INCOME TAX OFFICER, MUMBAI vs. RAMAVTAR INVESTMENT & TRADING COMPANY PRIVATE LIMITED, MUMBAI

The assessment was completed under section 147 read with section 144B of the Act on 28.03.2022. 2

The Revenue has raised the following grounds:

Before the learned CIT(A), the assessee challenged both the reopening and the addition. In its written submissions at paper- book pages 160 to 165, it contended that the Assessing Officer had adopted the information from the Insight portal without independently verifying whether the alleged loss had been claimed. It reiterated that the recorded reasons were factually incorrect. The learned CIT(A), in paragraph 6 of the appellate order, recorded as an undisputed fact that the assessee had neither debited the alleged loss to its profit and loss account nor claimed it in the return. He also held that the inference concerning non-recovery of the advance was an unfounded surmise. Accordingly, the addition was deleted. Having granted relief on merits, the learned CIT(A) expressly declined to adjudicate the reopening and other procedural grounds.

The assessee has filed an application dated 14.07.2026 under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking to support the appellate order by challenging the validity of reopening. The substantive grounds accompanying the application read:

On the date of hearing, none appeared on behalf of the assessee. The learned Departmental Representative relied upon the order of the Assessing Officer. Accordingly, the appeal was heard ex parte qua the assessee, after considering the submissions of the 4 Ramavtar Investment & Trading Company Private Limited learned Departmental Representative and the material available on record, including the written application under Rule 27. 8. We have considered the submissions of the learned Departmental Representative and examined the material on record, including the assessee’s application under Rule 27, the recorded reasons, the objections and their disposal, the written submissions before the learned CIT(A), and specifically the ledger account of M/s. Goodluck Securities. The ledger account at paper-book page 71 records a payment of Rs.28,20,000/- on 30.03.2015 and a receipt of Rs.33,223.10/- on 31.03.2015, leaving a debit balance of Rs.27,86,776.90/-. Thus, the account reflects payments to and receipts from M/s. Goodluck Securities. While these entries establish financial dealings with the broker, their nature and relationship with the disputed derivative transactions require examination. The ledger, by itself, does not resolve whether the transactions attributed to the assessee were authorised or how the resulting amounts were treated in its accounts and computation of income.

The learned CIT(A) deleted the addition on the premise that the alleged loss of Rs.27,80,700/- had neither been debited to the profit and loss account nor claimed in the return. He also recorded the assessee’s explanation that the broker had executed certain trades without its consent. However, the latter assertion was not independently verified. The appellate order expressly states that no remand report was called for. It does not demonstrate verification of the explanation against the broker’s account, transaction records and the assessee’s financial statements and return.

The Assessing Officer, on the other hand, treated the outstanding amount as representing the alleged non-genuine loss and inferred that it would never be repaid. The learned CIT(A) rejected that inference as an unfounded surmise. Although an addition cannot be sustained merely on an assumption concerning future non-recovery, the nature of the payment, receipt and outstanding balance, and their connection with the disputed transactions, also required factual examination. The competing explanations could not satisfactorily be resolved without such verification.

Accordingly, the absence of a remand report is material in the circumstances of this case because the disputed factual aspects remained unexamined. Section 250(4) empowers the learned CIT(A) to undertake further enquiry or direct the Assessing Officer to conduct an enquiry and report its results. A reasoned determination based on the relevant records was therefore necessary before granting relief.

The assessee had also challenged the validity of reopening before the learned CIT(A), contending that the recorded reasons were factually incorrect and that the Assessing Officer had acted without independently forming the requisite belief. Those grounds were expressly left unadjudicated after relief was granted on merits. The application under Rule 27 reiterates that juri ictional challenge. Since the matter requires reconsideration by the learned CIT(A), we consider it appropriate that the legal grounds also receive an express adjudication.

We therefore set aside the impugned appellate order and restore the matter to the file of the learned CIT(A) for fresh

The assessee shall be at liberty to urge before the learned CIT(A) the grounds contained in its application under Rule 27 and furnish supporting submissions and evidence in accordance with law. The learned CIT(A) shall expressly decide the juri ictional grounds concerning reopening, after considering the recorded reasons, the objections dated 04.08.2021 and the order disposing of those objections dated 08.12.2021. Depending upon the outcome of that determination, the addition shall also be adjudicated on merits. A speaking order shall be passed after providing a reasonable opportunity of hearing to the assessee.

We express no concluded opinion on the validity of reopening, the authorisation or genuineness of the disputed trades, the nature of the outstanding balance, or the sustainability of the addition. All these matters remain open for determination by the learned CIT(A). The application under Rule 27 is disposed of in terms of the liberty and directions stated above. Ground No.1 of the Revenue’s appeal is allowed for statistical purposes. The applicability of the exception to the monetary limits pleaded in ground No.2 is left open, and ground No.3 requires no separate adjudication.

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

ABHINAV आदेशानुसार/BY ORDER, ANANT GAVANDE ANANT Date: 2026.10.13 16:20:46 स"ािपत "ित //// GAVANDE +05'30' 1. उप/सहायक पंजीकार ( Asst.