ii) GSTR extracts of five (5) suppliers. However, the Ld.CIT(A)/NFAC refused to admit the same on the specious plea that even though the AO has granted five opportunities to the assessee, the assessee failed to produce the same i.e. evidences relating to five suppliers in question before the AO; and since assessee failed to show sufficient cause for not producing the said evidences before the AO, he was pleased not to admit the additional evidences and was pleased to confirm the action of the AO. We don’t countenance the impugned action of the Ld.CIT(A). We note that the AO had given five (5) opportunities and notes in this regard that the assessee had complied with the directions/requisition made as directed by notice u/s.142(1) of the Act which later led the AO to issue show cause notice on 18.12.2022 proposing addition of ₹18,27,26,824/- u/s.69C of the Act. And pursuant to it, the assessee is noted to have filed reply dated 22.12.2022 and the AO accepted the genuineness of transaction with six (6) parties amounting to ₹4,39,78,057/- and thereafter is noted to have again issued show cause notice on 27.12.2022 asking the assessee ‘as to why’ the amount of ₹13,87,48,767/- shouldn’t be added u/s.69C of the Act and gave time to the assessee up to 28.12.2022 [i.e. one day] and thereafter passed the assessment order on 30.12.2022. The sequence of events itself shows that the AO didn’t give proper opportunity to prove the purchase of ₹13,67,05,698/-. Therefore, assessment need to be restored to the file of the AO for enquiry into the addition made to the tune of ₹13,67,05,698/-. For such an action, we rely on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC), and set aside the impugned order of the Ld.CIT(A) and restore the assessment for limited purpose of enquiry into the addition made to the tune of ₹13,87,48,767/- u/s.69C of the Act. The additional evidences filed by the assessee to prove the genuineness of transaction is allowed to be filed before the AO and the AO to consider the
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 07th day of October, 2025, in Chennai.