THOMAS JOSEPH,KARKUTTY vs. ITO WARD 2, ALUVA

Brief facts of the case are that the appellant is an individual carrying on the business under proprietary concern dealing in Christian prayer articles such as Bible, statues, rosary, candles, etc. The return of income for AY 2023-24 was filed on 27.10.2023 disclosing income of Rs. 13,23,420/-. Against the said return of Thomas Joseph income, the assessment was completed by the Assessment Unit, Income Department (hereinafter called "the AO") vide order dated 27.02.2025 passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 1,41,24,375/-. While doing so, the AO made addition of Rs. 49,64,398/-as unexplained expenditure on account of failure of the appellant to explain the source of expenditure incurred on salary, festival celebration, etc. The AO also made addition on account of sundry creditors of Rs. 46,31,857/- disbelieving the expenses of sundry creditor.

Being aggrieved, an appeal was filed before the CIT(A). who vide the impugned order partly allowed the appeal confirming the disallowance of sundry creditors and addition of unexplained expenditure.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

It is submitted that the expenditure was met by the appellant out of realization from debtors and further it is submitted that the AO as well as the CIT(A) ought not have made the addition as sundry creditors represent the job work charges payable towards rosary making (stitching) of the appellant and the appellant had discharged the onus of proving sundry creditors by filing confirmation letters from creditors.

We have heard the rival contentions and perused the material available on record. We find that the AO made addition on account of unexplained expenditure of Rs. 49,64,398/- and sundry creditors of Rs. 46,31,857/- for the failure of the appellant to explain the source of unexplained expenditure and prove the genuineness of the sundry creditors. We find that the appellant had explained the source of the expenditure and also filed details of the sundry creditors. All the contentions raised by the appellant were not dealt with by the CIT(A) in proper perspective. Since it requires verification of the details filed by the appellant, we are of the considered opinion that the matter requires remand to the file of AO for de novo assessment in accordance with law after affording reasonable opportunity of hearing to the appellant. Ordered accordingly.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.