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Facts
The assessee filed a return of income for AY 2019-20. The case was reopened under Section 147 based on information that the assessee transacted with shell entities managed by Shri Sanjay Tibrewal, who was involved in providing accommodation entries. An addition of Rs. 99,80,000/- was made.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without providing an effective opportunity of hearing, violating principles of natural justice. The Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication.
Key Issues
Whether the CIT(A) violated the principles of natural justice by not providing an effective opportunity of hearing, including a video conference, before dismissing the appeal.
Sections Cited
147, 144B, 148, 151, 148A, 69C, 68, 250
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 12.11.2025 passed for A.Y. 2019-20.
The assessee has taken the following grounds of appeal:
“1. Erroneous dismissal of appeal on ground of delay despite date of assessment order is 04.03.2024 whereas the appeal is uploaded on 02.04.2024.
2. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- in as much as the assumption of jurisdiction is not valid.
The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/-in as much as the assumption of jurisdiction is not valid. The notice u/s 148 ought to have been issued by the Faceless Assessing Officer and not the Jurisdictional Assessing Officer.
4. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. l,06,33,890/-in as much as the approval u/s 151 is invalid in so far as the Approval is without application of mind.
The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. l,06,33,890/-in as much as the approval u/s 151 is invalid in so far as the Approval does not contain any digital signature.
The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. l,06,33,890/-in as much as the assumption of jurisdiction is not valid as the Notice u/s 148A(b) is not only vague but also for making fishing inquiry which is not permissible and the same is issued without supplying any information in possession of Ld. AO. Grounds on Merits 7. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- by upholding the addition of Rs 99,80,000/- by modifying the section from 69C to Section 68. 8. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- by upholding the addition of Rs 99,80,000/- ignoring the fact that the same have been returned by the Appellant. 9. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- by upholding the addition of Rs 99,80,000/ - by violating the principle of Natural Justice. 10. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- by upholding the addition of Rs 99,80,000/-as accommodation entry precisely based on conjectures and surmises without bringing any evidence on record. Failure to Provide Video Conference Despite Demanded in Written submission 11. The Ld. CIT(A) has erred in law and in facts in confirming the Assessment Order passed u/s 147 rws 144B of the Income Tax Act, 1961 assessing total income at Rs. 1,06,33,890/- by upholding the addition of Rs 99,80,000/- without providing the opportunity of video conference despite categorically demanded in the written submission filed by the Appellant.
Vikas Chandrakantbhai Shah vs. ITO Asst. Year –2019-20 - 3– 12. The appellant craves leave to add, alter or amend the ground of appeal before or at the time of hearing of the appeal.”
3. The brief facts of the case are that the assessee is an individual who filed his return of income for the Assessment Year 2019–20 declaring total income of ₹6,53,890/-. Subsequently, based on information received from the Investigation Wing of the Department that the assessee had entered into transactions with concerns managed by Shri Sanjay Tibrewal, on whom a search was conducted on 12.04.2019, the case of the assessee was reopened under section 147 of the Income-tax Act ("the Act"). The allegation of the Department was that Shri Sanjay Tibrewal was operating a network of shell entities which were engaged in providing accommodation entries to various beneficiaries. On the basis of such information, proceedings under section 148A of the Act were initiated on the assessee. In response to the notice issued by the Assessing Officer, the assessee filed a return of income on 24.04.2023.
During the course of reassessment proceedings, the Assessing Officer observed that the assessee had allegedly entered into transactions amounting to ₹99,80,000/- with concerns associated with Shri Sanjay Tibrewal. The Assessing Officer asked the assessee to furnish details and furnish explanation regarding the said transactions. According to the Assessing Officer, the assessee did not furnish satisfactory explanation nor did the assessee file documentary evidence regarding the nature of these transactions. Therefore, the Assessing Officer treated the said amount of ₹99,80,000/- as unexplained expenditure under section 69C of the Act and added the same to the total income of the assessee. The Assessing Officer completed the Vikas Chandrakantbhai Shah vs. ITO Asst. Year –2019-20 - 4– assessment assessing the total income at ₹1,06,33,890/- as against the returned income of ₹6,53,890/- originally filed by the assessee.
5. Aggrieved by the reassessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC). The CIT(A) first noted that the appeal had been filed with a delay of almost one year and that the assessee had neither mentioned the delay in Form No.35 nor furnished any explanation seeking condonation of delay. According to the CIT(A), the appeal was liable to be dismissed on this ground alone. However, the CIT(A) proceeded to examine the issues raised in the appeal on merits as well. In Ground Nos.1 and 2, the assessee challenged the validity of reopening of assessment and contended that the notice under section 148A(b) and order under section 148A(d) were issued without proper application of mind and that the notice under section 148 of the Act had been issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. The CIT(A) rejected these contentions and held that the issue relating to issuance of notice by the Jurisdictional Assessing Officer had been decided in favour of the Revenue in the decision of TKS Builders Pvt. Ltd. v. ITO (2024) 167 taxmann.com 759 (Delhi). The CIT(A) further observed that sufficient opportunity had been provided to the assessee during the proceedings under section 148A but the assessee had failed to furnish any explanation regarding the accommodation entries. The CIT(Appeals). relying upon the judgment of the Hon’ble Allahabad High Court in Rochana Aggarwal v. ACIT (2022) 138 taxmann.com 336 (Allahabad), held that where the Assessing Officer forms a reason to believe on the basis of information received from the Investigation Wing that the assessee is a Vikas Chandrakantbhai Shah vs. ITO Asst. Year –2019-20 - 5– beneficiary of accommodation entries, issuance of notice under section 148 of the Act is justified. Accordingly, Ground Nos.1 and 2 of the appeal were dismissed. In Ground Nos.3 and 4, the assessee challenged the addition of ₹99,80,000/- made by the Assessing Officer. The CIT(A) noted that during the course of assessment proceedings the assessee was repeatedly asked to explain the transactions with concerns associated with Shri Sanjay Tibrewal. However, the assessee did not furnish any satisfactory explanation before the Assessing Officer. The CIT(A) further observed that information gathered during search proceedings in the case of Shri Sanjay Tibrewal showed that several shell concerns viz Austvinayak Textiles, Ganpati Textile, Hanuman Fabrics, Narayan & Co., Radhika & Brothers and Shankar Enterprise were used for providing accommodation entries. According to the CIT(A), the assessee was one of the beneficiaries of such accommodation entries to the extent of ₹99,80,000/-. Though during the appellate proceedings the assessee contended that the said amount represented advance received from Narayan & Co. for supply of goods which was later refunded, the CIT(A) held that the assessee failed to produce any supporting evidence such as correspondence, purchase orders or proof of proposed supply of goods. The CIT(A) therefore held that the explanation furnished by the assessee was not substantiated by evidence. However, the CIT(A) held that the addition made by the Assessing Officer under section 69C was not appropriate and the same ought to have been made under section 68 of the Act as unexplained cash credit. Accordingly, while modifying the section under which the addition was made, the CIT(A) confirmed the addition of ₹99,80,000/- under section 68 of the Act and dismissed the appeal on these grounds.
Vikas Chandrakantbhai Shah vs. ITO Asst. Year –2019-20 - 6– 6. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee.
We have heard the rival submissions and perused the material available on record. The primary contention raised by the learned counsel for the assessee before us is that the order passed by the learned CIT(A) suffers from violation of principles of natural justice. It was submitted that from page 116 of the Paper Book it is evident that the learned CIT(A) issued only one notice of hearing dated 20th June 2025 and thereafter proceeded to pass the appellate order without granting further opportunity of hearing to the assessee. It was further submitted that the assessee had filed written submissions dated 06.07.2025 before the CIT(A) wherein a specific request was made for personal hearing through video conference. However, this request was not acceded to by the CIT(A) and the appeal was decided without granting the assessee an effective opportunity of being heard.
We find merit in the submissions advanced by the learned counsel for the assessee. The right of an assessee to be heard before an adverse order is passed is a fundamental requirement of the principles of natural justice. Section 250 of the Income-tax Act also contemplates that the Commissioner (Appeals) shall give the appellant an opportunity of being heard before disposing of the appeal. Where such opportunity is not granted in an effective manner, the appellate order cannot be sustained in law.
In the present case, the material placed before us shows that the CIT(A) issued only one notice of hearing (which has not been controverted by Ld. Ld. DR) and thereafter proceeded to dispose of the appeal. Further, the Vikas Chandrakantbhai Shah vs. ITO Asst. Year –2019-20 - 7– request of the assessee seeking personal hearing through video conference was not considered. In our considered view, the assessee ought to have been provided a reasonable opportunity to present his case before the CIT(A), particularly when the issues involved relate to reopening of assessment as well as addition of substantial amount of ₹99,80,000/-.
Considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it appropriate to set aside the impugned order of the CIT(A) and restore the matter to the file of the CIT(A) for fresh adjudication. The CIT(A) shall grant adequate opportunity of hearing to the assessee including the opportunity of personal hearing through video conference, if so requested by the assessee, and thereafter pass a reasoned order in accordance with law.
Accordingly, the appeal of the assessee is allowed for statistical purposes and the matter is restored to the file of the CIT(A) for de-novo consideration. This Order is pronounced in the Open Court on 12/03/2026