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Facts
The assessee filed an appeal against the CIT(A)'s order which confirmed an addition of ₹1,26,89,915/- and enhanced the income to ₹2,60,80,590/- based on Form 26AS. The original assessment under Section 144 read with Section 147 included an addition of ₹1,26,89,915/- for unexplained contract receipts.
Held
The Tribunal held that the enhancement of income by the CIT(A) was made without providing the assessee with an opportunity of hearing or a specific notice, violating principles of natural justice. Therefore, the matter was remanded back to the Assessing Officer.
Key Issues
Whether the CIT(A) erred in enhancing the assessed income without providing the assessee with an adequate opportunity of hearing and without issuing prior notice.
Sections Cited
250, 68, 144, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
(Assessment Year: 2011-12) Zahir Iqbal Laliwala, The Assistant Vs. Aman, Opp. Paras Baug Soc. Commissioner of Income B/h. Tagore Hall, Tax, Paldi, Circle-4(1)(1), Ahmedabad-380007. Ahmedabad. [PAN :AAFPL5516 R] (Appellant) .. (Respondent) Appellant by : Shri Hardik Vora, AR Respondent by: Shri Hargovind Singh, Sr. DR Date of Hearing 30.07.2025 Date of Pronouncement 31.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) [CIT(A)], passed under section 250 of the Income-tax Act, 1961 (“the Act” for short), dated 26.07.2023, for the assessment year 2011–12, whereby the ld. CIT(A) not only confirmed the addition of ₹1,26,89,915/- made by the Assessing Officer (AO) under section 68 of the Act, but also enhanced the same to ₹2,60,80,590/- based on the income reflected in Form No. 26AS.
The assessee has raised the following grounds of appeals:
Zahir Iqbal Laliwala Vs. ACIT Asst. Year : 2011-12 - 2– 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in passing order without providing enough opportunities to represent the case of the assessee.
2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in passing order without considering that CA Nazim Rajaiwala, who was handling the appeal had expired and email id on portal belonged to him, as a result, the assessee was unaware of the notices.
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 addition of Rs. 1,26,89,915/- as unexplained cash credits u/s.68 based on credit entries in the bank account.
On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) erred in enhancing assesee’s income by Rs.1,33,90,675/- u/s.68 based on entries reflected in 26AS, without issuing any prior notice.
5. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted.
The assessment in this case was completed under section 144 read with section 147 of the Act. In the said assessment, the AO made an addition of ₹1,26,89,915/- under section 68, on the ground that the assessee had failed to furnish any explanation with respect to certain receipts shown as contract payments.
4. The assessee preferred an appeal before the ld. CIT(A). During the appellate proceedings, the CIT(A) observed that as per Form No. 26AS, the gross contract receipts of the assessee amounted to ₹2,60,80,590/-, whereas the AO had considered only ₹1,26,89,915/-. Accordingly, the CIT(A) held that there was an understatement of ₹1,33,90,675/- and enhanced the assessed income to ₹2,60,80,590/-,
Aggrieved by the enhancement of income, the assessee has come in appeal before us. The principal grievance of the assessee is that the ld. CIT(A) enhanced the assessed income from ₹1,26,89,915/- to ₹2,60,80,590/- without issuing any specific notice to the assessee or granting an opportunity to explain the discrepancy.
The ld. counsel for the assessee submitted that the enhancement made by the ld. CIT(A) is bad in law as no opportunity was provided before enhancing the income. The ld. Departmental Representative, on the other hand, relied upon the order of the ld. CIT(A).
We have heard both parties and perused the orders of the Revenue authorities. It is evident that the order of the ld. CIT(A) was passed ex parte despite issuance of multiple notices. The enhancement of income was solely based on the difference between the amount considered by the AO and the gross receipts as per Form No. 26AS. However, such enhancement was made without giving notices or opportunity of hearing to the assessee, which is in violation of the principles of natural justice.
Given that the enhancement involves a substantial amount, and in view of the fact that no opportunity was given to the assessee to explain the same, we deem it appropriate to remand the matter back to the file of the Assessing Officer. The AO shall verify the receipts Zahir Iqbal Laliwala Vs. ACIT Asst. Year : 2011-12 - 4– reflected in Form 26AS vis-à-vis the actual income of the assessee, and adjudicate the matter afresh, after affording due opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 31.07.2025
Sd/- Sd/- (T.R SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 31.07.2025 MV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��थ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy