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Facts
The assessee, a partnership firm that did not file its return of income, had its case reopened for AY 2016-17 due to alleged bogus purchases amounting to Rs. 4,95,78,586/- from M/s. ABN Tradelink Private Limited. The Assessing Officer (AO) made an addition u/s. 69B r.w. 115BBE of the Act. The CIT(A) upheld the addition, stating the assessee failed to furnish cogent evidence.
Held
The Tribunal held that the assessee should be given one more opportunity to present its case before the AO. The issues were remanded back to the AO for de novo assessment, with directions for the assessee to comply and the AO to decide on merits based on submissions and additional evidence.
Key Issues
Whether the reassessment proceedings and the additions made were justified, and whether the assessee deserves another opportunity to present its case and evidence.
Sections Cited
250, 148, 147, 68B, 115BBE, 142(1), 147, 144, 69B, 148A, 148A(1)(b), 148A(1)(d), 148A(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2016-17) United Industries I.T.O. Ward 22(3)(6), Mumbai 102, Kamal Parag, N. S. Road No. 5, Juhu Scheme, Vileparle West, Mumbai Vs. – 400056. PAN/GIR No. AACFU5591N (Appellant) : (Respondent) Assessee by : Shri Haresh P Shah : Ms. Kavitha Kaushik (SR DR) Respondent by : 09.07.2025 Date of Hearing Date of Pronouncement : 08.08.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2016-17.
The assessee has raised the grounds of appeal as well as additional grounds of appeal vide an application dated 07.06.2025: “Grounds of Appeal: (1) FRESH/ADDITIONAL GROUND - On the facts and in the circumstances and in law Your Appellant craves leave to raise the following Fresh/Additional Grounds of Appeal which are purely legal and (A.Y. 2016-17) Unites Industries arising on the basis of the prevalent facts on record, particularly, at the time issue of issue of the impugned Notice under the provisions of section 148 rws 147 of the Act. Hence, it is humbly prayed that the same may be admitted and adjudicated in the interest of justice as originally they were, inadvertently, not raised. (1.1) On the facts and circumstances and in law, the learned ITO-22(3)(6), Mumbai [ITO] erred in initiating reassessment proceedings under the provisions of section 148 rws 147 of the Act merely on the basis of suspicion as it is evident & corroborates from the 'CASE RELATED INFORMATION DETAILS' on the 'Insight Portal' which clearly indicates that it was on the basis of categorical noting under the head 'General Documents' at the serial no 4 indicating the document description as "Ground of suspicion and finding of inquiry". (1.2) Without prejudice to the above, the learned ITO erred in initiating and issuing the impugned reassessment notice under the provisions of section 148 rws 147 of the Act on the 'Non est' /non-existent person and hence, Your Appellant humbly states that it is bad-in-law.
(1.3) On the facts and circumstances and in law, the learned ITO failed to appreciate that the erstwhile Appellant firm, vide letter dated 31" March, 2010, filed with the Original PAN card and Deed of Retirement and Continuation of Proprietary Business [duly filed and acknowledged on 6th Sept, 2010], stating that the erstwhile partnership firm was dissolved and hence requested to CANCELL the PAN. (1.4) However, on the facts and circumstances and in law the impugned reassessment proceeding is bad-in-law. (2) OPPORTUNITY - Without prejudice to the above, on the facts and circumstances, the learned NFAC, DELHI [referred as 'CIT(A')] ought to have appreciated, in the interest of principle of natural justice, that the learned ITO failed to provide all the relevant material basis coupled with proper and sufficient opportunity to rebut and cross examine the alleged party on which the impugned reassessment proceeding was initiated and reassessment was completed by making the alleged addition of Rs. 4,95,78,590/- as unrecorded transactions 3) ADDITION OF RS. 4,95,78,590 AS UNEXPLAINED INVESTMENT US, 698- (3.1) On the facts and circumstances and in law the learned CIT(A) erred in confirming the alleged addition of Rs.4,95,78,590/- as unexplained (A.Y. 2016-17) Unites Industries investment without considering the prevalent facts and submissions and merely on the basis of suspicion and without any corroborative or conclusive evidence/s. (3.2) The learned CIT(A) erred in confirming the alleged addition of Rs.4,95,78,590/- as u/s. 68B of the Act without appreciating the facts on record that the ITO's conclusion was purely based upon inconclusive material facts, details and documents. (3.3) The learned CIT(A) failed to appreciate that the Your Appellant, with regard to the alleged transaction, had very categorically submitted that the partnership was dissolved and vide letter dated 31 March 2010 with the Original PAN card and Deed of Retirement and Continuation of Proprietary Business [duly filed and acknowledged on 6th Sept, 2010] requested categorically to cancel the PAN: AACFU5591N. (3.4) However, on the facts and circumstances the learned CIT(A) failed to appreciate that the ITO had conveniently ignored/disregarded the above letter and categorical submission during the impugned reassessment proceedings that the erstwhile Appellant firm was so dissolved and it was, since then, being carrying business activity under the name & style M's. United Industries as a proprietary concern of Shri. Dilip Hemchand Doshi under the PAN NO. AACPD9826F. (3.5) On the facts and circumstances and in law, the learned CIT(A) erred in confirming the alleged addition of Rs.4,95,78,690/- as alleged 'unrecorded transactions' without appreciating the fact that it was made without any corroborative and/or conclusive evidence/finding and merely on the basis of further false assumption that the erstwhile firm was allegedly still active by observing that the system was showing the firm was still active. (3.6) On the facts and circumstances and in law the learned CIT(A) failed to appreciate from the details of purchase and sale of the proprietary concern i.e. M/s. United Industries had no purchases from the alleged supplier party- M/s. ABN Trade Link P. Ltd. (4) On the facts and circumstances and in law Your Appellant prays that the impugned reassessment proceedings may be quashed and the alleged addition may be deleted.” Additional Grounds of Appeal: (1) On the facts and circumstances and in law, the learned ITO-22(3)(6), Mumbai [ITO] erred in initiating the proceedings under the amended provisions of section (A.Y. 2016-17) Unites Industries 148 vide Finance Act, 2022 w,e,f, 1-4-2022 in contravention of the provisions of section 148A read with the section 148A(1)(b) and 148A(1) (d) of the Act. (2) On the facts and circumstances and in law, erred in proceeding reassessment the notice under section 148, read with section 148A, without considering the legal requirement as to under what specified conditions, that are laid down, under the provisions of section 48A(1)(b) & 148A(1)(d) any notice as such under the provisions of section 148 of the Act could be issued. (3) However, on the facts and circumstances and in law, Your Appellant humbly states that the learned ITO erred in passing the impugned reassessment order in contravention of the provisions of section 148A(1)(a) and 148A(1)(b) of the Act. (4) On the facts and circumstances and in law the impugned reassessment proceeding is bad-in-law.”
3. Briefly stated, the assessee is a partnership firm and had not filed its return of income for the year under consideration. The assessee’s case was reopened vide notice u/s. 148, dated 27.07.2022 in consequence of order u/s. 148A(d) of the Act, dated 26.07.2022 after duly taking prior approval of the competent authority. The assessee did not file its return of income in response to notice u/s. 148 of the Act. The learned Assessing Officer ('ld. A.O.' for short) issued notice u/s. 142(1) of the Act, dated 02.11.2022 seeking for details pertaining to the transaction with M/s. ABN Tradelink Private Limited alleged to be an accommodation entry provider in which the assessee was found to be one of the beneficiaries of accommodation entries in the nature of bogus purchases amounting to Rs. 4,95,78,586/- during the year under consideration. The ld. AO passed the assessment order dated 29.05.2023 u/s. 147 r.w.s. 144 of the Act, being the best judgment assessment, determining total income at Rs. 4,95,78,590/- after making an addition u/s. 69B r.w. 115BBE of the Act on the ground that the assessee has failed to substantiate the genuineness of the impugned transaction.
(A.Y. 2016-17) Unites Industries 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 11.12.2024 upheld the addition made by the ld. AO on the ground that the assessee had failed to furnish any cogent evidences to substantiate the genuineness of the transaction.
The assessee is in appeal before us, challenging the order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the addition made by the ld. AO before the first appellate authority but has been non-compliant and had failed to furnish any evidences as to the genuineness of the transaction neither made any submission nor any corroborative evidence during the appellate proceeding as well as during the assessment proceeding. Before us, the ld. AR has filed documents in the nature of additional evidences which were not filed before the lower authorities.
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present its case before the ld. AO.
The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. AO for the reason that the assessee was given several opportunities by the ld. AO as well as the ld. CIT(A) which was not availed by the assessee.
On the above facts of the case, we are of the considered view that the assessee may be given one more opportunity to present its case before the ld. AO by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, (A.Y. 2016-17) Unites Industries remand all these issues back to the file of the ld. AO for de novo assessment. The assessee is directed to strictly comply with the proceedings without any undue delay on its side and the ld. AO is also directed to decide the issue on the merits of the case based upon the submission and additional evidences proposed to be filed by the assessee and in accordance with law.