GAURAV GUPTA,JALAUN vs. ITO,WARD 2(1)(5), ORAI

The assessee has filed this appeal against the order of the learned

Commissioner of Income-tax (Appeals), National Faceless Appeal Centre(NFAC), Delhi dated 28.05.2025 for the Assessment Year 2013-14.

ITA No.354/Agr/2025

beneficiaries. On the basis of statement recorded from Smt. Amita Gupta,

Prop. M/s. Gauri Traders and Shri Santiosh Kumar Gupta, Shri Prateek

Omer S/o Smt. Sudha Gupta, Prop M/s. PCS Traders, the Assessing

Officer observed that they provide accommodation entries in the garb of

commodity trading and issue fake bills and cheques to its clients in lieu of

cash. Assessing Officer observed that the assessee is one of the

beneficiaries, who has received accommodation entries from PCS traders

to the extent of Rs.3,01,155/-. Accordingly, based on the above reasons

recorded and obtained approval from the competent authority, notice u/s.

148 was issued and served upon the assessee. Assessee filed its return of

income in response to the above notice. Accordingly, notice u/s. 143(2) was

issued and served on the assessee. In response, the assessee submitted

that it is in the business of cloth trading and commodity trading business

and declared Rs.55,082/- and Rs.3,00,000/- respectively. The assessee

submitted that the assessee has declared the above said amount in its

books of account, which was received by the assessee through his bank

account. Since the assessee is not maintaining books of account, the

assessee has declared the above said amount u/s. 44AE of the Act and

also declared other business income @ 8%. The Assessing Officer

observed that the above said income was declared u/s. 44AE of the Act,

whereas it is applicable for the business of plying, hiring and leasing of 2 | P a g e

ITA No.354/Agr/2025

goods carriages and not for commodity trading. Accordingly, the

explanation given by the assessee is dismissed and addition was made to

the income of the assessee.

Aggrieved with the above order, assessee preferred appeal before

NFAC, Delhi and filed a detailed submission. After considering the detailed

submission of the assessee, learned CIT(Appeals) observed that the case

of assessee was reopened for the purpose of verification of

accommodation entries. However, Assessing Officer has rejected the

submissions of the assessee on the basis that the assessee has declared

above income u/s. 44AE of the Act instead of section 44AD of the Act. He

observed that the assessee has not submitted any evidence to show that

the assessee has transacted with PCS traders. Since he failed to explain

the above transaction from commodity trading, which assessee has already

declared in the return of income, in the absence of contract note, ledger

account, it cannot be said that the amount disclosed in the return of income

is the same amount. In absence of relevant documents and details of the

transactions, he proceeded to sustain the addition made by the Assessing

Officer.

Aggrieved, the assessee is in appeal before ITAT, raising following

grounds :

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“01. The Assessment order passed by the Assessing Officer and upheld by the CIT(A) is illegal, unlawful and against the principle of natural justice. 02. THAT the AO has arbitrarily in adding income of Rs.3,00,000/- on making the profit u/s.44AE from business of plying, hiring and leasing of goods carriages, the CIT(A)/NFAC has also upheld the same, which is bad in law and contrary to the provisions of law be quashed. 03. THAT, the CIT(A)/NFAC as well as AO has failed to appreciate that the assessee has also shown the income of Rs.3,00,000/- in his return and computation of income, the addition of Rs.3,00,000/- made by the AO and upheld by the CIT(A)/NFAC is contrary to facts, bad in law be quashed. 04. THAT, the AO as well as CIT(A) without appreciation of the fact has added the amount of Rs.3,00,000/-u/s.44AE, whereas the fact that the said profit are from commodity of business, which has already shown in the income tax return and computation of income, hence action of AO are contrary to fact, bad in law be deleted.” None is present on behalf of the assessee. Considered the material

available on record.

I observe that the case of the assessee was reopened on the basis of

information from investigation wing that the assessee has acquired

accommodation entries of commodity trading. I observe from the record

that the assessee has declared the above said transactions in his return of

income u/s. 44AE of the Act and other income u/s. 44AD of the Act. It is not

clear from the orders of the lower authorities that the assessee has

transacted more than the transactions declared by the assessee on

presumptive basis. The Assessing Officer has made the addition on the

basis of declaration of income under wrong section and learned

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ITA No.354/Agr/2025

CIT(Appeals) has sustained the addition with the observation that the

assessee has already declared the income. However, the alleged

transaction is not traceable from the income declared by the assessee. I

observe that the assessee has declared both income, which was earned by

the assessee in his books of account. The lower authorities have not

investigated properly whether the information received from investigation

wing is for the same income, which the assessee has already declared in

the books of account or not. Merely because the information was received

from investigation wing, they cannot presume that the assessee has not

declared the same in his return of income. Therefore, I am inclined to delete

the above said addition for the improper verification made by the lower

authorities and failed to substantiate their claim

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 19.12.2025 Sd/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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