DURGAPUR CERAMICS & ALLOYS PVT. LTD.,KOLKATA vs. I.T.O., WARD - 12(1), KOLKATA

For that the Ld. CIT(A), NFAC, Delhi has erred in law as well as on facts of the case by passing order u/s 250 of the I.T. Act, 1961 dated 16/01/2026 dismissing the appeal filed by the appellant and thereby confirming the addition of Rs.8,12,34,000/- made by the Assessing Officer u/s 40A(3) of the I.T. Act, 1961 ignoring the worst situation suffered by the appellant due to sudden death of their Chartered Accountant which is not correct and detrimental to natural justice.

For that the Ld. CIT(A), NFAC, Delhi has erred in law as well as on facts of the case by confirming the addition of Rs.8,12,34,000/- made by the Assessing Officer u/s 40A(3) of the I.T. Act, 1961 which is not correct as details of such expenses were clarified on 17/01/2025 in response to show cause notice dated 02/01/2025. Inspite of that the Ld. Assessing Officer has made addition and Ld. CIT(A) has confirmed the same depending on whims and surmises.

For that the observations and contentions of the Ld. CIT(A) in dismissing the appeal filed by the appellant on the grounds which are not correct.

For that the appellant craves leave to adduce, modify and/or alter the grounds at or before hearing."

Brief facts of the case are that the assessee had filed the return of income for the AY 2019-20 on 13.05.2023 in response to the notice issued u/s 148 of the Act, declaring the total income at ₹5,54,370/-. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee had made significant financial transactions during the FY 2018-19, including cash withdrawals of ₹8,12,34,000/-. Since the assessee failed to explain properly the purpose of these bulk cash withdrawals, the Ld. AO completed the assessment u/s 147 r.w.s. 144B of the Act on the total income at ₹8,17,88,370/- by making a disallowance of ₹8,12,34,000/- u/s 40A(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who observed that the assessee had failed to adduce any corroborative documentary evidence to substantiate that the transactions were entered into under compelling business situations. Since the assessee remained non-compliant to the notices issued for hearing of the appeal, the Ld. CIT(A) found no reason to interfere with the assessment order and passed an ex parte order, confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined.

The Ld. AR submitted that the assessee deals in the business of coal, coke, Iron and steel and had not filed the return due to the death of the auditor. In response to the notice issued under section 148 of the Act, the return of income was filed. The Ld. AO made the disallowance under section 40A(3) of the Act. He requested that owing to compelling circumstances proper representation could not be made before both the Ld. AO and the Ld. CIT(A) and requested that the matter may be remanded before the Ld. AO for making the assessment de novo as the assessee has sufficient evidence to justify the income returned. The Ld. DR relied upon the order of the Ld. CIT(A) but did not oppose the request of the assessee.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Since there was no proper compliance before the Ld. CIT(A), in the interest of justice and fair play it was considered that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter to the Ld. AO for making the reassessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 21st July, 2026. [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.07.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order