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Facts
The assessee, a jeweller, faced reassessment proceedings for AY 2017-18 and 2018-19. For AY 2018-19, gold jewellery intercepted at an airport was added as unexplained investment, which the assessee claimed was sent for job work. For AY 2017-18, additions were made for unexplained cash deposits during demonetization and short closing stock/profit after a PCIT revision order.
Held
The Tribunal noted that the CIT(A) orders for both assessment years were passed ex parte without independent findings on merits. Therefore, to ensure justice and fair play, the appeals were restored to the CIT(A) for de novo adjudication.
Key Issues
Whether the CIT(A) orders were passed ex parte without proper adjudication on merits, and if the reassessment proceedings were conducted appropriately based on the evidence and explanations provided by the assessee.
Sections Cited
143(3), 263, 148, 69A, 115BBE, 147, 142(1), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “DB”: AGRA
Before: SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in Learned Commissioner of Income Tax (Appeals) , Kanpur-4 [hereinafter referred to as the Learned CITA] in Appeal No. CIT(A)-IV/KNP/12105/2016-17 dated 4-11- 2025 against the order passed by the Learned Deputy Commissioner of Income Tax , Central Circle, Agra [hereinafter referred to as the Learned AO] under section 143(3) r.w.s. 263 of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] dated 31-3-2023 for the Assessment Year 2017-18. is against the order of the Learned Commissioner of Income Tax (Appeals) , Kanpur-4 [hereinafter referred to as the Learned CITA] in Appeal No. CIT(A)-IV/KNP/11138/2017-18 dated 4-11- 2025 against the order passed by the Learned Assistant Commissioner of Income Tax , Central Circle, Agra [hereinafter referred to as the Learned AO] under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] dated 26-3-2022 for the Assessment Year 2018-19.
The Assessee is a company engaged in the business of trading in gold and jewellery.The Assessee regularly maintains books of accounts and filed its return of income for assessment year 2018-19 on 15-09-2018 declaring total income of Rs. 7,74,540. Subsequently, information was received by the Assessing Officer from the office of ACIT Central Circle, Rajkot, stating that during election surveillance at Rajkot Airport on 27-10-2017, a parcel containing gold jewellery weighing 255.09 grams valued at Rs. 6,05,510 was intercepted. Based on this said information, the Learned AO issued notice under Section 148 of the Act dated 30-03-2021 alleging escapement of income. During reassessment proceedings, the Assessee explained that the jewellery belonged to the company and had been sent for repolishing / job work to M/s Vijay Enterprises, Rajkot. The transaction was duly recorded in the books of accounts and supported by documentary evidences. However, the Learned AO rejected the explanation mainly on the ground that Form - 403 was generated after interception and concluded that the jewellery represented unexplained investment. Consequently, the Learned AO made an addition of Rs. 6,05,510 under Section 69A read with Section 115BBE of the Act and completed the assessment under Section 143(3) read with Section 147 of the Act on 26-03-2022 determining total income of the Assessee at Rs. 13,80,050. The Learned CIT(A) disposed of the appeal ex parte and dismissed the appeal primarily on the ground that the Assessee did not file submissions before the appellate proceedings. The Learned CIT(A) confirmed the addition made by the Learned AO without examining the evidences already available on record.
The Assessee Company electronically filed its return of income for the assessment year 2017-18 on 29-10-2017 declaring total income of Rs.
3,05,56,370. The assessment was completed under Section 143(3) of the Act on 31-12-2019 determining total income at Rs.14,01,75,270 after making addition of Rs 10,96,18,898 on account of unexplained cash deposits made in bank account during the demonetization period. The Assessee filed an appeal before the Learned CITA-IV, Kanpur which was decided in favour of the Assessee. The revenue filed an appeal before the Tribunal which is pending till date. Meanwhile the Learned PCIT (Central), Kanpur set aside the order dated 31-12-2019 passed by the Learned AO under section 143(3) of the Act by passing an order under section 263 of the Act on 24-3-2022 and Corrigendum on 10-5-2022 and directed the Learned AO to pass a fresh order after conducting proper inquiries, verifying the facts from materials available on record and after providing opportunity to the Assessee on the following grounds :- a) The Assessee has shown short closing stock in the details of closing stock consolidated b) Short net profit of Rs 71,67,230 on account of difference in purchase value in the profit and loss account
4. Pursuant to this revision order passed under section 263 of the Act , the set-aside proceedings commenced vide issuance of notice under section 142(1) of the Act to the Assessee on 6-5-2022 calling for certain details that were contemplated in the revision order under section 263 of the Act. Thereafter, the final show-cause notice under section 142(1) of the Act dated 24-3-2023 was also issued to the Assessee company affording final opportunity to the Assessee.The Assessee submitted its reply dated 27-3-2023 and 28-3-2023 before the Learned AO. The Learned AO framed the set-aside assessment under section 143 (3) read with section 263 of the Act on 31-3-2023 for the assessment year 2017-18 after making an addition under section 68 read with section 115BBE of the Act in the sum of Rs 25,33,246 and addition on account of short purchases of Rs 71,67,230 and completed the assessment. The Learned CIT(A) passed an ex parte order without securing the presence of the Assessee and without giving its independent finding on merits.
5. From the above, it could be seen that both the orders of the Learned CIT(A) for both the years were passed ex parte without giving independent findings on merits. Hence, in the interest of justice and fairplay, we deem it fit and appropriate to restore these appeals to the file of Learned CIT(A) for de novo adjudication in accordance with law. Needless to mention that the Assessee be given reasonable opportunity of being heard. The Assessee is directed to cooperate with the Learned CIT(A) for expeditious disposal of the appeals by not taking unwarranted adjournments except due to exceptional or bonafide circumstances. The Assessee is given liberty to raise additional grounds, if any, and furnish additional evidences, if any, in support of its contentions. With these observations, the grounds raised by the assessee for both the years are allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 17/03/2026.