METRO MOTORS ,MUZAFFARPUR vs. ITO WARD 1(2), MUZAFFARPUR

Per Sonjoy Sarma, Judicial Member: The present appeal filed by the assessee is directed against the order dated 14.01.2026 passed by the NFAC, Delhi [hereinafter referred to as the ‘Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2017-18. 2. Brief facts of the case are that, the case of assessee was selected for scrutiny followed by statutory notice issued u/s 143(2) and 142(1) of the Act, which were duly issued to serve upon the assessee. However, the assessee failed to comply with the said notices and did not produce the books of accounts or other relevant details. In view of such non- compliance, the Assessing Officer proceeded to complete the assessment

I.T.A. No.105/Pat/2026 Metro Motors; AY: 2017-18 u/s 144 of the Act. The books of accounts were rejected by placing reliance on the judgment of the Hon’ble Supreme Court, in the judgment of Kachwala Gems Vs. Joint Commissioner of Income Tax, Jaipur 2006 (12) TMI 83 – Supreme Court, wherein it has been held that the absence of proper books, the Assessing Officer empower to estimate income. Accordingly, the Assessing Officer estimated income and determine the business income at Rs.1,92,05,690/-. Further, with respect to cash deposit made during the demonetisation period, the Assessing Officer treated the same of Rs.45,91,811/- u/s 69A of the Act and added the same to the total income of the assessee. The total income of the assessee was assessed at Rs.2,32,97,500/-. 3. Dissatisfied with the above order, assessee preferred an appeal before the Ld. CIT(A), where the Ld. CIT(A) relied upon the decision of the Hon’ble Rajasthan High Court in CIT Vs. Jain Construction Co. (245 ITR 527) has held that where income is estimate after rejection of books, separate claims which are not verifiable need not be allowed independently. 4. Aggrieved by the above order, assessee is in appeal before this Tribunal. At the time of hearing, the Ld. AR submitted that the assessment order was ex-parte due to non-compliance arising from certain unavoidable circumstances. It was prayed that one more opportunity be granted to the assessee to set aside its claim by producing necessary books of accounts and supported documents before the Assessing Officer. 5. On the other hand, the Ld. DR strongly opposed the plea, and submitted that sufficient opportunities were granted to the assessee at the assessment stage but the assessee failed to comply. It was further prayed that in this case the matter is restored, substantial cost may be imposed to the assessee.

I.T.A. No.105/Pat/2026 Metro Motors; AY: 2017-18 6. We have heard the rival submissions and perused the material available on record, it is an admitted position that the assessee failed to comply with the multiple statutory notices issued by the Assessing Officer, even during the appellate proceedings before the Ld. CIT(A). The assessee could not satisfactorily explain the reasons for non-production of books of accounts; such conduct of the assessee reflects negligence and has resulted in wastage of valuable judicial time. However, considering the principles of natural justice and in the interest of fair play, we are of the view that one final opportunity should be granted to the assessee to present its case on merit. Accordingly, the impugned order is set aside and the matter is restored to the file of Assessing Officer for de novo adjudication with a direction to examine the issue afresh, after providing adequate opportunity of being heard to the assessee. The assessee is also directed to cooperate fully and furnish relevant documents and explanation. At the same time, considering the negligent conduct of the assessee during the assessment proceedings which lead to repetition of the process and consumption of judicial time, we deem it appropriate to impose a cost of Rs.1,000/-. The assessee is directed to deposit the said amount with the Income Tax Department and furnish the proof of payment before the Assessing Officer during set aside proceedings. 7. In the result, appeal of the assessee is allowed for statistical purposes.

Kolkata, the 24th April, 2026.

Sd/- Sd/- [Laxmi Prasad Sahu] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 24.04.2026. DP, PS

I.T.A. No.105/Pat/2026 Metro Motors; AY: 2017-18

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches