CHAUHAN JAGDISHSNGH MANUBHAI (HUF),SURAT vs. ITO WARD 2(3)(1), SURAT, SURAT

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ITA 298/SRT/2026Status: DisposedITAT Surat28 October 2026AY 2022-234 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the AO had not taken cognizance of details related to the tax audit report, audit financial statements, and creditor details, which were supposed to be filed but could not be submitted within the stipulated time. The Tribunal found that both the AO and the CIT(A) had passed ex-parte orders. Therefore, the Tribunal decided to remand the matter back to the file of the AO for proper verification of the details filed by the assessee. The AO was directed to adjudicate the matter in accordance with the Income Tax Act, and the assessee was to be given an opportunity of hearing, following the principles of natural justice. The issue of whether the additions were justified or if a best judgment assessment was required was not decided on merits but was to be examined by the AO upon remand.

What were the facts?

The assessee, Chauhan Jagdishsingh Manubhai (HUF), filed an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, for Assessment Year 2022-23. The assessee, engaged in wholesale and retail trading of diamonds, declared a total income of Rs. 11,46,220/-. The case was selected for scrutiny, and notices under Section 143(2) and 142(1) were issued. The Assessing Officer observed non-compliance with these notices and passed an ex-parte order under Section 144 r.w.s. 144B, making additions of Rs. 2,52,59,786/- on account of increased sundry debtors and Rs. 2,81,87,132/- on account of increased sundry creditors, totaling Rs. 5,34,46,918/-, treating them as non-genuine. The CIT(A) also dismissed the assessee's appeal ex-parte.

What were the issues?

1. Whether the Learned CIT(A) erred in passing an ex-parte order despite the assessee filing written submissions and a paper book. (Question of law and fact) 2. Whether the Learned CIT(A) erred in dismissing the appeal without passing a speaking order. (Question of law) 3. Whether the Assessing Officer erred in making an addition of Rs. 2,52,59,786/- on account of an increase in sundry debtors compared to the previous year. (Question of mixed law and fact, concerning Section 144 r.w.s. 144B) 4. Whether the Assessing Officer erred in making an addition of Rs. 2,81,87,132/- on account of an increase in sundry creditors compared to the previous year. (Question of mixed law and fact, concerning Section 144 r.w.s. 144B) 5. Whether, even if debtors and creditors are recorded in the books, the Assessing Officer should have made a best judgment assessment estimating income based on past records or comparable cases. (Question of law, concerning Section 144) Assessee's Contentions: The assessee argued that written submissions and a paper book were filed before the AO, but due to non-appearance, an ex-parte order was passed. The CIT(A) also passed an ex-parte order as notices were not properly served, and the received notice allowed insufficient time to gather material. The assessee prayed for the matter to be remanded back to the AO for verification. Revenue's Contentions: The Learned Departmental Representative relied upon the assessment order and the order of the CIT(A).

Which sections of the Income-tax Act were involved?

Section 44AB,Section 143(2),Section 142(1),Section 144,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.298/SRT/2026 (िनधा�रण वष�/Assessment Year: 2022-23) CHAUHAN JAGDISHSNGH ITO WARD 2(3)(1), SURAT MANUBHAI (HUF) AAYAKAR BHAVAN, B-102, NEW MAHAVIR FLATS, MAJURA GATE, OPP. RUPALI CINEMA, SURAT-395001, Vs. RAMNAGAR, GUJARAT SURAT-395005, GUJARAT अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AABHC1756Q

अपीलाथ� �ारा/Appellant represented by: Shri Rasesh Shah, CA ��थ� �ारा/Respondent represented by: Ms. Ila Mahendrasinh Parmar, CIT(DR) सुनवाई की तारीख / Date of conclusion of hearing: 19.08.2026 घोषणा की तारीख / Date of pronouncement: 28.10.2026

O R D E R PER : SUCHITRA KAMBLE, J M:

The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 09.12.2025 for the Assessment Year (in short “AY”) 2022-23. 2. The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in passing ex-parte order even though written submission and paper book were filed before him.

ITA No.298/SRT/2026 (A.Y. 2022-23) CHAUHAN JAGDISHSNGH MANUBHAI (HUF)

2.

On the facts and circumstances of the case as well as law on the subject, the Id. CIT(A) has erred in dismissing the appeal without passing speaking order. 3. On the facts and circumstances of the case as well as law on the subject, the Id. Assessing officer has erred in making addition of Rs. 2,52,59,786/- on account of increase in sundry debtors as compared to previous year. 4. On the facts and circumstances of the case as well as law on the subject, the Id. Assessing officer has erred in making addition of Rs. 2,81,87,132/- on account of increase in sundry creditors as compared to previous year. 5. Even otherwise, the debtors and creditors are recorded in the books of accounts, the assessing officer should have made best judgment assessment estimating the income on the basis of past records or comparable cases. 6. It is therefore prayed that above addition made by the assessing officer and confirmed by the Id. CIT(A) may please be deleted or the matter may please be set aside to the file of assessing officer/Id. CIT(A). 7. Appellant craves leave to add, alter or delete any of the ground(s) either before or in the course of hearing of the appeal.” 3. The assessee HUF filed its return of Income on 11.10.2022 declaring a total income of Rs.11,46,220/-. The assessee has derived income from business & profession and income from other source being interest income. During the year under consideration, the assessee was engaged in wholesale and retail trading of Diamonds under the trade name M/s. Brijal Impex. The assessee maintains complete books of accounts and the same are duly audited as per section 44AB of Income Tax Act, 1961 (in short “the Act”). The case was of the assessee was selected for scrutiny under CASS and accordingly notice u/s. 143(2) was issued on 01.06.2023. In the assessment order, Assessing Officer (in short the “AO”) mentioned that he had issued various notices u/s. 142(1) dated 23.06.2023, 13.09.2023 and 09.01.2024, issued letter dated 22.09.2023 and show cause notice dated 01.02.2024. The AO further observed in his assessment order, that the assessee failed to comply with said notices. Accordingly, the AO passed order u/s, 144 r.w.s. 144B on 15.02.2024 after making the total addition of

ITA No.298/SRT/2026 (A.Y. 2022-23) CHAUHAN JAGDISHSNGH MANUBHAI (HUF) Rs.5,34,46,918/- on account of increase in sundry creditors amounting to Rs.2.81,87,132/- and sundry debtors amounting to Rs.2,52,59,786/- as compared to previous year by treating them as alleged non-genuine transactions.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. Authorised Representative (in short “the Ld. AR”) submitted that the assessee filed the details before the AO but due to the non- appearance the AO passed order u/s 144 r.w.s. 144B of the Act. The CIT(A) has also passed ex-parte order as the notices were not properly served and the notice which was received by the assessee was during the short period of time where the assessee was unable to gather material information. Therefore, the Ld. AR submitted that the matter may be remanded back for verification to the file of the AO.

6.

The Ld. Departmental Representative (in short “Ld. DR”) relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the AO has not taken cognizance of the details related to tax audit report, audit financial statements as well as the creditor’s details were supposed to be filed but the same could not be filed before the AO within the stipulated time. Therefore, this needs verification. Both the AO as well as the CIT(A) has passed ex-parte orders, therefore, we remand back this matter to the file of the AO for proper verification of the details filed by the assessee and adjudicate the same as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.

ITA No.298/SRT/2026 (A.Y. 2022-23) CHAUHAN JAGDISHSNGH MANUBHAI (HUF) 8. In result, appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the open court on 28.10.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER //True Copy// Surat; Dated: 28.10.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order, Digitally signed by HEMA KISHORE HEMA KISHORE JAKKA JAKKA Date: 2026.10.30 11:31:08 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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