INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD., VEJALPUR vs. 7NR RETAIL LIMITED, NAVRANGPURA

The brief facts of the case are that assessee filed its return of income under section 139(1) of the Act, declaring total income of ₹26,35,294/-. However, based on information from a search conducted under section 132 in the case of Jignesh Shah and Sanjay Shah Group, a group which was involved in providing bogus accommodation entries, the AO reopened the assessment under section 147 of the Act. In response, the assessee re-filed its return and submitted all details and supporting documents as required under notice issued under section 142(1) of the Act. The assessee submitted that its purchases and sales were genuine and he had proper documentation in support of the same, including bills and ledger accounts etc. However, the Assessing Officer rejected the submissions and proceeded to make additions on an ad hoc basis by treating 25% of the purchases as unexplained under section 69C of the Act, and thereby made an addition of ₹30,02,500, and further added a sum of ₹14,85,600/- by estimating additional gross profit on the alleged bogus sales under section 68 of the Act.

The assessee challenged the reassessment order before CIT(Appeals) and raised various grounds including illegal reopening of the case without proper evidence, denial of opportunity to cross-examine third-party witnesses, failure to supply materials relied-upon by the assessee, and additions having been made without rejecting audited books of accounts. The assessee submitted that the entire assessment was based on presumptions and that the Ld. Assessing Officer failed to follow the principles of natural justice. After reviewing the case records, Form 35, and additional evidences submitted by the assessee, the CIT(Appeals) noted that the assessee was not in a position to respond to earlier notices and had submitted relevant material ITO vs. 7NR Retail Ltd. Asst.Year –2017-18 - 3–

The Department is in appeal before us against the order passed by CIT(Appeals). The only grievance of the Department is that in the order passed by CIT(Appeals), he has mentioned that assessment order was passed u/s 144 of the Act whereas in fact the order was passed u/s 147 of the Act. On going through the case records. we find that although the assessment order was passed under section 147 and not section 144 of the Act, the grievance raised by the Department is purely academic in nature. The CIT(A)’s order does not cause any prejudice to the interest of the Revenue, as the assessment has only been set aside for fresh consideration. It is also evident from the order that the CIT(A) has restored the matter back to the AO on the basis that the documentary evidence and submissions furnished by the assessee were not properly examined or appreciated by the AO at the assessment stage. Therefore, the intent and effect of the CIT(A)’s direction is to ensure proper adjudication after affording due opportunity, which is in line with the principles of natural justice. The appeal filed by the Department, in substance, does not challenge the merit or rationale of the CIT(A)'s decision to remand the matter for de-novo assessment. In view of the above discussion, and considering that no prejudice is caused to the Revenue due to the remand ITO vs. 7NR Retail Ltd. Asst.Year –2017-18 - 4–

In the result, the appeal filed by the Department is dismissed. This Order pronounced in Open Court on 25/08/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 25/08/2025