BALAJI COKE COAL),ASSAM vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, GUWAHATI, ASSAM

Violation of Section 250(6): The Ld. Commissioner of Income Tax (Appeals) [CIT(A)] erred in law and on facts by passing an ex-parte order dismissing the appeal for non-prosecution. The Ld. CIT(A) failed to comply with the ITA No(s). 62/GTY/2026 Assessment Year(s) 2023-24 mandate of Section 250(6) of the Act, which requires the appellate authority to state the points for determination, the decision thereon, and the reasons for such decision on merits, regardless of the appellant's appearance.

Denial of Cross-Examination: The Ld. AO and CIT(A) erred in relying upon the statements of Shri Gobind Chetry recorded under Section 132(4) and other third parties without providing the appellant an opportunity to cross- examine the deponents. It is a settled position of law (relying on Andaman Timber Industries) that evidence collected behind the back of the assessee without cross-examination has no evidentiary value.

Non-Provision of Seized Materials: The Ld. AO erred in making heavy additions based on seized documents (GC-01 and GC-02) without providing authenticated copies/scanned copies of the entire seized material to the appellant despite specific requests, thus preventing the appellant from filing a meaningful rebuttal. II. LEGAL GROUNDS: JURI ICTION & INCRIMINATING MATERIAL

Absence of Incriminating Material (Abhisar Buildwell): The Ld. CIT(A) erred in confirming the additions when no "incriminating material" was found during the search in the case of the appellant firm itself. Relying on the ratio of the Hon'ble Supreme Court in PCIT vs. Abhisar Buildwell P. Ltd. (2023), the AO is not permitted to make additions in the absence of incriminating material found from the premises of the specific assessee being assessed.

Invalid Assessment Procedure (Post-2021 Search Regime): The Ld. Assessing Officer (AO) erred in law by passing the assessment order under Section 143(3) using material found during a search conducted on 01.12.2023. As per the amended law (Finance Act 2021), for searches conducted after 01.04.2021, the AO is mandatorily required to issue notice and proceed under Section 148 for preceding years. The failure to follow this juri ictional requirement renders the entire assessment order void ab initio.

Wrongful Invocation of Section 292C: The Ld. AO and CIT(A) erred in law by attributing documents (marked GC-01 and GC-02) found at the residential premises of a partner (Shri Gobind Chetry) to the appellant firm. Under Section 292C, the statutory presumption is that such documents belong to the person from whose possession they were seized. The AO failed to rebut this presumption before taxing the firm. III. CHALLENGE TO APPLICABILITY OF SECTION 69C

Inapplicability of Section 69C (Unexplained Expenditure): The Ld. AO erred in law by invoking Section 69C. For Section 69C to apply, the AO must first prove that:

No Proof of "Expenditure": The Ld. CIT(A) erred in confirming an addition of Rs. 3,97,73,011/- as "unexplained expenditure" based on Page 4 of GC-

Ownership of Income & Double Taxation: The Ld. CIT(A) failed to appreciate that Shri Gobind Chetry (Partner) has already owned up to these documents and offered the entire amount as "Additional Income" in his individual return for the same Assessment Year. Taxing the same amount again in the hands of the firm leads to double taxation of the same income, which is contrary to the scheme of the Income Tax Act.

Factual Misinterpretation of "Balaji" Entry: The Ld. AO erred in adding Rs. 25,00,000/- and Rs. 1,82,71,900/- by misinterpreting the word "Balaji" found in loose sheets. The AO ignored the partner's clarification that these related to his personal proprietary business and not the appellant firm. IV. GENERAL GROUNDS 11.Section 115BBE & Interest: The Ld. AO erred in applying the slab rate of 60% under Section 115BBE and charging consequential interest under Section 234A/B/C, which are not applicable as the primary additions themselves are legally unsustainable.

Prayer: The appellant craves leave to add, alter, or amend any grounds at the time of the hearing.”

Brief facts of the case are that the assessee is a firm and had filed its return of income for AY 2023-24 on 18.10.2023 declaring a total income of ₹72,23,120/-. The case was selected for complete scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') for the ITA No(s). 62/GTY/2026 Assessment Year(s) 2023-24 reasons being high liabilities in the balance sheet and substantial business purchases without deducting TDS. Following a search and seizure action u/s 132 of the Act conducted on 01.12.2023 at the assessee's factory and the residential premises of its partner, Shri Gobind Chetry, loose sheets marked GC-01 and GC-02 reflecting transactions with the assessee were found and seized. The Assessing Officer (hereinafter referred to as Ld. 'AO') observed from the seized documents that there were cash payments for freight and coal supply totalling to ₹3,97,73,011/-, a payment entry of ₹25,00,000/-, and raw coal payment proceeds amounting to ₹1,82,71,900/-. During the assessment, the assessee contended that the seized documents related to the individual business of Shri Gobind Chetry and not to the assessee firm. The Ld. AO rejected these submissions as unsubstantiated and factually incorrect, determining that the seized sheets explicitly showed purchases of coal and freight payments made by the assessee. Consequently, the Ld. AO treated the transactions as unexplained expenditure u/s 69C of the Act, making three specific additions: ₹3,97,73,011/-, ₹25,00,000/-, and ₹1,82,71,900/- which resulted in an aggregate addition of ₹6,05,44,911/-, culminating in an assessed total income of ₹6,77,68,031/- and the Ld. AO passed the order u/s 143(3) of the Act on 30.03.2025. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who noted that during the appellate proceedings, the assessee was given multiple opportunities of being heard through notices issued u/s 250 of the Act on 17.09.2025, 25.09.2025, 09.10.2025, and 21.10.2025, but the assessee completely failed to adhere to the notices or provide any explanation or credible documentary evidence. Evaluating the case on merits based on the seized documents, the Ld. CIT(A) held that the Ld. AO correctly treated the aggregate amount of ₹6,05,44,911/- as unexplained expenditure u/s 69C of the Act, as the transactions were clearly undertaken in the name of the assessee and were not controverted by the assessee. Accordingly, the Ld. CIT(A) 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.

It was noted by the Bench that the assessment order was framed by making additions based on seized documents found from the premises of the partner. The assessee has specifically raised grievances in its grounds of appeal that copies of the seized materials and the statements recorded were not provided, and cross-examination was not allowed, resulting in a violation of the principles of natural justice.

We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee. In this respect, we note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which ITA No(s). 62/GTY/2026 Assessment Year(s) 2023-24 requires no interference. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) after discussing the provisions of sections 250(1) and 251(1) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, therefore, set aside the order of the Ld. CIT(A) and restore the appeal to him to be decided afresh on merits, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass a speaking order in accordance with law after considering the submission of the assessee and providing a copy of the documents relied upon in case the same were not granted by the Ld. AO earlier. Hence, the grounds of appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 4th June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 04.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order