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Facts
The assessee filed his return for AY 2018-19, which was accepted. The case was reopened under section 147 based on information of alleged bogus purchases amounting to Rs.13,58,94,043/-. The Assessing Officer disallowed these purchases and completed reassessment. The assessee failed to comply with notices before the AO and CIT(A), leading to ex-parte orders.
Held
The Tribunal acknowledged that the assessee failed to produce requisite details before the AO and CIT(A), resulting in ex-parte orders. However, considering the substantial disallowance and the assessee's willingness to furnish supporting documents, the Tribunal decided to grant one more opportunity in the interest of natural justice and fair play.
Key Issues
Whether the CIT(A) erred in sustaining the addition for bogus purchases without granting sufficient opportunity, and whether the matter should be remanded for fresh adjudication.
Sections Cited
143(3), 147, 148, 37, 144, 144B
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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2018-19) Shri Venkatarama Satya Surya Income Tax Officer, Vs. Ward-6(1), Hyderabad. Narayana Murthy Raju Sagi, Hyderabad. PAN:ATHPS0867M (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri A.V. Raghuram & Shri P. Vinod, Advocates रधजस् व द्वधरध/Revenue by: Shri Narender Kumar Naik, CIT-DR सुिवधई की तधरीख/Date of hearing: 23/07/2025 घोर्णध की तधरीख/Pronouncement: 08/08/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Venkatarama Satya Surya Narayana Murthy Raju Sagi (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 30.04.2025 for the A.Y. 2018-19.
The assessee has raised the following grounds of 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 2018–19 on 08.12.2018, declaring total income of Rs.4,92,66,420/-. The case was selected for scrutiny through Computer Aided Scrutiny Selection (CASS), and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (“the Act”) on 18.03.2021, accepting the returned income. Subsequently, the case of the assessee was reopened under section 147 of the Act on the basis of information regarding alleged bogus purchases amounting to Rs.13,58,94,043/- from four parties. Accordingly, notice under section 148 of the Act was issued to the assessee on 31.03.2022. In response to the said notice, the assessee filed his return of income on 10.11.2022, declaring the same income of Rs.4,92,66,420/-. During the reassessment proceedings, the assessee only partially complied with the notices issued by the Learned Assessing Officer (“Ld. AO”). Consequently, the Ld. AO disallowed the alleged bogus purchases of Rs.13,58,94,043/- under section 37 of the Act and completed the reassessment under section 147 read with section 144 and 144B of the Act on 18.03.2023, assessing the total income of the assessee at Rs.18,51,60,463/-.
4. Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A). However, the assessee again failed to comply with the notices issued by the Ld. CIT(A), who accordingly dismissed the appeal.
5. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that the assessee could not produce relevant documents and information relating to the alleged bogus purchases either before the Ld. AO or the Ld. CIT(A) due to unavoidable circumstances. However, the assessee is now in possession of all necessary supporting evidences, which he is willing to furnish to substantiate the genuineness of the purchases. The Ld. AR submitted that the assessee has suffered due to non-compliance but prayed for one more opportunity in the interest of natural justice. It was further submitted that the disallowance has been made without properly examining the merits, and hence the matter may be restored to the file of the Ld. AO for fresh adjudication, granting the assessee an opportunity to present his case.
Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the request for remand and submitted that the assessee was provided with sufficient opportunities during the reassessment as well as appellate proceedings, which were not availed. Accordingly, the Ld. DR submitted that the appeal deserves to be dismissed.
We have carefully considered the contentions of both sides and perused the material available on record. It is an undisputed fact that the assessee failed to produce requisite details before both the Ld. AO and the Ld. CIT(A), resulting in ex parte orders at both levels. At the same time, the quantum of disallowance involved is substantial (Rs.13,58,94,043/-), and the assessee has now expressed willingness and preparedness to furnish all supporting documents to substantiate the purchases. In view of the principle of natural justice and in the interest of fair play, we are inclined to give one more opportunity to the assessee to explain the nature and genuineness of the impugned purchases. We, therefore, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the Ld. AO with a direction to re-adjudicate the issue afresh after granting due opportunity of being heard to the assessee. The assessee is also directed to fully cooperate with the proceedings and file all requisite evidences in support of his claim without seeking undue adjournments.