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Facts
The assessee's assessment was reopened based on information about availing accommodation entries through bogus purchases. The Assessing Officer made an addition of Rs. 24,14,30,244/- on account of these alleged bogus purchases. The CIT(A) upheld the addition ex parte due to the assessee's non-compliance and failure to substantiate its claim.
Held
The Tribunal observed that the assessee was given opportunities but failed to present its case effectively before the lower authorities. Considering the principles of natural justice, the Tribunal decided to remand the matter back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) order passed ex parte is valid, and if the assessee should be given another opportunity to present its case on merits.
Sections Cited
250, 139(1), 143(1), 147, 148, 148A, 143(2), 142(1), 144B, 69C, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2018-19) Varsha Mills Private Ltd. Income Tax Officer Ward 4(3)(1), 302, 3rd Floor, Kapadia Chambers, 599 Mumbai JSS Road, Chira Bazar, Marine Lines, Vs. Mumbai – 400002. PAN/GIR No. AAECV9343G (Appellant) : (Respondent) Assessee by : Ms. Darshana Bhaiya Respondent by : Shri Vivek Perampura, (CIT-DR) Date of Hearing : 22.07.2025 Date of Pronouncement : 31.07.2025 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) 2018-19.
The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the CIT(A) grossly erred in dismissing the appeal of the Appellant ex parte. without giving proper opportunity of hearing and without considering the facts and merits of the case, which makes the order of CIT(A) illegal and violative of principles of natural justice and accordingly liable to be set aside and the appeal of the Appellant deserves to be properly adjudicated on merits as per law and in the interest of justice.
(A.Y. 2018-19) Varsha Mills Private Limited 2. The reopening of the assessment and the assessment as completed is illegal, invalid, without jurisdiction, on borrowed satisfaction, without independent application of mind, violative of the principal of natural justice and which deserves to be quashed as per law and in the interest of justice.
3. On the facts and circumstance of the case and in law, the addition made under section 69C is grossly illegal and which deserves to be deleted as per law and in the interest of justice.
4. On the facts and circumstances of the case and in law, the AO grossly erred in treating the purchases made by the Appellant amounting to Rs. 24,14,30,244 as non- genuine ignoring the evidence filed and the submissions of the Appellant and the legal proposition on the same and proceeded to make the addition on mere assumptions, presumptions, surmises and conjectures, without giving opportunity of cross examination, which makes the addition illegal, bad in law. violative of the principles of natural justice and liable to be deleted as per law and in the interest of justice.
On the facts and circumstances of the case and in law, the entire purchases allegedly held to be bogus being duly supported by third party evidences, the addition made by the AO without objectively and subjectively disproving the evidences so filed, and solely on the basis of statements recorded and information shared by officers other than the Assessing Officer, makes the addition grossly illegal and liable to be deleted as per law and in the interest of justice.
6. On the facts and circumstances of the case and in law the entire purchases made by the Appellant are genuine and which deserve to be accepted as such.
On the facts and circumstances of the case and in law, the books of accounts having been accepted as well as the sales made by the Appellant, the corresponding purchases also ought to have been accepted as per law and in the interest of justice.
Without prejudice, in case any purchases made by the Appellant are held to be non-genuine, then the addition deserves to be restricted only to the gross profit on the same as per law and in the interest of justice.
9. The Appellant denies liability to be assessed to tax under section 115BBE as charged.”
Brief facts of the case are that the assessee is engaged in trading of multiple products and had filed its return of income u/s. 139(1) of the Act, dated 27.10.2018, declaring total income at Rs. 6,09,100/- and the same was processed u/s. 143(1) of the Act.
(A.Y. 2018-19) Varsha Mills Private Limited Pursuant to the information received from DDIT Inv., Mumbai, the assessee’s case was reopened u/s. 147 of the Act vide notice u/s. 148 dated 29.03.2022, for the reason that the assessee was one of the beneficiaries of availing accommodation entries by way of bogus purchases from the supplier companies aggregating to Rs. 24,14,30,244/- which according to the learned Assessing Officer ('ld. A.O.' for short) was not substantiated by supporting documentary evidences and further based on the statement of Shri Gopal Bhattar who was a director of M/s. SVG Style and Textile Company Pvt. Ltd and M/s. Rathi Style and Textile Company Ltd. that these were bogus entities which were providing accommodation entries to various beneficiaries, thereby holding that income had escaped assessment. The ld. AO issued show cause notice u/s. 148A(b) of the Act, dated 11.03.2022, seeking explanation as to why notice u/s. 148 should not be issued. The learned Assessing Officer (ld. A.O. for short) issued notice u/s. 148, dated 29.03.2022 pursuant to order u/s. 148A(d), dated 29.03.2022. In response to the notice u/s. 148 of the Act, the assessee filed its return of income, dated 24.04.2022, declaring total income of Rs. 6,09,100/-. Notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) then passed the assessment order u/s. 147 rw.s. 144B of the Act dated 26.03.2023, determining total income at Rs. 24,20,39,344/-, after making addition of Rs. 24,14,30,244/- u/s. 69C r.w.s. 115BBE of the Act.
Aggrieved the assessee was in appeal before the first appellate authority, who vide an ex parte order dated 25.03.2025 upheld the addition made by the ld. AO on the ground (A.Y. 2018-19) Varsha Mills Private Limited that the assessee has failed to substantiate its claim and had also not filed any submission inspite of several opportunities.
5. The assessee is in appeal before us, challenging the impugned 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 throughout the appellate proceeding and had also not corroborated its claim that these are genuine purchases by any documentary evidences.
7. 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. CIT(A).
8. The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunities by 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 first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to strictly comply with the proceedings without any undue delay on its side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law.