ITO., WARD-9(1), HYDERABAD V. MANISHA DIXIT, VANASTHALIPURAM

ITA 735/HYD/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), which had deleted an addition of Rs.7,00,52,477 made by the Learned Assessing Officer under Section 69C of the Income Tax Act, 1961. The addition was initially made due to the assessee's failure to provide sufficient evidence to substantiate the genuineness of purchases from thirteen parties. The Tribunal found that the Learned Commissioner of Income Tax (Appeals) had not adequately verified the documents for all parties and had erroneously presumed the documents for the remaining parties were in order based on the verification of one party's documents. The Tribunal also noted the absence of a remand report from the Learned Assessing Officer and the failure of the assessee to provide basic documents during the assessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792200 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2021-2022
• Appeal Filed On: 28-04-2025
• Other Referred Cases: Rajendra Shangari vs. DCIT, ITA No.266/RAN/2023 for A.Y. 2018-19 dated 15.07.2025
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR NAIK
• Assessee Lawyers: RAMA MURTHY T
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Unexplained expenditure
• Section: 143(3); 69C

Judgement Text

" ITA No 735 of 2025 Manisha Dixit Page 1 of 7 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-B ‘ Bench, Hyderabad ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.735/Hyd/2025 (िनधाŊरण वषŊ/Assessment Year: 2021-22) Income Tax Officer Ward 9 (1) Hyderabad Vs. Smt. Manisha Dixit Vanasthalipuram Hyderabad PAN:BHCPD9831L (Appellant) (Respondent) राज̾ व Ȫारा/Revenue by : Dr. Narendra Kumar Naik, CIT (DR) िनधाŊįरती Ȫारा/Assessee by: Shri Rama Murthy T, CA सुनवाई की तारीख/Date of hearing: 02/12/2025 घोषणा की तारीख/Pronouncement: 05/12/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by the Revenue, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 24.02.2025 for the A.Y.2021-22. 2. The Revenue has raised the following grounds of appeal: Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 2 of 7 “1. The learned CIT(A) erred to appreciate that an isolated test check verification will not make good the genuineness of other purchases made unless proved. 2. The learned CIT(A) erred in deleting the addition towards purchases when the information produced by the assessee was not subjected to any third-party confirmation/verification. 3. The learned CIT(A) failed to appreciate that the AO has brought on record that the assessee has made purchases with parties who are having \"inactive\" GST registration. 4. The learned CIT(A) failed to appreciate that appeal was disposed of without having an option to examine the \"remand report\" in view timelines to dispose the appeal. 5. Any other ground that may be urged at the time of appeal hearing.” 3. The brief facts of the case are that the assessee is the proprietor of Sri Malikarjuna Steels, engaged in the trading of ferrous and non-ferrous scrap. The assessee filed its return of income for the assessment year 2021-22 on 31.01.2022 declaring a total income of Rs.15,02,320/-. The case of the assessee was selected for scrutiny under CASS and accordingly notice under Section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) on 28.06.2022. During the assessment proceedings, the Ld. AO called for details relating to purchases aggregating to Rs.7,00,52,477/- from thirteen parties. As the assessee could not furnish certain evidences, the Ld. AO treated the said purchases as unexplained expenditure under Section 69C of the Act and disallowed the same. The assessment of the assessee was completed under Section 143(3) r.w.s. 144B of the Act on 28.12.2022 determining the total income at Rs.7,15,54,797/-. Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 3 of 7 4. Aggrieved with the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed additional evidences under Rule 46A of the Income Tax Rules, 1962 (“the Rules”), which were admitted by the Ld. CIT (A). The Ld. CIT(A) thereafter called for a remand report from the Ld. AO. However, the Ld. AO did not submit any remand report. The Ld. CIT(A), on his own verification, examined the documents relating to only one party, Peermohd Farheen Anjum, found them in order, and on that basis presumed that the documents pertaining to the remaining twelve parties were also in order. He thus deleted the entire addition of Rs.7,00,52,477/-. 5. Aggrieved with the order of the Ld. CIT (A), the Revenue is in appeal before us. At the outset, the Learned Departmental Representative (“Ld. DR”) submitted that the sole dispute arising out of the grounds raised by the Revenue pertains to the deletion of the addition made under Section 69C of the Act of Rs.7,00,52,477/- on account of purchases from 13 parties. The Ld. DR submitted that although it is a fact that the Ld. AO did not furnish any remand report before the Ld. CIT(A), it is equally a fact that the assessee failed to furnish several basic documents before the Ld. AO during the assessment proceedings. Inviting our attention to page no. 9 of the assessment order, the Ld. DR submitted that the Ld. AO had specifically called for the ledger accounts as appearing in the books of the assessee for the financial year 2020-21, copy of bills issued for the purchases, transportation memos and details of the mode of payment. The Ld. DR further submitted that the Ld. AO had also called upon the assessee to clarify whether the payments were made through bank Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 4 of 7 or by cash and, in the event of bank payments, to furnish bank statements indicating the dates of such payments. These documents were necessary for the Ld. AO to satisfy himself whether the payments had been duly recorded in the books of account. However, the assessee failed to furnish the said documents, thereby preventing the Ld. AO from verifying the source of payments for the purchases. The Ld. DR argued that purchase bills and details of payment are the most fundamental pieces of evidence to prove genuineness of purchases, and in the absence of such material, the Ld. AO was compelled to make the addition. The Ld. DR also submitted that although the assessee furnished documents before the Ld. CIT(A) and the same were admitted under Rule 46A of the Rules, the Ld. CIT(A) was duty- bound to verify all the documents relating to all thirteen parties. Instead, the Ld. CIT(A) verified only one party’s documents and presumed that the rest were in order. Such an assumption, without verification, according to the Ld. DR, is legally untenable. Accordingly, the Ld. DR prayed for the matter to be remanded to the file of the Ld. AO for proper verification. 6. Per contra, the Learned Authorized Representative (“Ld. AR”) submitted that all relevant documents were filed before the Ld. CIT(A), and the same have now been furnished before the Tribunal placed at page nos. 1 to 668 of the paper book. He submitted that after considering all the documents, the Ld. CIT(A) recorded satisfaction and deleted the addition. The Ld. AR alternatively submitted that since the Ld. AO had accepted the books of account without rejecting them, the addition made towards purchases is not sustainable under law. In support of Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 5 of 7 this, the Ld. AR relied on the judgment of the coordinate bench of the ITAT in the case of Rajendra Shangari vs. DCIT, ITA No.266/RAN/2023 for A.Y. 2018-19 dated 15.07.2025. 7. In rejoinder, the Ld. DR submitted that the assessee failed to furnish even the basic evidences before the Ld. AO, including purchase bills, transportation memos, and documentary proof of payment. Accordingly, there is no infirmity in the order of the Ld. AO in making the addition of entire purchases of Rs.7,00,52,477/-. 8. We have carefully considered the rival submissions and examined the material available on record. In this regard, we have gone through the relevant portion of page no. 9 of the order of the Ld. AO, which is to the following effect: 9. On perusal of above, we find that the Ld. AO had specifically called for the ledger accounts as appearing in the books of the assessee for the financial year 2020-21, copy of bills issued for the purchases and transportation memos. The Ld. AO Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 6 of 7 had also called for the details regarding the mode of payment, whether through bank or by cash, and in case of bank payments, copies of the bank account statements indicating the dates of payment. These details were essential for the Ld. AO to verify whether the payments were duly recorded in the books of account. However, in the absence of such documents, the Ld. AO was unable to verify the source of payments for the purchases. The above aspect clearly establishes that the Ld. AO did not have the benefit of examining crucial evidence directly linked with the genuineness of purchases. We also find that although the Ld. CIT(A) admitted additional evidence under Rule 46A of the Rules, he examined only the documents relating to one party and presumed that the documents for the remaining parties were also in order. Such a presumption cannot substitute for actual verification. Further, the Ld. AO had not furnished any remand report despite being called upon. In these circumstances, verification of evidences is incomplete. We also note that the decision relied on by the assessee is distinguishable on facts and does not apply to the present case. Therefore, in the interest of justice, we deem it appropriate to restore the matter to the file of the Ld. AO for de novo verification of all evidences pertaining to all thirteen parties, including purchase bills, transportation memos, ledger accounts, payment proofs and bank statements. The Ld. AO shall examine the documents furnished by the assessee and thereafter pass a speaking order in accordance with law after providing adequate opportunity of being heard. In view of the above, the order of the Ld. CIT(A) is set aside and the matter is restored to the file of the Ld. AO for fresh adjudication. Printed from counselvise.com ITA No 735 of 2025 Manisha Dixit Page 7 of 7 10. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the Open Court on 5th December 2025. Sd/- Sd/- (RAVISH SOOD) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 5th December 2025 Vinodan/sps Copy to: S.No Addresses 1 Income Tax Officer Ward 9(1) 2nd Floor, D Block, AC Guards, Masab Tank, Hyderabad 500004 2 Smt. Manisha Dixit, Plot No.285, High Court Colony, Vanasthalipuram, Hyderabad 500070 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com "