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Facts
The assessee's return declared Nil income. The AO added Rs. 5,26,89,500/- to the total income under section 69C of the Act, treating fixed assets as unexplained investment due to lack of details. The CIT(A) upheld this addition.
Held
The Tribunal noted that the assessee has now furnished invoices/bills for additions to fixed assets. In the interest of justice, the issue was restored to the CIT(A) for de novo adjudication after examining the fresh evidence and affording an opportunity of hearing.
Key Issues
Whether the addition of Rs. 5,26,89,500/- under section 69C as unexplained investment was justified, and if the assessee was denied a proper opportunity of hearing.
Sections Cited
69C, 250, 143(2), 142(1), 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 25/03/2026 Date of Order – 27/03/2026
O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 25/06/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2022-23.
In this appeal, the assessee has raised the following grounds: – “1) Ground No. 1; Violation of Natural Justice On facts and circumstances, Ld. CIT(A) has erred in passing the order without providing proper opportunity of hearing to the appellant. Said additions
confirmed are bad in law and liable to be deleted as order is passed without opportunity of being heard and violating the principles of natural justice. 2) Ground No. 2: Addition of Rs. 5,26,89,500/- u/s 69C On facts and circumstances, Ld. CIT(A) has erred in confirming the addition made by AO of Rs. 5,26,89,500/-u/s 69C contending that addition made to fixed assets are not suitably explained. Such addition is made on account that purchases made by the appellant remains unexplained. Said addition is bad in law and erroneous in facts and liable to be deleted.”
The solitary grievance of the assessee is against the addition of INR 5,26,89,500 under section 69C of the Act.
We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an individual, and for the year under consideration, filed its return of income on 11/10/2022, declaring a total income of INR Nil, and claimed current year business loss of INR 1,84,94,271. The assessee was engaged in the business of manufacturing wristbands and grippers, and trading in pocketing, suiting, lining, garment accessories, RDF luggage bags, and travel bags. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. Vide notice dated 11/03/2024 issued under section 142(1) of the Act, the assessee, inter alia, was asked to submit the invoices of INR 5,26,89,503 of addition made in fixed assets along with their nature and purpose. In response to the said notice, the assessee sought an adjournment and the same was granted till 18/03/2024. However, on the said date, no response was filed by the assessee, and the matter was adjourned again. Since the assessment was getting time-barred, the Assessing Officer (“AO”) proceeded to pass the assessment order. The AO noted from Form 3CD that (A.Y. 2022-23) the assessee company has acquired fixed assets worth INR 5,26,89,500 under the head “Factory Building”, but has not provided any details regarding the additions to assets. In response to the show cause notice dated 19/03/2024, the assessee submitted that an addition of INR 1,73,36,422.40 to the fixed assets was made during the year, with an opening balance of INR 5,22,56,134.97. However, the AO, in the absence of any invoice for purchases of assets made during the year, treated the entire amount of fixed assets of INR 5,26,89,500 as unexplained and added the same to the total income of the assessee under section 69C of the Act, vide order dated 28/03/2024 passed under section 143(3) read with section 144B of the Act.
The learned CIT(A), vide impugned order, after noting the fact that the assessee has merely filed a written submission without having furnished even a single invoice or bill of any asset purchased by him during the year, upheld the addition made by the AO under section 69C of the Act. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee was not granted sufficient opportunity during the assessment proceedings to furnish the required details as per the notice seeking details regarding the addition to the fixed assets, which was issued on 11/03/2024, while the assessment order itself was passed on 28/03/2024. Thus, the learned AR submitted that before the assessee could collate the necessary documents sought during the assessment proceedings, the AO passed the assessment order. The learned AR submitted that even during the appellate proceedings before the learned CIT(A), no specific query was raised against the submission filed by the assessee, and the addition made under section 69C of the Act was upheld. The learned AR submitted that the invoices for the purchase of assets made during the year are available with the assessee, and accordingly, sought admission of the same as additional evidence. In this regard, the learned AR also filed an application seeking admission of additional evidence under Rule 29 of the ITAT Rules, 1963.
On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the lower authorities and submitted that the assessee could not furnish the relevant information or documents despite the grant of sufficient opportunity.
Having considered the submissions of both sides and perused the material available on record, in the present case, it is evident that as the assessee could not substantiate the claim of purchase of assets made during the year vis-à-vis the opening balance of the fixed assets, the lower authorities considered the closing balance of fixed assets as unexplained investment under section 69C of the Act. On perusal of the documents placed on record by the assessee, we find that the assessee has now furnished the invoices/bills in respect of additions to fixed assets during the year. Therefore, in the interest of justice and fair play, we deem it appropriate to restore this issue to the file of the learned CIT(A) for de novo adjudication after necessary examination of the invoices of fixed assets furnished by the assessee in support of its claim of addition to fixed assets during the year. Needless to mention, the learned CIT(A) shall be at liberty to seek a remand report from (A.Y. 2022-23) the AO in respect of the fresh evidence filed by the assessee and shall pass the order after affording reasonable and appropriate opportunity of hearing to both sides. With the above directions, the impugned order on this issue is set aside, and the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27/03/2026