STEEL AND SCRAP SUPPLIER,BHAVNAGAR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BHAVNAGAR

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3. The brief facts of the case are that the assessee firm filed return of income for the impugned assessment year declaring total income of Rs.8,36,620/-. Subsequently, the Assessing Officer came into possession of Steel And Scrap Supplier vs. ACIT Asst. Year –2014-15 - 2– certain information received from ADIT (Investigation), Bhavnagar and the Assessing Officer observed that as per information received from the Investigation Wing, the assessee was one of the beneficiaries and had availed accommodation entries amounting to Rs. 2,99,73,147/- from certain dummy entities viz. Zara Alloys Pvt. Ltd., Virshan Impex Pvt. Ltd. and Zara Tradelink Pvt. Ltd. The assessee had made payments to these dummy entities towards certain purchases, with a view to reduce it’s profits. Accordingly, notice under Section 148 of the Act was issued to the assessee. During the course of re-assessment proceedings, the Assessing Officer asked the assessee to provide certain details, surrounding the transaction, which as per the Assessing Officer were not provided by the assessee. The Assessing Officer observed that the assessee submitted certain documents, but no documents with respect to transactions made with M/s. Zara Alloys Pvt. Ltd., a shell / dummy company were furnished by the assessee, except for a ledger copy containing transaction details. As per the ledger submitted to the Assessing Officer, the assessee claimed to have purchase goods valued at Rs.3,16,50,319/- from M/s. Zara Alloys Pvt. Ltd. for which payment of Rs.2,99,73,147/- was claimed to have made, leaving balance payable amounting to Rs.16,77,172/-. The Assessing Officer was of the view that the assessee had no valid explanation to substantiate the nature of transaction made with M/s. Zara Alloys Pvt. Ltd., a shell entity having no real business. Further, the Assessing Officer also issued notice under Section 133(6) of the Act to M/s. Zara Alloys Pvt. Ltd. to furnish details of goods sold to the assessee firm, with certified copies of sale bills / invoices, road challan, VAT returns etc. to prove the sale made to the assessee. But till the passing of the assessment order, no compliance / confirmation was received from M/s. Zara Alloys Pvt. Ltd. Accordingly, in light of these facts, the Assessing Officer held that the purchase claimed to have been made from M/s. Zara Alloys Pvt. Ltd. is not genuine. Accordingly, a sum of Rs. 3,16,50,319/- was added to 4. In appeal, Ld. CIT(A) dismissed the appeal of the assesse with the following observations:

“7.1 I also find that the assessee did not file any submissions before the AO during the course of assessment proceedings. Nor did the assessee file any submissions supported by proper evidence along with a petition under Rule 46A for admission of evidence in the appellate proceedings. The assessee has not controverted the findings of the AO supported by proper evidence. I also find that the additions made by the AO are based on solid evidence which was confronted to the assessee by the AO and the additions are made as per the provisions of law. No evidence whatsoever has been filed by the assessee to substantiate and buttress the grounds of appeal

. In the circumstances, I do not see any reason to interfere with the well reasoned and speaking order of the AO. Therefore the additions made by the AO are confirmed. Hence, the grounds of appeal are Dismissed.”

5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) dismissing the appeal of the assessee.

6. Before us, the Counsel for the assessee submitted that during the course of assessment proceedings, the assessee had requested for an opportunity of cross-examination, however, such opportunity of cross- examination was not provided to the assessee since the Assessing Officer was of the view that such opportunity of cross-examination is not required to be allowed in the instant facts. The Counsel for the assessee submitted that at Page 8 of the assessment order, it is evident that the assessee had sought opportunity of cross-examination, but the same was denied to the assessee. Further, the Counsel for the assessee submitted that this issue was raised before the Ld. CIT(A) as well, but Ld. CIT(A), while dismissing the appeal of the assessee did not give any finding (refer Page 8 of Ld. CIT(A)’s order) on the opportunity of cross-examination having been denied to the assessee. Secondly, the Counsel for the assessee submitted that various evidences were furnished by the assessee before Ld. CIT(A), which were not considered by Ld. CIT(A) while dismissing the appeal of the assessee. The Counsel for the Steel And Scrap Supplier vs. ACIT Asst. Year –2014-15 - 4– assessee drew our attention to Para 7.1 of the Ld. CIT(A)’s order and also the written submission filed by the assessee forming part of the order passed by the Ld. CIT(A). The Counsel for the assessee submitted that in the instant facts, the aforesaid order was clearly passed against the principles of natural justice, wherein adequate opportunity of hearing / cross-examination was not provided to the assessee and also various evidences/ supporting documents filed by the assessee were omitted to be considered by Ld. CIT(A), during the course of appellate proceedings.

7. On going through the instant facts and the interest of justice the matter is hereby restored to the file of Assessing Officer for de-novo consideration. The assessee would be at liberty to place any additional documents / supporting evidences in support of it’s claim.

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 22/05/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 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,