Nikulbhai Chaturbhai Patel-HUF Vs NFAC (ITAT Ahmedabad)
Background: The core dispute concerns additions under section 68 of the Income Tax Act in respect of alleged unexplained credits in bank accounts of Nikulbhai Chaturbhai Patel-HUF for AY 2016-17. The assessee had declared total income of ₹4,19,220, incorporating all banking transactions in its books of accounts. However, reassessment proceedings were initiated under sections 147 and 144B based on information from the Income Tax Insight Portal regarding high-value non-cash transactions totaling ₹13.87 crore across six bank accounts allegedly linked to the assessee’s PAN. The Assessing Officer (AO) made additions treating these as unexplained credits.
Assessee’s Stand:
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The assessee contended that only two bank accounts were owned by the HUF; the remaining four accounts belonged to unrelated third parties.
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All transactions in the assessee’s bank accounts were recorded in books of account, supported by bank statements and confirmations.
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The AO failed to provide any breakup of the alleged ₹13.87 crore or verify which credits belonged to the assessee.
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The reassessment notice under section 148 was challenged as being beyond the four-year period and unsustainable in law, as no failure to disclose material facts was established.
CIT(A) Findings:
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CIT(A) noted that the assessee had evidence to substantiate that four of the six accounts were unrelated.
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The AO had not submitted a proper remand report or undertaken verification.
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CIT(A) allowed partial relief: deletion of additions relating to the four unrelated accounts, but directed AO to verify credits in the two accounts belonging to the assessee.
ITAT Findings:
