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Facts
The assessee, an HUF, filed its return for AY 2015-16. Following a search in related cases, the AO initiated reassessment proceedings u/s 147, alleging unaccounted loans and credits. The AO framed an ex-parte assessment u/s 144 r.w.s. 147, making significant additions.
Held
The Tribunal held that the ex-parte assessment orders lacked adequate reasoning and independent analysis, and the CIT(A)'s orders also failed to provide proper findings. The short notice period and dismissal on technical grounds for one year violated natural justice.
Key Issues
Whether the ex-parte assessment and the CIT(A)'s confirmation were justified, given the short notice period and lack of independent analysis, and whether the proceedings violated principles of natural justice.
Sections Cited
147, 148, 250, 132, 144, 68, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI SIDDHARTHA NAUTIYAL
O R D E R PER BENCH : The captioned four appeals have been filed by the Assessee against the separate orders dated 07.02.2025, 30.01.2025 & 31.01.2025 passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘Ld. CIT(A)’ in short], u/s 250 of the Income-tax Act, 1961 [‘the Act’ in short] relating to the Assessment Years 2015-16 to 2018-19.
Since the issues involved in all four appeals are common and inter-connected, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
AY 2015-16 is taken as the lead case.
AY 2015-16 3. The assessee has raised the following grounds of appeal:
1. 1. On the facts and circumstances of the case as well as law on the subject, the Id. CIT(A) has erred in confirming the action of assessing officer in re-opening assessment u/s 147 by issuing notice u/s 148 of the I.T. Act, 1961. to 678/Ahd/2025 Mukesh S Kedia HUF Vs. ITO Asst. Years : (2015-16 to 2018-19) - 2– 2. On the facts and circumstances of the case as well as law on the subject, the id. Assessing officer has erred in framing assessment u/s. 144.
3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making an addition of Rs. 54,00,000/-u/s. 68 of the Act on account of alleged unexplained credit.
4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making an addition of Rs. 3,50,00,000/-u/s. 69A of the I.T. Act on account of alleged unaccounted money.
5. It is therefore prayed that assessment framed u/s 144 r.w.s. 147 of the Act may kindly be quashed and/or addition made by assessing officer and confirmed by CIT (A) may please be deleted.
6. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.
4. Briefly stated, the facts of the case are that the assessee, an HUF, filed its return of income for AY 2015-16 on 07.02.2017 declaring total income of Rs.5,12,260/-. Subsequently, search and seizure action under section 132 of the Act was conducted in the case of Shri Jignesh Shah and Shri Sanjay Shah on 11.09.2018, during which unaccounted cash and incriminating documents indicating provision of accommodation entries were found. Based on information shared by the Investigation Wing and analysis of a Suspicious Transaction Report (STR), the Assessing Officer noted that the assessee allegedly received accommodation entries in the form of unsecured loans amounting to Rs.54,00,000/- and had unexplained credits of Rs.3.50 crores, despite declaring a modest turnover of Rs.18.54 lakhs. In the absence of satisfactory explanation and due to non-compliance with statutory notices, the AO framed an ex-parte assessment u/s 144 r.w.s. 147 of the Act and assessed the total income at Rs.4,09,12,260/-, making additions u/s 68 and 69A of the Act.
5. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who confirmed the additions made by the Assessing Officer and dismissed the appeal filed by the assessee, mainly due to lack of evidentiary support or rebuttal of findings. to 678/Ahd/2025 Mukesh S Kedia HUF Vs. ITO Asst. Years : (2015-16 to 2018-19) - 3– 6. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
7. Before us, the Ld. AR submitted that the order passed by the Ld. CIT(A) lacks clear reasoning and independent analysis. Specifically, paragraph 4.6 on page 7 of the appellate order does not contain any proper findings or consideration of the issues raised by the assessee, showing that the Ld. CIT(A) simply accepted the Assessing Officer’s conclusions without proper thought. The Ld. AR further submitted that, in three out of the four assessment years under appeal, namely AYs 2015-16 to 2017- 18, the Assessing Officer issued show-cause notices dated 24.03.2022, fixing the hearing on 26.03.2022, thereby affording the assessee only one day to respond and the final assessment orders were passed shortly thereafter on 29.03.2022. The Ld. AR, therefore, contended that it is a clear violation of the principles of natural justice. With respect to AY 2018-19, the Ld. AR argued that the appeal was dismissed by the Ld. CIT(A) solely on the technical ground that the appeal was filed in the name of the HUF, whereas the data in the ITBA portal pertained to the individual. This discrepancy was neither duly communicated to the assessee for rectification nor was any opportunity provided to cure the defect. Consequently, the appeal was dismissed without adjudication on merits, rendering the order both non-speaking and unsustainable in law.
The Ld. DR, on the other hand, supported the orders of the authorities below.
We have carefully considered the submissions of both parties and perused the material available on record. It is an undisputed fact that the assessments for the relevant years were framed ex-parte u/s 144 r.w.s. 147 of the Act. The Assessing Officer provided only two days’ notice between issuance of the show-cause notice and date of hearing, which is not in conformity with the principles of natural justice. The orders of the Ld. CIT(A), particularly for AYs 2015-16 to 2017-18, do not exhibit adequate reasoning or independent analysis of the facts and legal position. The order to 678/Ahd/2025 Mukesh S Kedia HUF Vs. ITO Asst. Years : (2015-16 to 2018-19) - 4– merely reproduces the findings of the Assessing Officer and concludes that the assessee has not discharged the burden of proof without dealing with specific submissions or evidence filed. For AY 2018-19, the CIT(A) has dismissed the appeal on a technical ground regarding mismatch in the name i.e. HUF vs. individual, without affording an opportunity to the assessee to rectify the defect.
9.1 In view of the above, we are of the considered opinion that the matter needs to be restored to the file of the Assessing Officer for de novo adjudication, after affording a proper opportunity of being heard to the assessee. The Assessing Officer shall also consider any additional evidences that the assessee may wish to submit and shall pass a speaking order in accordance with law.
In the result, all four appeals filed by the assessee are allowed for statistical purposes.
The order is pronounced in the open Court on 14.10.2025.