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Judgment
PER MANISH AGARWAL, A.M.:
The present appeal is filed by assessee against the order dated 20.01.2026 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2022-23/10483724 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 29.12.2018 passed u/s 143(3) r.w.s. 153A(1)(b) of the Act pertaining to Assessment Year 2016-17.
Brief facts of the case are that a search and seizure action u/s 132 was carried out on M/s. Garg Group of cases, Panipat and residential premises of its directors on 22.06.2016. The assessee is one of the concerns and was also covered u/s 132 of the Act. The original return of income was filed u/s 139(1) of the Act on 21.09.2016, declaring loss of INR 17,64,932/-. The assessee company was a partnership firm, engaged in the business of manufacturing textile fibers from cotton waste/rags and trading of cotton waste/rags. The notice u/s 153A of the Act was issued on 10.01.2018 and in response to the same, the assessee filed return of income, declaring same income as was declared in the return of income filed u/s 139(1) of the Act. Thereafter, statutory notices were issued and they were duly replied to by the assessee. The AO observed that out of the loose papers, found and seized, marked as AnnexureA-1 seized from Khata No.5, Village-Balana, Panipat contained detail of purchase of machinery parts and others material through delivery challans and some bills and assessee was asked to explain these documents w.r.t. entries in the regular books of accounts, mode and source of payments during the course of post-search proceedings. The assessee has made payment of INR 183826/- and as per the AO, the assessee has failed to explain the same. The claim of the assessee was that it was recorded under the head repair and maintenance in the regular books of accounts however, the AO does not find any such entry and made the addition which was confirmed by ld. CIT(A). Aggrieved by the said order, the present appeal is filed by the assessee before the Tribunal.
Ground of appeal No.3 is with respect to the approval granted u/s 153D which is not pressed hence, dismissed.
The remaining Grounds of appeal Nos. 1, 2 & 4 are with respect to the confirmation of addition of INR 1,83,826/- thus, all are taken together for consideration.
Heard the contentions of both parties at length and perused the material available on record. The AO observed that during the course of search certain bills and challans were found and seized marked as Annexure A-1 placed at pages 39, 40, 42, 47, 48 and 51 of the Paper Book, which as per AO, were unexplained expenditure incurred by the assessee. These bills also include the bill issued by M/s S-Tex Enterprises. It was the claim of the assessee that these are duly recorded in the books of accounts maintained in the regular course and the payments were made through banking channel. The assessee submits necessary copies of the ledger accounts etc. before the AO however, AO has failed to verify the same and observed that these are not appearing in the books of accounts. On the verification of the facts and from the perusal of page 7 of Paper Book which is ledger account of “repair and maintenance”, it is observed that an entry of INR 1,52,600/- of bill No.1044 was made on 22.03.2016. The total bill amount of INR 1,60,506/- which is inclusive of VAT and assessee has taken VAT to a separate account. Further, page 9 is the ledger account of S-Tex Enterprises where total amount of INR 1,60,506/- was entered which was cleared through banking channel on 23.03.2016 for which the copy of bank statements was also filed wherein on 25.03.2015, this payment is appearing. Thus, it cannot be held that bills of INR 1,83,826/- are not recorded in the ledger account of “repair and maintenance” which includes bill issued by M/s S-Tex Enterprises for INR 1,60,506/- marked as Annexure A-1 placed at page 48 of PB. Considering these facts, we find no reason for making/confirming the said addition. Accordingly, the same is hereby deleted. The Grounds of appeal Nos. 1, 2 & 4 raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.