Prakash Palgota Vs DCIT (ITAT Bangalore)
Summary: The assessee, proprietor of Icon Fashion and engaged in the wholesale trade of readymade garments, challenged the assessment for AY 2022–23 in which the Assessing Officer made an addition of ₹89,00,638 under section 69C based on search material found in the case of supplier J. M. Jain LLP, where entries under the name “Kalyan Creations, Hubli” carried the assessee’s PAN and were treated as unaccounted purchases. The assessee contended that its purchases were recorded in its books and that there was no independent evidence establishing delivery of goods, payment of money or the alleged transactions, while the Department relied on SAP data and statements of persons connected with the supplier. The Tribunal noted that the material relied upon against the assessee principally consisted of the PAN mentioned against “Kalyan Creations, Hubli”, and that the assessee had not been given an opportunity to cross-examine the partners of J. M. Jain LLP or confronted with corroborative material establishing the alleged unaccounted sales. Following the coordinate Bench decision in Mr. Vikas Kumar, ITA No. 212/Visakhapatnam/2025 for AY 2022–23, dated 25 July 2025, the Tribunal held the ₹89,00,638 addition unsustainable and directed its deletion; the proposed application of section 115BBE consequently could not survive. The Tribunal also considered the ₹1,43,066 disallowance under section 40(a)(ia) relating to interest payments of ₹4,76,888 and found that the assessee had obtained Form 15G from the concerned recipients; accordingly, the disallowance for alleged non-deduction under section 194A was deleted. Grounds 1 to 4 and 12 were dismissed as general or premature, grounds 6 to 11 were allowed, ground 5 was allowed, and the assessee’s appeal was partly allowed.
