ITO-10(3)(1), MUMBAI, MUMBAI vs. M/S PERFECT THREAD MILLS LIMITED, MUMBAI

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ITA 7436/MUM/2025Status: DisposedITAT Mumbai22 July 2026AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file for fresh adjudication. This was done because the assessee failed to appear or file submissions despite opportunities, and the Tribunal decided to grant a fresh opportunity to both parties.

What were the facts?

The Revenue appealed against the CIT(A)'s order which quashed the reassessment proceedings. The reassessment was initiated based on information from the Investigation Wing regarding accommodation entries and bogus purchases/share application money. The assessee did not appear before the Tribunal.

What were the issues?

The primary issues were the validity of the reassessment proceedings initiated based on information from the Investigation Wing and the correctness of the CIT(A)'s deletion of additions made for bogus purchases and unexplained share application money.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 68,Section 250

AI-generated summary — verify with the full judgment below

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “SMC” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.7436/MUM/2025 (AY: 2010-11) ITO-10(3)(1) vs. M/s Perfect Thread Mills Limited 129A Aaykar Bhawan, Mumbai- 201 Millennium Plaza, Behind Saki 400020. Naka Telephone Exchange, Andheri- Kurla Road, Andheri (East), Mumbai- 400072. PAN/GIR No: AAACP6449F (Appellant) (Respondent) Assessee by None Revenue by Shri Nitin Kulkarni (SR DR) Date of Hearing 22.07.2026 Date of Pronouncement 23.07.2026

O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the revenue emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless

Appeal Centre [in short, ‘CIT(A)’], dated 10.10.2025 for the assessment year (AY)

2010-11.

2.

The grounds of appeal raised by the revenue are as under:

" 1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the assessment order u/s 143(3) r.w.s 147 without appreciating that the reassessment was validly initiated on the basis of specific, credible and tangible information received from the Investigation Wing, Mumbai, regarding accommodation entries provided by the Shri Praveen Jain Group?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the information received from the Investigation Wing, duly supported by statements and material gathered during search and survey operations, constituted tangible material sufficient to form a "reason to believe that income had escaped assessment. Hence, the reassessment could not be held invalid merely for want of independent verification by the Assessing Officer?" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 60,00,000 made on account of bogus purchases from M/s Atharv Business Pvt. Ltd. and M/s Nakshatra Business Put. Ltd., without appreciating that both entities were identified as shell concerns of the Praveen Jain Group engaged in providing accommodation entries?" 4. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.20,00,000 made u/s 68 towards unexplained share application money, without appreciating that the assessee failed to prove the identity. creditworthiness, and genuineness of the investor entities and the summons issued to the alleged investors were returned unserved, and the assessee, being a company under BIFR with continuous losses, could not substantiate the investment's bona fides?" 5. "The appellant craves the leave to add, amend, alter and/ or delete any of the grounds of appeal as above.”

3.

The case was posted for hearing on 03.02.2026, 26.03.2026, 04.05.2026,

23.06.2026 and 22.07.2026. However, none appeared on behalf of the assessee on

any occasion nor any request for adjournment nor written submission was filed.

Hence, no useful purpose would be served by prolonging the proceedings before us.

The case is, accordingly, decided on the basis of materials available on record.

4.

Facts of the case, in brief, are that the assessee filed return of income

declaring loss of Rs.64,93,927/-. The assessment was completed on 03.12.2012

determining total income at Rs.49,25,990/-. Subsequently, the case was reopened

and notice u/s 148 of the Act was issued. The case was reopened on the basis of information received from the Investigation Wing of the Department, which had

conducted search and survey action in case of Shri Praveen Jain and his group on

01.10.2013. Shri Jain was found to be engaged in providing accommodation entries.

The assessee company was one of the beneficiaries and had obtained bogus bill of

Rs.60,00,000/-. It was also found that the assessee had received share application

money of Rs.20,00,000/-. These two amounts were added to the income determined

u/s 143(3) of the Act and the total income was determined at Rs.1,29,25,990/-.

5.

Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The

CIT(A) allowed the ground of the assessee challenging the validity of reopening the

case u/s 147 of the Act and resultantly allowed the appeal of the assessee. Since, the

reopening was quashed, the addition made in the assessment order ceased to exist.

In the result, the appeal was allowed.

6.

Aggrieved by the order CIT(A), the revenue filed appeal before the Tribunal. As stated earlier, the assessee did not appear before the Tribunal on the dates of hearing. It has also not requested for adjournment nor filed any written submission. On the other hand, the Ld. Sr. DR supported the order of AO and submitted that the CIT(A) was not correct in allowing the appeal of the assessee because the case was reopened by the AO on the basis of credible information received from the Investigation Wing. He submitted that reopening based on similar information has been upheld by various Tribunals and Hon’ble High Courts.

7.

We have carefully considered the facts of the case and the submission made by the Ld. Sr. DR. Despite adequate and reasonable opportunity of being heard to the assessee, it has neither attended the hearing nor filed any written submission. It is thus clear that the appellant has no specific submissions against the grounds raised in the appeal by the revenue. It is well settled that the Tribunal has the inherent power to dismiss the appeal if the appellant/revenue does not represent its case despite opportunity granted to him. Therefore, without delving further, we set aside the order of CIT(A) and restore the matter to his file for fresh adjudication after granting adequate and reasonable opportunity of being heard to both parties. The ground is allowed for statistical purpose. 8. In the result, the appeal of the revenue is allowed for statistical purpose.

Order is pronounced on 23.07.2026.

Sd/- Sd/- (ANIKESH BANERJEE) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER

*Aniket Chand; Sr. PS MUMBAI Date: 23.07.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The PCIT/CIT 4. DR/AR, ITAT, MUMBAI 5. Guard File By Order

Assistant Registrar ITAT, MUMBAI

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