HARDIK DHIRUBHAI MALAVIYA,AHMEDABAD V. THE ITO, WARD-6(1)(1), AHMEDABAD

ITA 295/AHD/2025

AI Insights

The case involves Hardik Dhirubhai Malaviya, the proprietor of Maruti Petroleum, who appealed against the order of the National Faceless Appeal Centre (CIT(A)) which confirmed the addition of Rs.53,49,521 to his income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer due to a discrepancy between the purchases recorded by the assessee and the sales confirmed by M/s. Essar Oil Limited. The assessee argued that the discrepancy was due to the separate accounting of VAT, which was not included in the Profit & Loss Account but taken directly to the Balance Sheet. The Tribunal found merit in giving the assessee another opportunity to explain the discrepancy with supporting evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315727 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: ANIL BRAHMAKSHATRIYA
• Keywords: Set aside; Additional evidence; Unexplained expenditure
• Section: 143(3); 133(6); 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No.295/Ahd/2025 Assessment Year: 2017-18 Hardik Dhirubhai Malaviya, (Prop. of Maruti Petroleum), 74/582, Gujarat Housing Board, Nr. Ahirwadi, Kalapi Nagar, Asarva, Ahmedabad – 380 016. [PAN – AKDPM 9338 A] Vs. Income Tax Officer, Ward – 6(1)(1), Ahmedabad, Aaykar Bhavan (Vejalpur), Nr. Sachin Tower, Anandnagar, Prahlad Nagar Road, Satellite, Ahmedabad – 380 015. (Appellant) (Respondent) Assessee by Shri Anil Brahmakshatriya, AR Revenue by Shri B.P. Srivastava, Sr. DR Date of Hearing 01.05.2025 Date of Pronouncement 15.05.2025 O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of National Faceless Appeal Centre (in short ‘the CIT(A)’) dated 20.12.2024 for the Assessment Year (A.Y.) 2017-18 2. The brief facts of the case are that the assessee is doing business of retail selling of petrol and diesel in the name of his proprietorship concern M/s. Maruti Petroleum. The assessee had filed his return of income for the A.Y. 2017-18 on 30.10.2017 declaring total income of Rs.4,31,560/-. The case was selected for complete scrutiny under CASS. In the course of assessment, the Assessing Officer found that the ITA No.295/Ahd/2025 (Assessment Year: 2017-18) Hardik Dhirubhai Malaviya vs. ITO Page 2 of 5 assessee had shown purchase of Rs.1,72,65,411/- which was made from M/s. Essar Oil Limited. The Assessing Officer had made enquiry from M/s. Essar Oil Limited by issue of notice under Section 133(6) of the Income Tax Act, 1961 (hereinafter ‘the Act’) and M/s. Essar Oil Limited had confirmed sales of Rs.2,25,22,926/- to the assessee. Thus, there was difference of Rs.52,57,515/- in the purchases as disclosed by the assessee. Since the assessee was unable to reconcile this difference, the Assessing Officer held that the purchase to the extent of Rs.52,57,515/- was made outside the books of account. Accordingly, the entire difference of Rs.52,57,515/- in purchase was considered as unexplained expenditure of the assessee. Further, the Assessing Officer applied GP rate of 1.75% on these unaccounted purchases and made addition of Rs.92,006/- on account of income derived thereon. Thus, total addition of Rs.53,49,521/- was made in respect of unaccounted purchases and income derived therefrom. The assessment was completed under Section 143(3) on 30.12.2019 at a total income of Rs.57,81,371/-. 3. Aggrieved with the order of the Assessing Officer the assessee had filed an appeal before the First Appellate Authority which was decided by the CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Now the assessee is in second appal before us. The following grounds have been taken in this appeal: - “1. The Learned Commissioner of Income Tax (A) NFAC Delhi was wrong in confirming the order of the Assessing Officer holding that the sum of Rs.52.57,515/- as a Different in Purchase account with assessee’s books and Essar Oil Ltd books. ITA No.295/Ahd/2025 (Assessment Year: 2017-18) Hardik Dhirubhai Malaviya vs. ITO Page 3 of 5 2. The Learned Commissioner of Income Tax (A) NFAC Delhi was wrong in confirming the addition of Rs.92,006/- gross profit consider at the rate of 1.75% on Purchase of Rs.52,57,515/- by assessing officer. 3. The assessment is made bad in law, invalid and illegal. It is so held now and the same be quashed. 4. Direction to charge interest under Section 234B and 234C without application of mind is unjustified. It is so held now. 5. The Appellant craves to add alter or amend the grounds of Appeal on or before the final hearing of the Appeal.” 5. Shri Tej Shah, Ld. AR of the assessee submitted that the difference of Rs.52,57,515/- in the purchase account was duly explained before the Ld. CIT(A) vide online submission made on 29.01.2021. He explained that the assessee had prepared Profit & Loss Account without considering VAT component in purchases and sales and that the difference of Rs.52,57,515/- was on account of VAT which was directly taken to Balance Sheet. In support thereof, he has filed copy of VAT return for the period from Sept 2016 to March 2017 and clarified that the assessee had purchased the petrol pump in the month of June 2016 only. The Ld. AR further submitted that the Ld. CIT(A) had not correctly appreciated the explanation of the assessee and, therefore, the assessee may be allowed another opportunity to explain the difference in the purchase account. 6. Per contra, Shri B. P. Srivastava, Ld. Sr DR submitted that no explanation was filed by the assessee before the Assessing Officer to explain the difference in the purchase account. He further submitted that the explanation filed before the Ld. CIT(A) was not supported with any documentary evidence. He, however, had no objection if the matter was set aside to allow another opportunity to the assessee to explain the difference. ITA No.295/Ahd/2025 (Assessment Year: 2017-18) Hardik Dhirubhai Malaviya vs. ITO Page 4 of 5 7. We have carefully considered the rival submissions. There is no dispute to the fact that M/s Essar Oil Limited had shown sales of Rs 2,25,22,926/- made to the assessee, while the assessee had disclosed purchase of Rs.1,72,65,411/- only in his Profit & Loss Account. The difference of Rs.52,57,515/- in the purchase account was not explained before the Assessing Officer. The assessee had, however, submitted before the Ld. CIT(A) that this difference was due to separate accounting of VAT component, which was not taken into Profit & Loss Account. The Ld. CIT(A) had rejected the explanation of the assessee for the reason that no evidence in this regard was brought on record before him. The assessee has now filed copy of ledger account of M/s. Essar Oil Limited, purchase register, copy of VAT returns and statement of reconciliation etc., which are fresh evidences and were not filed before the lower authorities. In the interest of justice, we, therefore, deem it proper to set aside the matter to the file of the jurisdictional Assessing Officer to allow another opportunity to the assessee to reconcile the difference in the purchases. Accordingly, the Assessing Officer is directed to allow another opportunity to the assessee to reconcile the difference of Rs.52,57,515/- in the purchase account. The assessee is also directed to comply before the Assessing Officer and not to seek adjournment, without any pressing reason. The assessee will be free to file the additional evidences brought on record before us or any other evidence before the Assessing Officer in order to reconcile the difference in the purchases. ITA No.295/Ahd/2025 (Assessment Year: 2017-18) Hardik Dhirubhai Malaviya vs. ITO Page 5 of 5 8. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on this 15th May, 2025. Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Ahmedabad, the 15th May, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPYE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "