VITARAN ELECTRONICS PRIVATE LIMTED,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX, PUNE

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ITA 1745/PUN/2026Status: DisposedITAT Pune14 October 2026AY 2020-218 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee's contention that the CIT(A)/NFAC passed a cryptic and non-speaking order, merely endorsing the AO's findings without independent consideration of the submissions and evidence, was correct. The Tribunal noted that the submissions and additional evidence filed by the assessee before the lower authorities and placed on record required verification. Therefore, in the interest of justice, the Tribunal set aside the impugned order of the CIT(A)/NFAC and restored the matter to the file of the AO. The AO was directed to decide the impugned issues afresh after due verification of the assessee's claims, considering the submissions and evidence already on record, as well as any further submissions or evidence that may be required. The assessee was directed to comply with the AO's notices without seeking adjournments unless for sufficient cause. The grounds raised by the assessee were allowed for statistical purposes.

What were the facts?

The assessee, Vitaran Electronics Private Limited, engaged in trading and servicing of RFID products, filed its return for AY 2020-21. The Assessing Officer (AO) noted a decrease in gross profit and net profit compared to the previous year, and a significant drop in service receipts despite increased sales. The AO added Rs. 69,45,697/- as short admission of income from business. Additionally, the AO disallowed trade payables of Rs. 4,01,80,034/- to Feig Electronics GMBH, RF Gennie Enterprises Ltd, and Robstur Automation, treating them as unexplained cash credits under Section 68, as the assessee failed to furnish confirmations by the due date. The assessment order was passed on 21-09-2022. The CIT(A)/NFAC dismissed the assessee's appeal, upholding the AO's additions. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 69,45,697/- on account of alleged short admission of income from business (low service receipts) is sustainable in law, given that it was made on an ad-hoc and estimated basis without rejecting the books of account and without establishing a direct nexus between increased sales and decreased service income. 2. Whether the addition of Rs. 4,01,80,034/- under Section 68 as unexplained cash credits, in lieu of trade payables, is justified, considering the assessee's contention that it could not furnish confirmations by the due date due to an inadvertent oversight and that the required details were subsequently attempted to be filed. 3. Whether the orders passed by the AO and CIT(A) are bad in law for violating principles of natural justice, as the assessee claims its submissions and evidence were not properly considered, and a request for a video conferencing hearing was ignored. Assessee's arguments: The CIT(A)'s order is cryptic and non-speaking, merely endorsing the AO's findings without independent examination. The addition on account of service receipts is arbitrary and lacks evidentiary basis. The failure to submit confirmations for trade payables was due to an inadvertent oversight, and the assessee attempted to submit them later, but the IT portal was closed. The assessee had filed ledger accounts and other relevant details before both lower authorities. The matter should be restored to the AO for fresh verification. Revenue's arguments: The revenue relied on the orders of the AO and CIT(A) and objected to setting aside the matter to the AO.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 143(3),Section 144B,Section 68,Section 250,Section 234A,Section 234B,Section 270A,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: CA Yogesh Kale and BK Khare
For Respondent: Shri Sandeep Sathe, JCIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 1745/PUN/2026 Assessment Year : 2020-21 Vitaran Electronics Dy. Commissioner of Income Tax, Private Limited, Circle-12, Pride Kumar Senate-II, vs. Aaykar Sadan, CTS No. 970, FPN 402, Bodhi Tower, Salisbury Park, Shivaji Nagar, Gultekdi, Pune-411037. Pune-411016. PAN : AACCV4165C (Appellant) (Respondent) Assessee by : CA Yogesh Kale and BK Khare Department by : Shri Sandeep Sathe, JCIT Date of Hearing : 30-07-2026 Date of Pronouncement : 14-10-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 24-02-2026 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2020-21.

2.

Briefly stated, the facts of the case are that the assessee is a company engaged in the business of trading in Radio Frequency Identification Products and other relatable products. It is also engaged in providing after sales services for these products. For AY 2020-21, the assessee filed its return of income on 18-12-2020, declaring total income of Rs. 1,19,12,540/-, which was later revised on 12-02-2021 without there being any change in the amount of total income, but with only change made to the details of dividend distribution tax, declaring same income. The case was selected for complete scrutiny under CASS. Accordingly, the Ld. Assessing Officer (“AO”) issued statutory notice(s) u/s.

2 ITA No. 1745/PUN/2026 143(2) and 142(1) of the Act along with questionnaire calling for certain information/details, in response to which the assessee duly submitted its reply. However, the show cause notice issued on 07-09-2022 requesting the assessee to show cause as to why addition should not be made on two counts mentioned therein could not be complied by the assessee within the due date of compliance i.e. 12-09-2022. The assessee tried to file its response on 22-09-2022, however, the could not be uploaded as the Ld.AO had already passed the assessment order on 21-09-2022. During the assessment proceedings, from the return of income filed by the assessee for the AYs. 2019-20 and 2020-21, it was found that the assessee company admitted sale of goods at Rs.8,50,75,885/- for the AY. 2019-20 and Rs. 10,72,48,431/- for the AY. 2020-21 but the company admitted less gross profit and net profit when compared to previous AY. 2019-20. It was further observed that receipts towards sale of services at Rs.70,17,215/- for the AY. 2019-20 and Rs. 19,00,350/- for the AY. 2020- 21 only and generally, services are depending upon sales, still services were decreased even though the sales were increased. In this connection, the assessee was asked to furnish the reasons for decrease of receipts towards services even though sales were increased. Since the assessee did not furnish the required information and in the absence of ledger account of sale of services for both the FY. 2018-19 relevant to the AY. 2019-20 and FY. 2019-20 relevant to the ΑΥ. 2020-21 to verify the genuineness of less services, the proportionate receipts at Rs.88,46,047/- towards sale of services taken for the FY. 2019-20. Accordingly, the Ld.AO treated the amount of Rs.69,45,697/- [Rs.88,46,047/- (-) Rs.19,00,350/-] as short admission of "Income from Business" for the F.Y. 2019-20 relevant to the A.Y.2020-21 and added the same to the income returned by the assessee. Further, the Ld.AO vide his notice u/s. 142(1) of the Act, asked the

3 ITA No. 1745/PUN/2026 assessee-company to furnish confirmations from the following trade payables:

S.No Name of the trader Amount (Rs.) 1 Feig Electronics GMBH 54,92,738/- 2 RF Gennie Enterprises Ltd 2,22,97,941/- 3 Robstur Automation 1,23,89,355/- Total: 4,01,80,034/- Since the assessee failed to furnish confirmations from the above traders to prove that these are trade payable towards purchases, the Ld.AO deemed that the same are not trade payables and came to the conclusion that these are nothing but cash credits introduced during the FY. 2019-20 and accordingly the Ld.AO treated the amount of Rs. 4,01,80,034/- as cash credits u/s. 68 of the Act and added the same to the income returned by the assessee for AY. 2020-21. By making the aforesaid two additions, the Ld.AO completed the assessment vide his order dt. 21-09-2022, passed u/s. 143(3) r.w.s. 144B of the Act.

3.

Aggrieved, the assessee filed appeal before the Ld.CIT(A)/NFAC, who dismissed the appeal of the assessee by endorsing the findings of the Ld.AO.

4.

Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income tax (Appeals) ['Ld. CIT(A)'] has erred in confirming the additions and disallowances made in the assessment order dated 21" September 2022 passed by the learned Assessing Officer ('the Ld. AO') under section 143(3) r.w.s. 144B of the Act without properly considering the submissions and explanations filed by the Appellant and by passing the order in hasty manner. The orders passed by the Ld CIT(A) and Ld. AO are bad in law having been passed contrary to the principles of natural justice and without providing the Appellant a reasonable opportunity of being heard. 2. Without prejudice to the above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the Ld. AO failed to consider the submissions filed by the Appellant vide letter dated 21" September 2022, along with supporting annexures, which were duly uploaded on the portal before passing of the assessment order dated 21" September 2022 (which was signed on 22nd September 2022).

4 ITA No. 1745/PUN/2026

The Ld. CIT(A) failed to appreciate that the assessment order was passed without considering the submissions and evidences filed by the Appellant and without granting a VC hearing as requested by the Appellant, and therefore the assessment order itself is bad in law, void ab initio and liable to be quashed, having been passed in violation of the principles of natural justice and without granting the Appellant a proper and reasonable opportunity of being heard. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the additions made by the Ld. AO by merely endorsing and reproducing the observations of the Ld. AO, without independently examining, evaluating and adjudicating upon the submissions and the additional evidences placed on record by the Appellant during the appellate proceedings. Therefore, order passed by the Ld. CIT(A) is therefore non-speaking, arbitrary and unsustainable in law, as the Ld. CIT(A) failed to exercise the quasi-judicial powers vested in him and did not pass a reasoned order in accordance with the provisions of the Act. The order passed by the Ld CITA, confirming the assessment is perverse. 3. The order of the Ld. CIT(A) is therefore in gross violation of natural justice and bad in law and liable to be set aside. Without prejudice to the above grounds: Addition of Rs. 69,45,697 made on account of variation in income generated from sale of services 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the ad-hoc and arbitrary addition of Rs. 69,45,697 made by the Ld. AO on account of alleged short admission of income from business (low service receipts), which was based purely on conjectures and surmises devoid of any evidentiary basis or cogent material on record. 5. The Ld. CIT(A) failed to appreciate that the impugned addition has been made on a purely arbitrary and estimated basis, without establishing any direct nexus between increase in sales and decrease in service income as explained by the Appellant, and without rejecting the books of account and is therefore unsustainable in law and liable to be deleted. Addition under section 68, of Rs. 4,01,80,034 made on account of trade payables 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in perfunctorily confirming the addition of Rs. 4,01,80,034 made under section 68 of the Act in respect of sundry creditors, only the premise that confirmations from the said parties were not submitted during the course of assessment proceedings. The addition is made on the basis of mere conjectures and surmises without rejecting the books of account and in particular the sales made by the Appellant. Accordingly, the addition so made and confirmed is untenable in law, arbitrary and liable to be deleted. Interest u/s. 234A and 234B of the Act 7. The Ld. CIT(A) has erred in confirming the levy of consequential interest under section 234A and 234B of the Act. Penalty u/s. 270A and 271AAC of the Act 8. The Ld. CIT(A) has erred in confirming the initiation of penalty proceedings u/s. 270A and 271AAC(1) of the Act by the AO.

5 ITA No. 1745/PUN/2026 The Appellant craves to leave, add, alter, delete, modify or amend any of the above grounds of appeal, if necessary, at any time till or during the hearing of the appeal.”

5.

The Ld.AR submitted that the impugned order of the Ld.CIT(A)/NFAC is a cryptic one as he has not independently dealt with any of the issues raised by the assessee. He submitted that during the appellate proceedings the assessee had filed detailed submissions and certain additional evidences were also filed, however, the Ld.CIT(A)/NFAC did not take the cognizance of the same and confirmed the additions made by the Ld.AO by merely endorsing and reproducing the observations and findings of the Ld.AO.

5.1. He further submitted that the first addition of Rs. 69,45,697/- on account of alleged short admission of income from business, is based on mere conjectures and surmises. The Ld.AO has not established any direct nexus between increase in sale and decrease in service income as explained by the assessee and made the impugned addition without rejecting the books of account and hence, it is unsustainable in law and liable to be deleted.

5.2. In respect of the second addition of Rs. 4,01,80,034/- on account of trade payables u/s. 68 of the Act, the Ld.AR submitted that admittedly, the assessee could not furnish its reply by the due date of 12-09-2022 due to inadvertent and genuine oversight of the notice issued by the Ld.AO. Immediately thereafter, upon realizing its mistake, the assessee tried to file the details sought by the Ld.AO in the form of confirmation from the concerned two parties etc., vide its letter dt. 22-09-2022, however, the same could not be uploaded as the IT Portal was closed for replies as the assessment order dt. 21-09-2022 was already passed by the Ld.AO (pg. 15-17 of the paper book refers). The assessee raised its grievance on this count before the Ld.AO, however, he did not address the same. The

6 ITA No. 1745/PUN/2026 request for video conferencing has also been completely ignored by the Ld.CIT(A)/NFAC.

5.3. Referring to the relevant pages of the paper book, the Ld.AR submitted that the assessee had duly filed all the ledger accounts and other relevant details before the Ld.AO as well as before the Ld.CIT(A)/NFAC, but they failed to consider the same while passing the impugned order(s) [pgs. 5-14, 51-58 and 60-167 of the paper book refers]. He, therefore, requested that the impugned issue(s) may be restored to the file of the Ld.AO as the same requires verification and this will also avoid multiplicity of proceedings.

6.

The Ld.DR relied on the order of the Ld.AO and the Ld.CIT(A)/NFAC and raised his objection for setting aside the matter to the file of the Ld.AO.

7.

We have heard the Ld. Representatives of the Parties and perused the material available on record and the paper book filed by the Ld.AR on behalf of the assessee. The facts of the case are not in dispute. The Ld.AO completed the assessment by making the two additions of Rs. 69,45,697/- and Rs. 4,01,80,034/- on account of short admission of income from business and trade payables u/s. 68 of the Act respectively. The Ld.CIT(A)/NFAC has confirmed the additions by endorsing the findings and observations of the Ld.AO. Before us, the Ld. Counsel for the assessee has submitted that both the Ld.AO as well as the Ld.CIT(A)/NFAC have failed to take cognizance of the submissions/evidences adduced by the assessee in support of its claim. The Ld.CIT(A)/NFAC has passed a cryptic and non-speaking order and has simply endorsed and reproduced the observations of the Ld.AO without himself going into the merits of the case and without considering the submissions/evidence placed on record before

7 ITA No. 1745/PUN/2026 him. From the perusal of the impugned order of the Ld.CIT(A)/NFAC and the paper book filed by the assessee, we find the contention of the Ld.AR to be correct. However, the submissions/additional evidence filed by the assessee before the lower authorities and placed on record before us needs verification. Thus, considering the totality of facts and in the circumstances of the case, we deem it fit, in the interest of justice, to set aside the impugned order of the Ld.CIT(A)/NFAC and restore the matter back to the file of the Ld.AO with a direction to decide the impugned issues afresh after due verification of the assessee‟s claim by considering the submissions/evidence filed by the assessee which is already available on record and such further submissions/evidence as may be required/called upon during the fresh proceedings and as per fact and law, after allowing reasonable opportunity of hearing to the assessee. Needless to say, the assessee shall comply with the notices issued by the Ld.AO and make its submissions before him on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld.AO shall be at liberty to pass appropriate order as per law. We order and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

8.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.

Order pronounced in the open Court on 14-10-2026

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 14-10-2026 TNMM

8 ITA No. 1745/PUN/2026 आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईि / Guard file. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil // True Copy // Kumar More More Date: 2026.10.24 13:19:10 +05'30' Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune

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