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Facts
The assessee, engaged in the business of purchasing and selling buffaloes, did not file a Return of Income for AY 2018-19. Based on information of cash withdrawals from Axis Bank, reassessment proceedings were initiated. The AO made additions of Rs.3,28,56,364/- as unexplained money under section 69A and Rs.7,20,900/- as unexplained expenditure under section 69C, after finding discrepancies in the assessee's business claims versus buyer's statements. The CIT(A) upheld these additions, dismissing the appeal without considering the extensive additional evidence submitted by the assessee under Rule 46A(3).
Held
The Income Tax Appellate Tribunal noted that the CIT(A) failed to consider the additional evidence presented by the assessee under Rule 46A, which was a violation of the principle of natural justice. Therefore, the tribunal set aside the matter and remanded it back to the Jurisdictional Assessing Officer to properly examine the additional documents, provide an opportunity of hearing to the assessee, and decide the case on its merits according to law.
Key Issues
Whether the additions made under sections 69A (unexplained money) and 69C (unexplained expenditure) were justified, and whether the CIT(A) erred by not considering additional evidence submitted under Rule 46A(3).
Sections Cited
147, 144B, 148A(b), 148A(d), 148, 142(1), 133(6), 69A, 115BBE, 69C, 234, Rule 46A(3)
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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: DR. BRR Kumar & Shri T. R. Senthil Kumar
Nathubhai Yusufji Kureshi Income Tax Officer Bihari Bag Gavadi Mukhya Ward-1 Vs Dakgar Gavadi, Deesa Modasa Dist. Banaskantha-385535 PAN: EIIPK0805F (Appellant) (Respondent) Assessee Represented: Shri Kunal Shangvi, A.R. Revenue Represented: Shri Rignesh Das, CIT-DR Date of hearing : 11-02-2026 Date of pronouncement : 25-02-2026 आदेश/ORDER PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER
This appeal is filed by the Assessee as against appellate order dated 24-12-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2018-19.
Brief facts of the case is that assessee is an individual engaged in the business of purchase and sale of buffaloes. However the assessee has not filed the Return of Income for the Asst. Year 2018-19. As per the information received with the department, the assessee made cash withdrawal of Rs.68,03,822/- from his current account maintained in Axis Bank Ltd. during the Financial Year 2017-18. Since no Return of Income filed by the assessee, show cause notice u/s. 148A(b) was issued, there was no response from the assessee. Hence order u/s. 148A(d) was passed on 30-03-2022 that the income amounting to Rs.68,03,822/- chargeable to tax has escaped assessment for the Asst. Year 2018-19, thereby notice u/s. 148 dated 30-03-2022 was issued to the assessee.
Thereafter notice u/s. 142(1) was issued calling for various details. The assessee partly submitted details and evidences. On verification of the sales register, the A.O. found majority of the sales effected by the assessee are two parties namely M/s. Mehfooz Agro Foods Pvt. Ltd. and M/s. Frigorifico Allana Pvt. Ltd. When summons u/s. 133(6) dated 08-02-2023 were issued to the above parties and calling for various details. They replied that raw buffalo carcass was supplied by the assessee and not living buffaloes. Since the business disclosed by the assessee is contradictory to the buyers submissions, the A.O. made addition of Rs.3,28,56,364/- being the credit entries in the Axis Bank Current account as unexplained money u/s. 69A r.w.s. 115BBE of the Act. Further in the absence of details of documentary evidences on freight charges amounting to Rs.7,20,900/-, the Ld. A.O. added the same as unexplained expenditure u/s. 69C of the Act. Thus the Ld. A.O. determined the total income of the assessee as Rs.3,35,77,264/- and demanded tax thereon.
Aggrieved against the reassessment order, assessee filed an appeal before Ld. CIT(A) wherein assessee invoked Rule 46A(3) of the Rules and submitted the following documents namely: 1. Specimen Additional Purchase voucher 2. Purchase Agreement and ID proof of the purchase 3. Image of the Business 4. Sale ledger 5. Ledger confirmation from the transporter 6. Additional documents for freight expense like Id Proof and vehicle report.
4.1. Ld. CIT(A) considered the submissions of the assessee and dismissed the appeal by observing as follows: “6.1 The appellant has failed to file the return of income for the A.Y. 2018-19 and remained largely non-compliant during the proceedings under sections 148A and 147 of the Act. Even during reassessment proceedings, the appellant did not furnish complete and verifiable details as called for by the Assessing Officer. The appellant could not substantiate the genuineness of the alleged business of purchase and sale of buffaloes with credible documentary evidence. 6.2 The Assessing Officer has rightly observed that the appellant failed to furnish complete particulars of buyers and sellers, such as addresses, PAN and confirmations, despite specific requisitions. Further, unsupported purchase vouchers, lack of confirmations for major purchases, and failure to furnish evidence relating to transportation, storage, and freight expenses clearly establish that the appellant has not discharged the onus cast upon him under the Act. In the absence of credible and verifiable evidence to substantiate the source and nature of substantial credit entries in the Axis Bank current Count, the Assessing Officer was justified in treating the total credits of 3,28,56,364/- as unexplained money under section 69A of the Act. Similarly, the disallowance of freight expenses of 7,20,900/- under section 69C is upheld due to lack of evidence to support that the vehicles have been used for appellant's business. In view of the above facts and circumstances, the additions and disallowances made by the Assessing Officer are confirmed. The grounds of appeal raised by the appellant are dismissed.”
Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal:
(1) The Ld. CIT(A), NFAC was grievously erred in upholding an addition of Rs.3,28,56,364/- u/s. 69A and Rs. 7,20,900/- u/s. 69C made by the Ld. A.O by dismissing the appeal is illegal and bad in law. [2] The Ld. CIT(A) has also mistaken to understand the appellant's business and the assessment is being opened with the reason on of cash withdrawals and making an addition of credit entries of Axis Bank Ac. amounting to Rs. 3,28.56.564- which is illegal and considering the credit entries without verification and also the debit entries and expenses [3] The appellant has submitted the cash book, bank book. Profit and Loss Ac., Balance Sheet which explains the business and sources of transaction but without verifying the same the Ld. A.O. has grievously erred in making the addition and applied the provision of section 115BBE which is incorrect. [4] The appellant has provided the details of freight expenses and without considering the same the Ld. CIT(A) has upheld the addition made by the Ld. A.O. as unexplained expenses u/s. 69C is incorrect. [5] The Ld. CIT(A), NFAC has also not considered that the Ld. A. O. National Faceless Assessment Centre has taxed under section 115BBE is wrong and not applicable to the real income. [6] The Ld. CIT(A), NFAC, was also erred in considering that the Ld. A. O. National Faceless Assessment Centre has grievously erred in levying the interest under various sections of 234 is not applicable to the appellant and likely to be deleted. [7] The appellant therefore requests your goodself to kindly delete the above mentioned additions/disallowance, looking to the merits of the case. [8] The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
6. Ld. Counsel for the assessee brought to our notice the type set of papers running to 254 pages, wherein additional submissions invoking Rule 46A invoked before Ld. CIT(A). However, Ld. CIT(A) without considering the above additional evidences passed the appellate order, thereby requested one more opportunity be given to the assessee to explain its case.
7. Ld. CIT-DR appearing for the Revenue has no serious objection in setting-aside the matter back to the file of assessing officer to consider the additional evidences.
8. Heard rival submissions and perused the materials available on record including the additional evidences submitted before Ld. CIT(A). From perusal of CIT(A)’s order, there is no mention or consideration of the additional documents filed by the assessee. Whereas assessee placed on record the additional documents along with the written submissions dated 13-01-2025 filed before Ld. CIT(A) which was not adjudicated by the Ld. CIT(A). Therefore in the interest of Principle of Natural Justice, we deem it fit to set-aside the mater back to the file of Jurisdictional Assessing Officer to look into the additional documents filed by the assessee by giving proper opportunity of hearing to the assessee and decide the case on merits and in accordance with the provisions of law.
In the result, the appeal filed by the Assessee is treated as allowed for statistical purpose.