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SANGITA LALWANI,ITARSI vs ITO 1, ITARSI, ITARSI | BharatTax

SANGITA LALWANI,ITARSI vs. ITO 1, ITARSI, ITARSI

ITA 1082/IND/2025Status: DisposedITAT Indore10 April 2026AY 2019-2011 pages

AI SummaryRemanded

Facts

The assessee's total income was assessed at Rs 1,63,56,284/-, with additions for unexplained expenditure (bogus purchases), fictitious sundry creditors, and unexplained cash credit. The assessee's first appeal before the CIT(A) was dismissed.

Held

The Tribunal held that the Assessment Order and the CIT(A)'s Order were not based on merits, especially since additional evidence filed before the CIT(A) was not considered. The Tribunal also noted the assessee's non-compliance at the assessment stage.

Key Issues

Whether the additions made by the AO on account of bogus purchases, fictitious creditors, and unexplained cash credit are sustainable, and whether the CIT(A) properly considered the additional evidence submitted by the assessee.

Sections Cited

147, 144B, 139(1), 148, 69C, 68, 246A, 250, 253, 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI & SHRI PARESH M JOSHI

For Appellant: Adv. & Sh

For Respondent: Shri Ashish Porwal, Sr.DR

Hearing: 06.04.2026Pronounced: 10.04.2026

This is an Appeal filed by the Assessee Under Section 253 of the Income Tax Act 1961 (herein after referred to as the Act for the sake of Brevity) before this tribunal as and by way of a second Appeal.The Assessee is aggrieved by the order bearing Number:-ITBA/NFAC/5/250/2025- 26/1081526355(1) dated 07-10-2025 passed by the Ld CIT(A) U/S 250 of the Act, which is herein after referred to as the “Impugned Order”. The Relevant Assessment year is 2019-2020 and the corresponding Previous year Period is from 01-04-2018 to 31-03-2019.

Page 1 of 11

2.

Factual Matrix (2.1) That as & by way of an Assessment Order made u/s 147 rws 144B of the Act, the total Income of the Assessee was Computed and Assessed at Rs 1,63,56,284/-.No return of Income was filed u/s 139(1) of the Act. The total Income as per the return of Income in response to the Notice u/s 148 of the Act was at Rs 7,31,150/-. The Addition on account of Unexplained expenditure u/s 69C of the Act was at Rs 48,21,840/- for bogus purchases.

Another Addition was towards sundry creditors amounting to Rs 98,03,294/- was treated as Fictious liability. Yet Another Addition of Rs 10,00,000/- [Ten lakhs] was made on account of Unexplained Cash credit u/s 68 of the Act. That the aforesaid order bears number :-

ITBA/AST/S/147/2023-24/1061633166(1) that the same is dated 28-02- 2024 which is herein after referred to as the “Impugned Assessment Order”.

(2.2) That the Assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers the first appeal u/s 246A of the Act before the Ld CIT(A) who by the “Impugned Order” has dismissed the first Appeal of the Assessee on the grounds & reasons stated therein. The core grounds & reasons for the dismissal of the first Appeal was as under:-

Further on the same analogy, appellant is contending that the additions made by AO are not to be considered for attraction of penalty proceedings and thereby contended such initiation of penalty proceedings as attributable to such additions as not maintainable. Precisely in all these GOA, appellant is contending that AO erred in making additions on account of explainable purchases as involving bogus purchases based on Investigation reports of Income tax department itself without making further enquiry by AO and thereby claims such re assessment proceedings as initiated to make such addition as not maintainable Further appellant contended sundry creditors and unsecured loans as reflected in books of accounts as explainable and accordingly pleaded to delete the additions as bad in law and as not attracted by such penalty proceedings initiations. However on perusal of facts on record as brought out by AO in the assessment order, it is clearly noticeable that. AO has sought for appellant complete substantiation with all such supporting proofs as attributable to appellant claim of purchases as made with the bogus party in the name of Gajendra Singh, Proprietor M/s National Metals with all its supporting proofs of goods transportation with delivery challans etc and in the absence of the same and as the same is not substantiated by Mr. gajendra Singh as involving genuine purchase of appellant contrary to the findings of search etc. AO treated the same as unexplained u/s. 69C of I.T.Act. Similarly with reference to sundry creditors and unsecured loans as well, appellant could not reconcile all supporting proofs as applicable to such unsecured loans and creditors to establish the genuineity and credit worthiness as applicable as per law. In the absence of the same, AO treated the sundry creditors as unexplained income of the appellant and unsecured loans as unexplained credit u/s. 68 of 1.T.Act as analysed in the assessment order. In the light of these facts and on perusal of appellant various contentions/claims /GOA/submissions as advanced during the appeal proceedings, it is noticeable that the appellant is apparently contending the Page 3 of 11 purchases as made by appellant from Mr. Gajendra Singh, Proprietor M/s, national Metals as only involving genuine purchases contrary to the findings of search and reasoning adduced by AD holding the same as explainable and requested to consider the same. Further to substantiated the same, appellant is claiming relevant invoices and other details as depicted/incorporated on GST filings as involving sufficient substantiations to hold the movement /transportation of goods as took place for its consideration as applicable. However appellant did not adduce any such conclusive evidences involving physical movement of goods from the premises/ go down of M/s. National Metals as appearing in their stock register with relevant out gate pass as reconcilable with lorry transportation receipts/ e-way bills for its further reconciliation with delivery chailans and inward gate receipts as accounted in physical/digital form for its reconciliation with the depictions /reflections of such GST filings to establish search findings on these purchases as not maintainable as per the finer facts of case as per law. In the absence of the same, apparently, there exists no infirmity in the addition as made by AO as attributable to such purchases as per the search findings in the case of Bansal Group Bhopal involving entries made with M/s. National Metals establishing transactions with these parties as involving paper transactions. Further with reference to the issue of additions as attributable to sundry creditors as well, appellant is contending the same as explainable and accordingly claims one creditors Sardar Steel as only involved in sales with the appellant for an amount of Rs. 1.94 crores and having paid excess amount for Rs. 1.64 crores, the difference amount is treated as creditor as involving advance payment for future sales. Accordingly claims such discrepancies in sundry creditors as are owing to the difference in accounting treatment on this analogy and claims the same as explainable and requested to consider. However appellant claims as advanced on this analogy by simply altering the character /nature of transactions from debtor to creditor on account of excess payments/advance payments as attributable to credit payment reflections is apparently not reconciliable as the same is not prudent grouping of transactions involving creditor separately and of debtor separately and the same would have been properly corrected if it were true at least during the auditing for its correct accounting and reflections to arrive at credits and debits separately and thereby appellant mere claims as advanced on this analogy after conclusion of assessment proceedings is neither reasonable nor justifiable and accordingly the additions as made by AO is to be treated as justifiable as attributable to sundry creditors claim of appellant which stands unexplained before AO as per law.

Similarly with reference to unsecured loans disallowances also, appellant is contending the same as mistakenly reflected as availed from Mr. Dilip Gurnani as against of its availment from his wife Smt Varsha Dilip Gurnani and has further stated that their auditor also mistakenly accounted against wrong person in form 3CB and thereby contended the loan as explainable as attributable to Smt Varsha Dilip Gurnani and thereby requested to consider Appellant having maintained or at least having claimed such maintenance of books with regular audit by auditor it would be improper to hold such mistakes of unsecured loans availment against a different person as against of actual person loan creditor seems to be an after thought to link the unrelated ends/transactions to reconcile such non explainable unsecured loans and sundry creditors as involving explainable transactions in the guise of clerical mistakes/accounting mistakes as attributable to auditor and thereby such contentions are apparently unfair and not justifiable to forward after conclusion of assessment proceedings without brining anything on record before AO on such omissions/defects, if any as applicable as per law as contended. In the light of these facts, appellant various contentions as advanced to hold the additions as made by AO as not maintainable is to be treated as far from truth and explanability with such finer facts as applicable to appellant as reconcilable with search findings in the case of Bansal Group vis- à-vis M/s National Metals and wrong claims in the appellant books of accounts that too audited etc as attributable to sundry creditors and unsecured loans as discussed supra. Further appellant has adduced various citations as attributable to appellant facts of case and on perusal of the same, the relevant facts of case and ratios of adjudication as attributable to these citations is not apparently comparable to appellant facts of case involving such search findings establishing appellant purchases as bogus with such party M/s. National Metals as reasoned by AO in the assessment order. Further appellant also could not bring out such comparable facts of case and ratios of adjudication as attributable to these citations as reconcilable to appellant facts of case and circumstances so as to claim its applicability as per law. In the absence of the same appellant various submissions as advanced as attributable to these citations is to be treated as not comparable and thereby same are treated as not acceptable. In view of the same, appellant all grounds of appeal as advanced are to be treated as not maintainable as there exists no infirmity in the order of AO as reasoned and discussed supra. Thereby, appellant appeal is dismissed as not maintainable as per facts available on record on merits and on consideration of appellant's claims/submissions as reasoned and explained above.

4.3 We basis records of the case & after hearing & upon examining the rival contentions of the Ld AR & the Ld DR canvassed before us, are of the considered opinion that the “Impugned Assessment Order” is under section 144/144B of the Act and the matter has not been adjudicated and adjudged basis merits. Even the “Impugned Order” is not on merits in as much as Additional evidence placed before the ld. CIT(A) finds No mention in the “Impugned Order” & that no report was called for by the Ld CIT(A) in respect of the Additional evidence filed before him from the Ld AO. This tribunal desires that the total Income of the Assessee should be computed & Assessed on the real time basis exigible to tax in the accordance with the law by following the due process of law under the Act. This tribunal also expects the Assessee to be compliant & should cooperate with the Dept of Income Tax promptly as & when Notice(s) etc are issued by the Department and received by the Assessee. In brief this tribunal desires the meritorious disposal of both the “Impugned Assessment order” as well as the Page 9 of 11 “Impugned Order”. The Assessee cooperation in this regard assumes importance.The Assessee cannot go in the slumber mode. We observe that at the original stage of the Assessment before Ld AO the Assessee was non compliant. We are therefore of the considered opinion that the “Impugned Order” should be set aside & that the matter should be remanded back to the file of the Ld AO for passing a fresh order on merits of the case. It is also the expectation of this tribunal that Assessee would now give full & complete details to all the notice(s) issued so far in the course of the original Assessment Proceedings as the assessee was admittedly Non-compliant at that stage. We quantify cost of Rs.5000/- to be paid by the assessee by a challan under category others & show necessary proof in this regard to the ld. AO. The Assessee to attend hearings as & when fixed & to file reply & other details as sought by the Ld AO. 4.4 In view of the above, we set aside the “Impugned Order” & remand the case back to the file of the Ld AO on denovo basis who shall now pass a well reasoned order basis merits.