Hitesh Bhikhubhai Desai Vs ITO (ITAT Surat)
The appeal before the Income Tax Appellate Tribunal (ITAT), Surat, arose from an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] dated 26-08-2025 for Assessment Year 2019–20.
The assessee, an individual, had originally filed a return of income on 17-09-2019. The assessment was subsequently reopened based on information that certain entities, including M/s. Classic Industries and its partner, were allegedly involved in providing bogus purchase and sale bills. The assessee was identified as a beneficiary, having reported sales amounting to Rs. 21,82,940/- to M/s. Blue Moon Textiles, an entity linked to the alleged operator.
During reassessment proceedings initiated under section 148, the assessee filed a return declaring income of Rs. 3,26,430/- and submitted supporting documents including ledgers, invoices, and bank transaction details. However, the Assessing Officer (AO) observed deficiencies such as lack of evidence of transportation, absence of delivery proof, and missing recipient signatures on invoices. Based on these observations, the AO treated the transactions as non-genuine and made additions of Rs. 21,82,940/- under section 68 (unexplained credit) and Rs. 21,829/- under section 69C (unexplained expenditure), also invoking section 115BBE.
The CIT(A) upheld these additions, leading the assessee to file an appeal before the Tribunal. The assessee argued that all relevant documents were provided, and merely treating transactions as bogus without concrete evidence was unjustified. It was further contended that since the return was filed under section 44AD (presumptive taxation), maintenance of books of account was not mandatory, and therefore section 68 could not be invoked. Additionally, the estimated commission addition under section 69C was claimed to be unsupported by evidence.
