IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER &

SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील स.ं /ITA No.1266/SRT/2024 Assessment Year: 2016-17 (Hybrid hearing)

Vimalkumar Vajubhai Assistant Commissioner of Katrodiya बनाम/ Income-tax,Circle-2(2), Surat, 90, Mamta Park Society, Vs. Aayakar Bhawan, Majura Gate-

Spinning Mill Kapodara, 395 001 Varachha Road, Surat-395

006 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AQIPK 2458 C (अपीलाथ५/Appellant) (ঋ(cid:529)थ५ /Respondent)

िनधा१ौरती की ओर से /Appellant by Shri Kamlesh Bhatt, CA राज(cid:738) की ओर से /Respondent by Shri Aashish Pophare, CIT-DR सुनवाई की तारीख/Date of Hearing 08/07/2025 उद्घोषणा की तारीख/Date of Pronouncement 26/09/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM:

This appeal by the assessee emanates from order passed under section

250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 17.10.2024 by the National Faceless Appeal Centre, Delhi/ Commissioner of Income-tax (Appeals), [in short, “NFAC/CIT(A)”] for assessment year (AY) 2016- 17, which in turn assessment order passed by Assessing Officer (in short, “AO”)

u/s 144 of the Act on 29.11.2018.

2. The ground of appeal raised by the assessee is as under:

1. In view of the facts and circumstances of the case the Ld. AO erred in making the addition of Rs.10,09,16,505/- u/s 68 and disallowing the sum of Rs.23,47,810 as alleged interest expenses and Hon’ble CIT(A)/NFAC, New Delhi erred in law and in facts, in dismissing the appeal and hence your appellant Prays that both the orders being unfair, illegal and in total disregard of the facts, be quashed.”

3. Facts of the case in brief are that the assessee filed his return of income for the assessment year 2016-17 declaring income of Rs.19,28,660/-. The case was selected for limited scrutiny under CASS. Thereafter, notice u/s 143(2) of the Act was issued and served upon the assessee but there was no compliance. Again, notices u/s 142(1) were issued; however, assessee did not comply with the said notices. The issues to be examined during scrutiny proceedings were: (i) whether income from real estate business was correctly offered to tax, (ii) whether sundry creditors were genuine and (iii) whether the interest expense was admissible or not. The AO has observed that the assessee had submitted only partial information in response to notice u/s 142(1) though it was asked to specifically provide details of sundry creditors. The assessee only submitted list of sundry creditors without address and in some cases, even PANs were also not given. The amount of sundry creditors was Rs.10,09,16,505/-. In absence of reply from the assessee, the nature and source of the credit remained unexplained. The assessee failed to establish the identity of the creditors, genuineness of the transactions and the capacity of the persons to give the credit. Hence, relying on the decision in cases of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112, 117 (SC), Shanker Industries vs. CIT (1978) 114 ITR 681 (Cal) and Oriental Wires Industries Pvt. Ltd. vs. CIT (1981) 131 ITR 688 (Cal), the AO added Rs.10,09,16,505/- u/s 68 of the Act. The AO also added interest expense of Rs.23,47,810/- in absence of reply from the assessee. Thus, the total income was assessed u/s 144 of the Act at Rs.10,51,92,975/- as against returned income of Rs.19,28,660/-. Aggrieved by the addition made by the AO, assessee preferred appeal before CIT(A).

4. The CIT(A) issued as many as eight notices; however, there was no compliance to any notices. The CIT(A) had directed compliance on various dates starting from 25.01.2021 to 15.10.2024. The assessee sought adjournment on the dates of hearing fixed on 04.05.2023, 30.05.2023 and 01.12.2023. The request was accepted and case was re-fixed for hearing on 30.05.2023, 08.08.2023 and 12.07.2024, but there was no compliance. The CIT(A) also allowed further opportunity on 15.10.2024. However, the assessee did not comply