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Facts
The Assessing Officer (AO) passed an order under Section 144 read with Section 147 of the Income Tax Act, treating Rs. 9,88,000/- as unexplained money from Chakdana Motors Pvt. Ltd. The Commissioner of Income Tax (Appeals) [CIT(A)] set aside the assessment order and remanded the matter back to the AO for fresh assessment, citing violations of natural justice.
Held
The Tribunal held that the CIT(A) correctly utilized the provisions of Section 250(1)(1)(a) to remand the matter back to the AO. The Tribunal found that the CIT(A)'s action did not prejudice the assessee's rights and provided an opportunity to prove the absence of the transaction and obtain recorded reasons for reopening.
Key Issues
Whether the reassessment proceedings were vitiated due to violation of principles of natural justice by the AO, and whether the CIT(A) rightly remanded the matter back to the AO for fresh assessment.
Sections Cited
147, 144, 69A, 250(1)(a), 148, 153(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
M/s Abheek Dealtrade Private Limited, 37, Hem Chandra Naskar Road, Kolkata - 700010 [PAN: AAKCA3618F] ……..…...…………….... Appellant vs. The Income Tax Officer, Ward – 4(3), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata - 700069 ................................. Respondent Appearances by: Assessee represented by : Abhishek Bansal, FCA Department represented by : Susanta Saha, Sr. DR, Addl. CIT Date of concluding the hearing : 13.08.2025 Date of pronouncing the order : 22.08.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter “the Ld. CIT(A)], vide order dated 01.01.2025.
1.1 In this case, the Ld.AO passed an order u/s 144 read with section 147 of the Act. Through this assessment order, the Ld.AO treated an amount of Rs. 9,88,000/- u/s 69A of the Act as unexplained money. The assessee carried this matter in appeal where the matter was remanded back to the Ld. AO as follows:
M/s Abhishek Dealtrade Private Limited “6.0 Upon considering the facts of the case and the written submissions it is noted that the reassessment order was passed in clear violation of the principles of natural justice. The AO failed to provide the reasons recorded for reopening or the material relied upon, despite the assessee's repeated requests. This omission deprived the assessee of their statutory right to challenge the reopening. 6.1 It is noted that the AO added Rs. 9,88,000/- as unexplained cash credit based solely on unverified third-party information, without conducting any inquiry with CMFPL to verify the alleged transaction. The assessee denied having any transactions with CMFPL and provided bank statements to substantiate their claim. The AO's failure to verify the information or to produce any contrary evidence undermines the validity of the addition. 6.2 It is observed that the reassessment proceedings were initiated based on the assumption that the assessee received Rs. 9,88,000/- from CMFPL, an assertion for which evidence should have been collected and verified. 6.3 Further the AO did not address the assessee's objections or provide a speaking order disposing of those objections, as required under the guidelines established in GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC). 7.0 Upon a careful examination of the submissions made by the appellant, I am of the considered view that the issues raised in the grounds of appeal require extensive inquiry and verification, including the additional/supporting evidence filed during the appeal proceedings and therefore in the interest of substantial justice and to ensure fair play, it is most appropriate to provide the appellant with an additional opportunity to present its case before the AO. This would enable the AO to thoroughly verify the assessee's submissions and additional/supporting evidence filed during the appeal proceedings and conduct the necessary inquiries to gather all relevant material for an accurate determination of the appellant's income. The Courts in many rulings have clearly held that the importance of providing proper notice and reasonable opportunity for response, even in situations where the assessee failed to comply with initial notices, in order to ensure principles of natural justice are followed. 7.1 Proviso to Section 251(1)(a) of the Income Tax Act wef 01/10/2024 provides that in the case of appeal against an order of assessment made under section 144, the Commissioner (Appeals) is empowered to set aside the order of assessment and refer the matter back to the Assessing officer for making a fresh assessment. 7.2 In view of the power conferred under proviso to Section 251(1)(a) of the Act, I hereby set aside the assessment made u/s 144 and refer the case back to the Assessing Officer for making a fresh assessment, after giving reasonable opportunity of being heard to the assessee. The assessee is directed to file necessary documents for substantiating its case and not seek unnecessary adjournment, so as to facilitate disposal of the case, in accordance with the statutory provisions and the timelines prescribed under Section 153(3) of the Act. 8.0 Accordingly, based on the above discussion, the appeal is disposed of.” 1.2 Aggrieved with this action, the assessee has approached the ITAT with the following grounds:
“1. For that the assessment order passed by the Ld. AO is bad in law as well as on facts.
For that Ld. CIT(A) erred in setting aside the reassessment proceedings back to the Ld. AO in spite of the Ld. CIT(A) having found that (i) the Ld. AO did not provide the assessee with reasons recorded, (ii) the reopening was based upon unverified third party information (iii) the assessee submitted before the Ld. AO its bank statements to show that the alleged amount was not received by it.
For that in spite of assessee having filed return in response to notice u/s 148 and making request, the Ld. AO did not provide the assessee copies of reasons recorded, material relied upon, inquiries made and approval obtained before initiating the reassessment proceedings. Therefore the assessment order passed by the Ld. AO is bad in law.
4. For that even otherwise, the initiation of reassessment proceedings for factually incorrect and non est reason of receipt of Rs. 9,88,000/-from Chakdana Motors Pvt. Ltd. is bad in law and ab initio void. 5. For that since the Ld. AO did not provide the copy of the approval obtained, it appears that either no approval was granted else the same was granted mechanically. As such the reassessment proceeding is bad in law. 6. For that the reassessment order passed alleging that the assessee did not comply with the notices wherein the assessee duly submitted that it did not receive any amount of Chakdana Motors Pvt. Ltd. and also submitted copies of bank statement in support thereof to show that no such amount was credited in its bank account. 7. For that the Ld. AO erred in assessing Rs. 9,88,000/- allegedly being received by the assessee from M/s Chakdana Motors Pvt. Ltd. whereas no such amount was received by the assessee and necessary evidences in support thereof was filed by the assessee. 8. For that the appellant craves leave to add, alter or withdraw any grounds of appeal
on or before hearing of the appeal.”
2. Before us, the Ld. AR vehemently argued regarding the alleged illegality of the action of Ld. AO in terms of violating the principles of natural justice and even the fact of ignoring the alleged illegality in the initiation of proceedings u/s 147 of the Act. It was the submissions that the Ld. AO did not provide any reasons for reopening and in any case such reopening was based on unverified third-party information. The Ld. AR argued on merits and stated that the impugned amount allegedly pertaining to one Chakdana Motors Pvt. Ltd. did not belong to the assessee and in spite of documents provided for the same, the Ld. CIT(A) did not believe in them and remanded the matter back to the file Ld. AO.
2.1 The Ld. DR on the other hand, stated that the assessee did not M/s Abhishek Dealtrade Private Limited cooperate with the Ld. AO during the course of assessment proceedings and no worthwhile information was provided to the Ld. AO and hence nothing could be verified. The Ld. DR also pointed out that the assessee was required to ask for the reasons in case he was desirous of filing objections for the same. The Ld. DR, thereafter, supported the orders of authorities below.
3. We have carefully considered the rival submissions and have diligently gone through the orders of authorities below. It is seen that the Ld. CIT(A) has utilised the provision of section 250(1)(1)(a) of the Act to remand the matter back to the file of Ld. AO. We also find that the Ld. CIT(A) has given specific directions keeping in mind the case of GKN Driveshafts (India) Limited reported in 259 ITR 19 (SC). It is felt through this action of Ld. CIT(A), the assessee’s rights are not prejudiced in any manner and he has a chance to prove that there was no transaction whatsoever with M/s Chakdana Motors Pvt. Ltd. (supra) and he would also be able to obtain the reasons recorded prior to issuance of notice u/s 148 of the Act and also file his objection thereon. Accordingly, the impugned order does not call for any interference whatsoever.
In result, appeal of the assessee is dismissed.
Order pronounced on 22.08.2025