DCIT, CIRCLE 1, GUWAHATI, GUWAHATI vs. DEEPAK ROLLER FLOUR MILLS, GUWAHATI

That a similar issue is presently pending adjudication before the Hon'ble Supreme Cour of India in the matter of the Special Leave Petition (SLP) filed by the Revenue in the cast of Hexaware Technologies Limited v. Assistant Commissioner of Income Tax, Circle-15(1)(2), Mumbai and Ors.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in law by failing to adjudicate on the merits of the addition, despite the Assessing Officer (AO) providing clear evidence that the assessee's records were doctored. The AO had found that numerous delivery challans and transport bills were written by only three distinct handwritings in a sequential manner, proving they were manufactured as an "afterthought." By treating the merits as "academic," the Ld. CIT(A) effectively sanctioned the use of fabricated evidence to shield unexplained income.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in failing to consider that the assessee failed to prove the basic "genuineness" of the transaction. The AO correctly noted the absence of mandatory e-way bills and the lack of official stamps or signatures on "kaccha" transport documents for a transaction exceeding 6 Crores. The Ld. CIT(A) failed to recognize that the mere movement of money through a bank does not validate a transaction if the underlying business activity (the sale of goods) is non-existent.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) committed a fundamental error by prioritizing the "form" of the notice over the "substance" of the evasion. While the Ld. CIT(A) relied on juri ictional precedents regarding faceless notices, it failed to realize that the primary objective of the Income Tax Act is to tax real income. The mechanical quashing of the assessment has allowed a clear "accommodation entry" to be treated as a legitimate business sale.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in applying judicial precedents in a blanket manner without considering the specific facts of the fraud involved in this case. The direction to "withdraw the notice" is legally flawed in a situation where such a withdrawal prevents the Department from ever taxing a proven case of unexplained money under Section 69A.

On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in both law and fact by quashing the reassessment proceedings and deleting the addition of 6,00,50,000/-. The Ld. CIT(A) failed to appreciate that a procedural irregularity in the manner of issuing a notice should not automatically invalidate an assessment where grave findings of tax evasion and document fabrication have been established.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) passed an order that is bad in law, contrary to the facts of the case, and against the principles of natural justice and revenue protection.

The Appellant craves leave to add, alter, modify, or amend any of the above grounds of appeal at or before the time of the hearing.”

On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erroneously interpreted the Remand Report as a total concession by the Assessing Officer, thereby ignoring the explicit caution that the case must be adjudicated on its own independent merits rather than on general findings from other assessments.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to address the significant evidence of a non-genuine transaction, specifically the shared business premises of the parties, the complete absence of logistical documentation for the delivery of goods, and the undisclosed financial link between the assessee and the third-party Director.

On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in law by presuming that the general genuineness of a third party in unrelated cases automatically validates this specific transaction, despite the total lack of proof regarding the physical movement of goods in the current proceedings.

On the facts and in the circumstances of the case and in law, the Ld. CIT (A) wrongly held that proving the source of funds alone satisfies Section 68, thereby neglecting the mandatory statutory obligation to independently verify the underlying genuineness of the purported trade transaction.

The Ld. CIT (A) failed to apply the "Test of Human Probabilities" and the principle of "Substance over Form" by validating a paper-based credit entry between entities sharing an office without any credible evidence of actual physical commerce.

On the facts and in the circumstances of the case and in law, the Ld. CIT (A) passed a perfunctory and non-speaking order by granting blanket relief based on a neutral remand report while failing to adjudicate upon the specific adverse findings and objections raised in the original Assessment Order.

The Appellant reserves the right to add, amend, alter, or withdraw any grounds of appeal at any stage of the proceedings before the Hon'ble Tribunal.” III. CO No. 4/GTY/2026:

For that the Ld. CIT(A) ought to have hold that the Ld. AO was not justified in contemptuously ignoring and belittling the judgment and order of the Hon'ble Juri ictional High Court in the case of Ram Narayan Sah v. UOI (2024) 471 ITR 228 (Gau) which was cited before him by the assessee and a copy of the said judgment was also furnished to him, as also quoted by the Ld. AO himself at page nos. 7 to 9 of the impugned order of re- assessment and thereafter, the Ld. AO was not justified in not following the said binding judgment of the Hon'ble Juri ictional High Court in violation of judicial hierarchical system prevalent in the country and more further, passing of such a non-speaking order by the Ld. AO, after ignoring the submissions of the assessee is bad in law and not sustainable on this count alone.

For that the Ld. CIT(A) ought to have also held that the juri ictional notice dated 28.04.2023 issued under section 148 of the Act by the Ld. AO requiring the assessee to furnish return of income within 30 days only from service of the said notice being not in accordance with the law, no valid juri iction to pass an order under section 147 was acquired by the Ld. AO and consequently, the order of re-assessment is bad in law and without juri iction.

For that the Ld. CIT(A) ought to have also held that in absence of valid approval, after due application of mind, under his signature having been granted by the Specified Authority under section 151 of the Act to the order dated 28.04.2023 as passed by the Ld. AO under section 148A(b) of the Act, the entire proceeding is vitiated and consequently, the order of assessment dated 29.01.2024 is untenable.

For that the Ld. CIT(A) ought to have also held that Notice dated 31.03.2023 under section 148A(b) and Notice under section 148 dated 28.04.2023, both issued after lapse of more than 3 years from the end of the relevant assessment year, ignoring and without recording satisfaction of the additional juri ictional conditions specified under section 149(1)(b) of the Act, the same are time barred and bad in law and consequently, the impugned order of re-assessment is bad in law and without juri iction.

For that the Ld. CIT(A) ought to have also held that the Show Cause Notice (SCN) dated 31.03.2023 under section 148A(b) having been issued by the Ld. ITO, Ward - 1(2), Guwahati and not by the juri ictional AO in accordance with the binding instruction of the Hon'ble CBDT and thus, in gross violation of provisions of section 119 and 120 of the Act, no valid juri iction under section 147 and 148 of the Act was assumed in the instant case and therefore, the order of re-assessment having been passed in furtherance to the said SCN is void ab-initio, without juri iction and bad in law.

For that the Ld. CIT(A) ought to have also held that the SCN dated 31.03.2023 under section 148A(b) of the Act being vague, unspecific, scanty and cryptic and without application of due mind and denying opportunity to the assessee to put its complete defense, the same is not in accordance with the law and consequently, the order of re-assessment is bad in law and without juri iction.

For that the Ld. CIT(A) ought to have held that the order u/s 148A dated 28.04.2023 having been passed in the instant case, in gross violation of the principles of natural justice and by travelling beyond the scope of information and material disclosed in the SCN issued under section 148A(b) of the Act and also by ignoring the submissions of the appellant in gross violation of the provisions of section 148A(c) of the Act and the mandatory instructions of the Hon'ble CBDT, the same is without juri iction and bad in law and consequently, the order of re-assessment is liable to be cancelled.

For that the Ld. CIT(A) ought to have held that the order u/s 148A dated 28.04.2023 having been passed without allowing opportunity of personal hearing despite specific request made by the assessee in its reply to SCN issued u/s 148A, the said order was passed in gross violation of principles of natural justice and binding guidelines laid down by the Hon'ble CBDT and hence, bad in law and consequently, the order of re-assessment is liable to be quashed.

For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have held that in absence of necessary enquiry as mandated by provisions of section 148A(a) of the Act and as instructed by the Hon'ble CBDT having been conducted in the instant case by the Ld. AO, the issuance of SCN under section 148A(b) of the Act was without juri iction and bad in law and consequently, the order of assessment passed in pursuance thereof is untenable.

For that the Ld. CIT(A) ought to have held that the Ld. AO after accepting that the juri iction under section 147 and 148 of the Act was assumed on factually erroneous information and after finding that the assessee has not received any unsecured loan of Rs. 6,00,50,000/- from M/s. Consistent Construction Pvt. Ltd. and further, the said Consistent Construction Pvt. Ltd. was not a shell company, the Ld. AO was not justified in still proceeding with the reassessment and passing the order of re-assessment.

For that the Ld. CIT(A) ought to have held that the addition of Rs. 6,00,50,000/- made by the Ld. AO in the order of re-assessment being in excess of the juri iction assumed in the instant case on the basis of SCN dated 31.03.2023 issued under section 148A(b) of the Act, the same is bad in law and untenable.

For that the Ld. CIT(A) ought to have hold that the Ld. AO was not justified in arbitrarily adding the impugned amount of Rs. 6,00,50,000/- on the basis of a roving and fishing enquiry and merely on the basis of conjectures, even after accepting the submissions of the assessee furnished on 05.03.2025 in response to SCN dated 01.03.2025 that no addition can be made in a re-assessment proceeding after making a roving and fishing enquiry. The Ld. AO was not justified in making the impugned addition, without controverting the above submissions of the assessee and by merely ignoring the submissions of the assessee by way of an unreasoned and non- speaking order, which is in gross violation of principles of natural justice and all canons of justice and fair-play and is legally unsustainable and bad in law.

For that the Ld. CIT(A) ought to have hold that the Ld. AO has not been able to controvert the submissions of the assessee furnished on 05.03.2025 that the amount which has already been included in sales and credited as income in P&L Account cannot be again added to the income, as it will tantamount to double addition, which is impermissible. For that the impugned addition of Rs. 6,00,50,000/- having been made by the Ld. AO by ignoring the submission of the assessee and without controverting the same with cogent reasons, such unreasoned and non-speaking order is void, bad in law and unsustainable and the impugned addition is liable to be deleted on this count alone.

For that the Ld. CIT(A) ought to have hold that the Ld. AO has accepted the fact that the impugned amount of Rs. 6,00,50,000/- has already been included in 'Business Income' being part of sales, was not justified in adding the same amount again after accepting the same as part of 'business income'. The impugned addition thus, tantamounts to double addition which is legally impermissible, bad in law and unsustainable.

For that the Ld. CIT(A) ought to have hold that impugned addition of Rs. 6,00,50,000/- having been made by the Ld. AO by relying upon inadmissible materials also which were gathered behind the back of the assessee without confronting the same to the assessee and without providing any opportunity of hearing to the assessee in respect of the same, which is not only in gross violation of principles of natural justice but is also in utter disregard to the statutory provisions of section 142(3) of the Act and hence, the said addition is liable to be deleted on this ground also.

For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have hold that the Ld. AO erred both in law and in facts in arbitrarily treating the sales of the assessee of Rs. 6,00,50,000/- as non-genuine merely on the basis of conjectures and inadmissible material and ignoring the relevant materials available on record and exceeded his juri iction in adding the same to the income of the appellant-assessee by invoking provisions of section 69A of the Act.

For that the Ld. CIT(A) ought to have hold that the impugned addition of Rs. 6,00,50,000/- having been made by the Ld. AO by ignoring and by not controverting the various submissions and materials furnished by the appellant, the same is in gross violation of principles of justice and fair play and such unreasoned and non-speaking order is liable to be quashed.

For that the Ld. CIT(A) ought to have hold that the Ld. AO was not justified in arbitrarily stating in the computation sheet, income from other sources at Rs. 12,01,00,000/- which shows that the impugned order of re- assessment has been made in a haste and in a casual and non-serious manner and therefore, the same is liable to be cancelled.

For that the Ld. CIT(A) ought to have hold that the Ld. AO was not justified in arbitrarily and whimsically stating business income of the assessee at Rs. 9,51,500/- in place of Rs. 9,47,506/- and consequently, arbitrarily enhancing the tax liability of the assessee, which also shows that the impugned order of re-assessment is untenable having been passed in a casual and non-serious manner.

For that the return of income having been filed within the due date, still imposing of interest under section 234A of the Act at Rs. 4,16,372/- in the impugned order of re-assessment also shows that the said order of assessment was passed in a casual and non-serious matter and consequently, the impugned order of re-assessment is bad in law and untenable.

For that the Ld. CIT(A) ought to have hold that the Ld. AO after determining total income of the assessee at Rs. 6,09,97,506/- was not justified in levying income-tax on total income of Rs. 6,10,01,500/- which also proves that the impugned order of re-assessment has been made in a haste and in a casual manner and therefore, the same is liable to be cancelled.

For that the cross-objector craves leave of your honour to take additional ground or grounds of cross-objection and/or to modify or resign any ground(s) of cross-objection before or at the time of hearing.” IV. CO No. 5/GTY/2026:

For that the Ld. CIT(A) ought to have also held that the notice under section 148 dated 30.03.2022 having been issued in breach of provisions of ITA No(s). 5 & 6/GTY/2026 section 151A of the Act, no valid juri iction was acquired by the Ld. AO and consequently, the order of re-assessment is bad in law and without juri iction.

For that the Ld. CIT(A) ought to have also held that in absence of approval of the Specified Authority under section 151 of the Act having been obtained by the Ld. AO as evidenced by the fact that no copy of the alleged approval order could not be provided to the assessee along with notice under section 148 in violation of instruction of the Hon'ble CBDT and even thereafter, despite repeated request of the assessee, the same could not be provided to the assessee and thus, the assessee was repeatedly denied justice and consequently, the entire proceeding is vitiated and resultantly, the order of re-assessment is untenable.

For that the Ld. CIT(A) ought to have also held that the Show Cause Notice (SCN) dated 17.03.2022 under section 148A(b) and notice under section 148 dated 30.03.2022 having been issued by the Ld. ITO, Ward - 1(2), Guwahati, who had no juri iction over the case of the assessee and in gross violation of the binding instruction of the Hon'ble CBDT and thus, in gross violation of provisions of section 119 and 120 of the Act, no valid juri iction under section 147 and 148 of the Act was assumed in the instant case and therefore, the order of re-assessment having been passed in furtherance to the said SCN is void ab-initio, without juri iction and is also bad in law as the same was passed by ignoring the repeated submissions of the assessee made in this regard.

For that the Ld. CIT(A) ought to have also held that the notice dated 17.03.2022 issued under section 148A(b) of the Act being vague, unspecific, scanty and cryptic and without application of due mind and denying opportunity to the assessee to put its complete defense, the same is not in accordance with the law and consequently, the order of reassessment is bad in law and without juri iction.

For that the Ld. CIT(A) ought to have also held that the order u/s 148A dated 30.03.2022 having been passed in the instant case, in gross violation of the principles of natural justice and by travelling beyond the scope of information disclosed in the SCN issued under section 148A(b) of the Act and also by ignoring the submissions of the appellant in gross violation of the provisions of section 148A(c) of the Act and the mandatory instructions of the Hon'ble CBDT, the same is without juri iction and bad in law and consequently, the order of reassessment is liable to be cancelled.

For that the Ld. CIT(A) ought to have also held that the Ld. AO has admittedly passed order under section 148A(d) of the Act and issued notice under section 148 of the Act dated 30.03.2022 merely for verification and making a roving and fishing enquiry, which is legally impermissible and bad in law and consequently, the impugned order of re-assessment is untenable and is liable to be quashed.

For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have held that in absence of necessary enquiry as mandated by provisions of section 148A(a) of the Act having been conducted in the instant case by the Ld. AO, the issuance of SCN under section 148A(b) of the Act was without juri iction and bad in law and consequently, the order of assessment passed in pursuance thereof is untenable.

For that the Ld. CIT(A) ought to have held that the notice under section 143(2) of the Act being not in accordance with the law, the order of re- assessment is untenable.

For that on the facts and circumstances of the case, the Ld. CIT(A) ought to have also held that the Ld. AO erred both in law and in facts in arbitrarily adding Rs. 2,65,00,000/- to the income of the appellant by invoking provisions of section 68 of the Act. For that the impugned addition being beyond the juri iction, the same is bad in law and untenable.

For that the Ld. CIT(A) ought to have hold that the Ld. AO has not been able to controvert the submissions of the assessee furnished on 18.03.2023 that the amount which has already been included in sales and credited as income in P&L Account cannot be again added to the income, as it will tantamount to double addition, which is impermissible and thus, the impugned order of re-assessment having been passed by a non-speaking and unreasoned order in a casual manner, ignoring the submissions of the assessee is void, bad in law and unsustainable and the said order of re- assessment impugned addition is liable to be deleted on this count alone.

For that the Ld. CIT(A) ought to have also held that the impugned addition of Rs. 2,65,00,000/- having been made by the Ld. AO by travelling beyond the Show-Cause Notice dated 15.03.2023 and without allowing any proper opportunity of hearing in gross violation of principles of natural justice and by taking into consideration inadmissible and unreliable material, the same is bad in law and untenable.

For that the Id CIT(A) ought to have also held that the order of re- assessment has been passed by the Ld. AO by ignoring and by not controverting the various submissions and materials furnished by the appellant, the same is in gross violation of all principles of justice and fair play and such unreasoned and non-speaking order is liable to be quashed.

For that the Ld. CIT(A) ought to have also held that the order of assessment having been passed by the Ld. AO without allowing reasonable opportunity of being heard and without allowing any reasonable time to respond to the SCN and in gross violation of principles of natural justice, the same is bad in law and is liable to be quashed.

For that the cross-objector craves leave of your honour to take additional ground or grounds of cross-objection and/or to modify or resign any ground(s) of cross-objection before or at the time of hearing.”

Perusal of the Section 151A along with the scheme reveals that the statute in order to obviate prejudice and bias has resorted to issuance of notices by the automated allocation through the risk management strategy. The Judgments referred to by the learned counsel for the petitioner supports the contention raised by the writ petition and hold that the notices are required to be issued in an automated manner without there being any interface between the department and the assessee. The Judgment relied upon by the learned counsel for the respondent however discussions and issue as to whether there is any vested or any fundamental right in respect of the assessee remand for automated issuances of notice. The Delhi high Court vide Judgment and order dated 26.05.2023 passed in W.P.(C) No.

If that be so then the department is required to follow the procedure prescribed in terms of the scheme and accordingly the department will withdraw the notices and thereafter issue fresh notices if permissible under law as per the scheme read with Section 151 A.

In the event the department proceeds to issue fresh notices then the petitioner shall also be granted liberty to file their appropriate reply under the provision of Section 148. 14. Accordingly, the writ petition stands disposed of.”

Hence, since section 147A of the Act has been inserted with retrospective effect and the law has been amended, in the interest of justice and fair play and 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 back to him to decide the merits of the case as the appeal was allowed on legal ground of juri iction alone and the merits of the case were not discussed. 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. We, therefore, set aside the order of the Ld. CIT(A) and restore the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and to be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereafter pass an order in accordance with law. Thus, all the grounds of appeal are partly allowed for statistical purposes. Accordingly, the grounds taken by the Revenue in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.”

DCIT, Circle-1, Guwahati.

Deepak Roller Flour Mills, 157, G.S. Road, Dispur Christian Basti, Guwahati, Assam, 781005. 3. CIT(A)-NFAC, Delhi.