M/S. M. S LUVISH INFOTECH PROJECTS PVT LTD, MUMBAI vs. ACIT CIRCLE -2(2)(1), MUMBAI

The assessee is a company engaged in the business of leasing commercial property. For the year under consideration, the assessment was reopened based on information received from the Investigation Wing that certain parties were engaged in providing accommodation entries in the form of bogus invoices without actual supply of goods or services. On the basis of such information, proceedings under section 148A were initiated and thereafter notice under section 148 was issued on 12.04.2023. During the reassessment proceedings, the Assessing Officer observed that the assessee had claimed purchases aggregating to Rs. 54,04,045/- from two parties, namely:  M/s Ketan Suresh Bhawar – Rs. 24,91,000/-  M/s Manoj Kumar Varada Ram – Rs. 29,13,045/- These parties were allegedly identified as non-genuine entities issuing accommodation bills.

The Assessing Officer issued notices under section 142(1) requiring the assessee to substantiate the genuineness of the purchases. According to the Assessing Officer, the assessee failed to furnish satisfactory evidence to establish actual delivery of goods. Though ledger copies, bank statements, and e-way bills were filed, the Assessing Officer held that these documents did not prove the genuineness of transactions. In the absence of satisfactory explanation, the Assessing Officer treated the purchases as non-genuine and made an addition of Rs. 54,04,045/- under section 69C of the Act and completed the assessment determining total income at Rs. 1,66,57,175/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). It is observed from the appellate order that multiple opportunities were granted to the assessee. However, according to the CIT(A), there was no effective compliance from the side of the assessee on several dates. The CIT(A) proceeded to decide the appeal ex parte and confirmed the addition made by the Assessing Officer without adjudicating the grounds on merits in detail.

Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: i. On the facts and circumstances of the case and in law, the Ld. CIT (A) failed to appreciate that the impugned notice u/s 148 dated 12.04.2023 is invalid, bad in law and liable to be quashed. ii. On the facts and circumstances of the case and in law, the Ld. CIT (A) failed to appreciate that Ld. ACIT ward 2(2)(1), Mumbai erred in issuing the re-opening notice u/s 148 dated 12.04.2023 as is violative of the CBDT Notification No. 18/2022 dated 29.03.2022, as the same should have been issued by a faceless Assessing Officer. iii. That on the facts and circumstances of the case and in law, the reopening of assessment is bad in law and is liable to be quashed. That Ld. AO has grossly erred in reopening the assessment solely relying on information flagged on the insight portal without any independent application of mind. iv. That in the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the addition made by Ld. A.O of Rs.

During the course of hearing before us, the learned Authorised Representative (AR) reiterated the facts as borne out from the assessment order and submitted that, in response to the show cause notice dated 03.03.2025, the assessee had, vide reply dated 07.03.2025, furnished documentary evidences such as ledger confirmations, copies of tax invoices, e-way bills and bank statements to substantiate the genuineness of the purchases. It was contended that the aforesaid evidences were not duly considered by the Assessing Officer while framing the assessment. It was further submitted that the learned CIT(A) has also failed to examine the submissions and evidences already placed on record and has merely affirmed the action of the Assessing Officer without passing a speaking and reasoned order. In view of the above, it was prayed that the matter may be restored to the file of the learned CIT(A) for fresh adjudication on merits after affording adequate opportunity of being heard to the assessee.

The learned Departmental Representative fairly submitted that he has no objection if the matter is restored to the file of the CIT(A) for fresh adjudication.

We have heard the rival submissions and perused the material available on record.

1 On a careful consideration of the impugned appellate order, it is observed that the learned CIT(A) has disposed of the appeal without adjudicating the issues on merits and has primarily proceeded on the basis of alleged non-compliance on the part of the assessee. The order does not reflect any independent appreciation of the evidences placed on record, nor does it deal with the specific contentions raised by the assessee, including the claim that documentary evidences such as ledger confirmations, tax invoices, e-way bills and bank statements were furnished before the Assessing Officer in response to the show cause notice. It is well settled that the first appellate authority exercises powers co-terminus with that of the Assessing Officer and is under a statutory obligation to examine the issues arising in appeal on merits. The appellate authority is required to pass a speaking and reasoned order after due consideration of the material on record and the grounds raised by the assessee. Mere confirmation of the assessment order without such examination cannot be sustained. In the present case, the learned CIT(A) has failed to discharge the aforesaid obligation. The impugned order does not contain any adjudication either on the validity of the reopening proceedings or on the merits of the addition made under section 69C of the Act. The contentions and evidences relied upon by the assessee have not been examined at all.

2 In view of the foregoing, and considering the principles of natural justice, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the matter to his file with adirection to adjudicate the appeal afresh on merits, after considering the evidences placed on record and after affording adequate opportunity of being heard to the assessee.

3 The assessee is also directed to extend full cooperation in the appellate proceedings and to furnish necessary evidences without seeking unwarranted adjournments.

4 Since the matter is restored to the file of the learned CIT(A), all the grounds raised by the assessee are kept open and are not adjudicated at this stage.

In the result, the appeal of the assessee is allowed for statistical purposes.