2025 (7) TMI 1581 - AT - Income Tax

Applicability of faceless assessment - no draft assessment order u/s. 144B(1)(xii)(b) of the Act was passed by the A.O - HELD THAT - The above provisions is not applicable to the facts of the present case since the provisions of section 144B namely faceless assessment is not done in the case of the assessee. Whereas regular assessment was made by Deputy Commissioner of Income Tax Central Circle-1(2) Ahmedabad. Therefore the provisions of faceless assessment are not applicable the facts of the present case. Thus the grounds 1 2 raised by the assessee are devoid of merits and the same are liable to be dismissed. Unexplained receipt u/s. 69A - statement recorded during search/post-search proceedings - HELD THAT - The Coordinate Bench of this Tribunal 2025 (6) TMI 1201 - ITAT AHMEDABAD confirmed the deletion made by the Ld. CIT(A) as addition made in the hands of the assesse is hereby deleted it is pertinent to note that the statement of Shri Mayank Ashokbhai Khatri was not confronted to the assessee while recording the assessee s statement by the AO. Assessee during the assessment proceedings produced copy of ledger account from where the assessee demonstrated that the assessee has regular transactions of purchases from Zen Group and all the transactions of sales and purchase have been duly recorded in the regular books of accounts. While rejecting the books of account the Assessing Officer has not followed the basis given under provisions of Section 145(3) of the Income Tax Act 1961 but only rejected the said books on the ground that no record of cash sales viz. name of the party contract no. exact amounts were maintained by the assessee as DSR after making entries in tally software and the same was destroyed on daily basis. AO has not given any finding as to on what basis he has arrived on the said conclusion. Neither the purchase party i.e. the assessee or his family members nor the seller party had admitted in the statement recorded during the course of search action or post search action that the said seized was related to the assessee or his group concern regarding unaccounted purchase of tobacco or other products. Decided in favour of assessee. Addition on substantive basis and on protective basis on account of unexplained investment in stock - estimation of gross profit on unaccounted purchase - HELD THAT - There is no evidence related to unrecorded payment in cash to the Zen group by the assessee and the purchasers also not admitted having paid unaccounted cash for purchase of tobacco and other products. In the absence of necessary evidences the deletion made by the Ld. CIT(A) which is confirmed by the Co-ordinate Bench of this Tribunal 2025 (6) TMI 1201 - ITAT AHMEDABAD does not require any interference. Thus Ground Nos. 1 2 raised by the Revenue are devoid of merits and the same are liable to be dismissed.

Summary

ISSUES:

Whether additions on account of unaccounted receipts under section 69A of the Income Tax Act, 1961 are justified based on statements recorded during search and seizure proceedings.Whether additions on account of unaccounted/unexplained investment in stock under section 69 of the Act can be sustained when corresponding sales in the hands of the alleged seller are deleted.Whether additions on account of estimation of gross profit on unaccounted purchases are sustainable in absence of conclusive evidence linking seized documents to the assessee.Whether the assessment orders passed without issuance of draft assessment order under section 144B(1)(xii)(b) of the Act are valid when faceless assessment provisions are not applicable.Whether appellate authority erred in dismissing grounds of appeal without considering submissions or assuming jurisdiction.

RULINGS / HOLDINGS:

On unexplained receipts under section 69A: The addition of Rs. 37,29,300/- was upheld as justified since the statement recorded under section 132(4) of the Act indicated suppression of sales and no supporting evidence was furnished by the assessee to rebut the claim.On unaccounted/unexplained investment in stock under section 69: Additions were deleted by the appellate authority and upheld by the Tribunal because the corresponding sales in the hands of the alleged seller (M/s. Zen Industries Pvt. Ltd.) were deleted, and no evidence linked the seized documents to the assessee's transactions.On estimation of gross profit additions: Such additions were deleted following the deletion of alleged unaccounted purchases, as the seized documents lacked vital details (e.g., name of appellant, quantity, rate, delivery details) and no nexus was established between the cash sales and the assessee.On validity of assessment without draft order under section 144B(1)(xii)(b): The Tribunal held that the provisions of faceless assessment under section 144B are not applicable as the assessment was conducted by a regular assessing officer, thus the absence of draft order did not invalidate the assessment.On dismissal of grounds without consideration: The grounds alleging denial of jurisdiction and non-consideration of submissions were dismissed as devoid of merit since the appellate orders were reasoned and jurisdiction was validly assumed.

RATIONALE:

The Tribunal applied provisions of the Income Tax Act, 1961, specifically sections 69, 69A, 131, 132, 143(3), 147, and 144B(1)(xii)(b), alongside evidentiary standards from search and seizure operations.The principle that additions on account of unaccounted purchases cannot be sustained if corresponding sales are deleted was followed, relying on the absence of corroborative evidence linking seized documents to the assessee.The Tribunal respected coordinate bench decisions and appellate orders deleting additions where the evidentiary nexus was not established, reflecting a consistent doctrinal approach to unaccounted income and investment issues.The Tribunal clarified that faceless assessment provisions under section 144B do not apply to assessments conducted by regular assessing officers, thereby rejecting procedural invalidity claims based on non-issuance of draft orders under that section.No dissenting or concurring opinions were recorded; the Tribunal's approach reflects adherence to established legal principles and procedural fairness in assessment and appellate proceedings.