KUNDAN DIAMONDS PVT LTD,SURAT vs. INCOME TAX OFFICER, WD-1(1)(3), SURAT, SURAT

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ITA 557/SRT/2025Status: DisposedITAT Surat06 July 2026AY 2018-196 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the ex-parte order of the CIT(A) and remanded the matter back for a fresh hearing. A cost of Rs. 10,000 was imposed on the assessee for non-compliance.

What were the facts?

The assessee's appeal was dismissed ex-parte by the CIT(A) due to non-compliance with hearing notices. The assessee sought a fresh opportunity, citing reasons like change of CA, death of a director's mother, and personal illness.

What were the issues?

Whether the CIT(A) erred in passing an ex-parte order without considering the assessee's reasons for non-appearance, and whether the reassessment proceedings were valid.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148A,Section 148,Section 151A,Section 69C,Section 68,Section 133(6),Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: Smt. Annapurna Gupta & Shri T.R. Senthil Kumar

Pronounced: 06.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT (PHYSICAL HEARING) Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member

ITA No: 557/SRT/2025 Assessment Year: 2018-19

Kundan Diamonds Private Income Tax Officer Limited Ward-1(1)(3), 6/2037, Office No. 205, Vs Surat Papadwala Bldg, Back Side, Bhoja Bhai Ni Sheri, Mahidharpura, (Respondent) Surat-395003, Gujarat PAN: AAECK6703H (Appellant) Assessee Represented: Shri Prakash Jhunjhunwala, AR Revenue Represented: Shri Mukesh Jain, CIT (DR) Date of hearing : 28-04-2026 Date of pronouncement : 06.07.2026 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Assessee as against the ex-parte appellate order dated 31.03.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “Ld. CIT(A)”), arising out of the re-assessment order passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2018-19.

I.T.A No. 557//SRT/2025 A.Y. 2018-19 Page No 2 Kundan Diamonds Pvt. Ltd. vs. ITO

2.

Brief facts of the case are, the assessee is private limited company engaged in the business of diamonds. Assessee filed its original return of income for the AY 2018-19 on 23.10.2018. Based on information with the Department, the AO found that the assessee company had entered into bogus transaction with various parties to the tune of Rs.89,84,19,882/-, thereby the assessment was reopened by issuing notice u/s. 148 dated 30.03.2022. In response, the assessee filed return of income on 16.04.2022 and partly complied with the notices issued by the AO. However, the AO re-casted the loss at- Rs.35,67,44,149/- and made addition u/s. 69C of Rs.33,03,76,236/- and addition u/s. 68 of Rs.68,73,98,091/- thereby determined the total income at Rs.66,10,30,178/-. 3. Aggrieved against the re-assessment order, assessee filed appeal before Ld. CIT(A), who has given 5 opportunities of hearing between 01.05.2023 to 21.03.2025. However, the assessee failed to response to any of the hearing notices, which has resulted in passing ex-parte appellate order and dismissing the appeal. 4. Aggrieved against the appellate order, assessee is in appeal before us raising following grounds of appeal:- 1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in passing the appeal order ex-parte, without considering the bonafide reasons and compelling circumstances that had precluded the appellant to participate in appeal proceeding; Additional Grounds of appeal 2.0 On facts and circumstances of the case and in law, the re-assessment order passed u/s 147 is bad in law, since the Order u/s 148A(d) and notice u/s 148 had been issued by the Jurisdictional Assessing Officer (JAO) and had not been issued by Faceless Assessing Officer (FAO), thereby violating the provision of Sec. 151A of the Act;

I.T.A No. 557//SRT/2025 A.Y. 2018-19 Page No 3 Kundan Diamonds Pvt. Ltd. vs. ITO

3.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the validity of Order passed u/s.148A(d) and notice issued u/s.148, în absence of information, material and reasons that suggests that income chargeable to tax has escaped assessment; 4.0 On facts and circumstances of the case and in law, Ld. AO, without rejecting the appellant's books of accounts u/s.145(3) and in absence of contrary material/evidence, erred in recasting the audited Profit and Loss account and determining the business loss of Rs.(-)35,67,44,199/-; 5.0 On facts and circumstances of the case and in law, Ld. AO, having held the appellant's business as non-genuine and purchase and sales transactions as accommodation in nature, ought to have estimated the commission income @0.10% of disputed purchase and sales turnover; 6.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition u/s.69C of Rs.33,03,76,236/- of entire (100%) purchase of traded goods (diamonds) made from alleged non-genuine suppliers: 7,0 The Ld. CIT(A), before confirming the addition of alleged non-genuine purchase of traded goods (diamonds) of Rs.33,03,76,236/-, erred in ignoring the understated vital facts, being; a) The exhaustive documentary evidences being purchase bills, corresponding sale bills, ledger account, confirmation of account, bank statements, purchase and sales register, import documents, quantity tally, GST returns and other documents filed on assessment record had not been disputed by the Ld. AO; b) The entire payments to disputed suppliers had been made through normal banking channel by A/c payee cheque/RTGS; c) Mere non-compliance to notice issued u/s. 133(6) by the suppliers, would not disprove the transactions of the appellant; d) The Ld. AO had not provided the copies of contrary material, evidence and statements of 3rd parties for rebuttal and also had not allowed an opportunity of cross examination: 8.0 Without prejudice, on adopting the concept of real income, the addition utmost could be sustained to the extent of reasonable profit embedded on disputed purchase made from disputed suppliers; 9.0 On facts and circumstances of the case and in law, Ld. CIT(A) ought to have deleted the addition u/s.68 of Rs.68,73,98,091/- of entire (100%) sales of traded goods (diamonds) made to disputed customers;

I.T.A No. 557//SRT/2025 A.Y. 2018-19 Page No 4 Kundan Diamonds Pvt. Ltd. vs. ITO

10.0 The Ld. CIT(A), before confirming the addition of alleged non-genuine sales of traded goods (diamonds) of Rs.68,73,98,091/-, erred in ignoring the understated vital facts, being; a) The exhaustive documentary evidences being sale bills, corresponding purchase bills, ledger account, confirmation of account, bank statements, purchase and sales register, import documents, quantity tally, GST returns and other documents filed on assessment record had not been disputed by the Ld. AO; b) The entire payments from disputed customers had been received through normal banking channel by A/c payee cheque/ RTGS; c) Mere non-compliance to notice issued u/s.133(6) by the customers, would not disprove the transactions of the appellant; d) The Ld. AO had not provided the copies of contrary material, evidence and statements of 3rd parties for rebuttal and also had not allowed an opportunity of cross examination; 11.0 Without prejudice, on adopting the concept of real income, the addition utmost could be sustained to the extent of reasonable profit embedded on disputed sales made to disputed customers. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at the time of hearing.

5.

At the outset, the assessee filed a notarized affidavit, the reason for non-appearance before ld. CIT(A) because of change of Chartered Accountant and the death of the Director’s mother on 01.02.2024 and shifting of his family from Surat to Rajasthan and then to Mumbai and medical illness and bone surgery undertaken by the Director. Thus, pleaded one more opportunity of hearing be given to the assessee to argue its case before Ld. CIT(A). 6. Per contra, Ld. CIT DR appearing for the Revenue, supported the orders passed by the Lower Authorities and strongly opposed the contention of the assessee and requested to impose heavy cost on the assessee, in the event of setting aside the matter back to the file of Ld. CIT(A).

I.T.A No. 557//SRT/2025 A.Y. 2018-19 Page No 5 Kundan Diamonds Pvt. Ltd. vs. ITO

7.

We have heard rival submissions and perused the materials available on record. It is undisputed fact that it is partial compliance before the Ld. AO and exparte before the First Appellate Authority. Now, the assessee undertakes to file all necessary details, materials and records before the Ld. CIT(A). Therefore, in the interest of Principle of Natural Justice, we deem it fit to impose a cost of Rs.10,000/- payable by the assessee to the Income Tax Department within two weeks of receipt of the copy of this order and on production of receipt for Rs.10,000/-, the exparte appellate order is hereby set aside and direct the Ld. CIT(A) to give one more opportunity of hearing to the assessee. Needless to say, the assessee should make use of this final opportunity and produce all relevant materials, evidences and documents for passing appellate order in accordance with provisions of law. 8. In the result, the appeal filed by the Assessee is treated as allowed for statistical purposes.

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 06-07-2026.

Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 06/07/2026 Mittali, Sr. PS आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat

I.T.A No. 557//SRT/2025 A.Y. 2018-19 Page No 6 Kundan Diamonds Pvt. Ltd. vs. ITO

6.

Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत

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