The Tribunal has the discretion to admit additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, if it is material to the adjudication of the issue and essential for rendering substantial justice, even if such evidence was not produced before the lower authorities.

ORDER

PER OM PRAKASH KANT, AM

This appeal preferred by the assessee is directed against the order dated 16.06.2025 passed by the learned Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi [in short ‘the ld. CIT(A)’], for assessment year 2015-16, raising following grounds of appeal:

“1. That on the facts and circumstances of the case, the Learned CIT(A), NFAC erred in sustaining the erroneous addition made by the Id. AO u/s 68 at Rs.3,25,03,449/- treating the amount of Rs.1,28,26,026/- outstanding against Creative Ferrous Industries Pvt Ltd and Rs.1,96,77,423/- owed to C.M. Metal & Alloys as non-genuine liability ignoring the fact that the liability is on account of current year's 'Purchases' and the said 'Purchases' accounted for in Audited Accounts and stands accepted by Id. A.O. after considering all evidences as to Purchase bills, Challans, Stock register, Corresponding 'Sales' details furnished by the appellant assessee and without appreciating the evidences filed such as identity, creditworthiness of creditors, and genuineness of transactions and also ignoring the fact that these 'Purchases' and 'Sales' were shown to MVAT department on real time basis in monthly Returns which stands accepted by them.

2. That the assessee had discharged the initial onus by furnishing PAN, duly executed account confirmations, purchase bills, stock register, acknowledgement of ITRs filed along with complete set of annual accounts of the creditors during the assessment proceedings.

3. That the show cause notices dated 18/09/2017, 03/10/2017 & 04/12/2017 issued during the assessment proceedings were issued to propose an addition u/s 41(1) due to cessation of liability, however the addition in the assessment order passed by the ld. AO and confirmed by the CIT(A), NFAC was made u/s 68 ignoring the submission made by asssessee without finding any fault therein, treating the outstanding creditors as unproved cash credit thereby violating the principles of natural justice and rendering the addition made in assessment order bad in law and without legal jurisdiction.

4. That the Id. CIT(A), NFAC failed to consider and accept the evidences filed by assessee discharging primary onus on issue raised in Show Cause Notices and considering issues which was never raised or are not relevant and adjudicating them, dismissed the appeal of assessee and without sharing the merits in addition made by the Id. A.O.”

Briefly stated, the facts of the case are that the assessee is engaged in the business of trading/wholesaling in ferrous and non-ferrous metals. The assessee filed its return of income on 12.09.2015 declaring total income of Rs. 7,83,900/-. The case was selected for scrutiny, inter alia, for verification of sundry creditors.

During the course of assessment proceedings, the Assessing Officer identified two creditors, namely (i) Creative Ferrous Industries Pvt. Ltd., and (ii) C.M. Metals & Alloys, for detailed verification. It was observed that substantial balances aggregating to Rs. 3,25,03,449/- were outstanding in the names of these parties, and no payments had been made thereto up to the date of scrutiny.

The Assessing Officer issued notices under Section 133(6) of the Act to both the aforesaid parties; however, the notices were returned unserved by the postal authorities with the remark “not known”. The assessee was confronted with this fact and was called upon to substantiate the genuineness of the transactions with the said creditors and to furnish confirmations from them. Despite such opportunity, no confirmations on the letterheads of the said parties were furnished.

The assessee was further required to explain the reasons for non-payment of such substantial outstanding liabilities and to produce supporting evidence. However, no cogent explanation or documentary evidence was placed on record. The Assessing Officer also noted discrepancies in the signatures appearing on various documents submitted in respect of th