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Facts
The assessee's total income was determined at Rs. 6,70,94,296/- against a returned income of Rs. 33,61,420/-. The Assessing Officer made an addition of Rs. 6,70,94,296/- under Section 68 of the Income Tax Act, treating it as unexplained cash credit, and disallowing the entire purchases and TCS. The assessee's appeal to the CIT(A) was dismissed.
Held
The Tribunal observed that the Assessing Officer passed the assessment order without application of mind and in a casual manner. The CIT(A) also failed to consider the assessee's returned income. The Tribunal set aside the CIT(A)'s order and restored the issues to the Assessing Officer for a de novo order.
Key Issues
Whether the addition made by the Assessing Officer under Section 68 was justified and whether the assessment proceedings were conducted with proper jurisdiction and application of mind.
Sections Cited
68, 143(3), 115BBE, 144, 127, 143(2), 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘A’, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
2017-18 against impugned appellate order dated 11/10/2023 [Din & Order No.ITBA/NFAC/S/250/2023- 24/1056968541(1)] passed by learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. In this appeal, the assessee has raised the following grounds of appeal:
Assessment Year:2017-18 2 “1. The CIT(A) NFAC has erred in law and in facts confirming the assessment order passed by the Assessing Officer and making addition of Rs.6,70,94,296/- (total sales amount) u/s 68 of the Act after treating the total purchase as bogus purchases debited by assessee in her profit & loss account.
The learned CIT(A) has erred in deciding the appeal without considering the reply filed by assessee on dated 16/09/2023 and 18/09/2023, well before due date for submission of reply being vital documents in support of genuineness of purchases like VAT assessment order and purchase list.
The CIT(A) has erred in deciding the appeal without considering the replies submitted by assessee on dated 09/08/2023. This reply consist of orders of last three previous years passed by CIT(A), in which the amount of TCS which was originally disallowed by the CPC in the assessment was allowed in the appeal with CIT(A). These orders were uploaded on portal on dated 09/08/2023 in response to the notice issued to assessee asking for pending or disposed of cases of previous years against the assessee at any appellate forum.
The CIT(A) NFAC has erred in confirming the order of Assessing Officer and treating all purchase as bogus ignoring the 27D issued by collector of TCS, a vital information available Assessing Officer.
The CIT(A) NFAC has erred in confirming the order of Assessing Officer ignoring the past history of the one of the supplier of the assessee i.e. ABLAXE INFO SOLUTIONS PVT LTD a company registered in New Delhi, against which investigation of CBI and EXCISE DUTY case is going on whose directors have been prosecuted and their offices have now been sealed by CBI w.e.f. 2019. The CIT(A) NFAC in para No. 3.5 of his order has admitted that M/s Ablaze Info Solutions Pvt. Ltd. was not found functioning from this address. So non receipt of reply of confirmation asked by Assessing Officer does not mean a negative reply.
The CIT(A) NFAC has erred in confirming the order of Assessing Officer and has relied upon the confirmation from second supplier i.e. BIHAR STATE BEVERAGES CORPORATION at its address in Patna Bihar, whereas actual supply of material was Assessment Year:2017-18 3 made from NARANG SUGAR MILLS CAMPUS SUGAR FACTORY NAWABGANJ GONDA UP which is a unit of Bihar State Beverages Corporation. It is pertinent to note that sales of liquor was banned in Bihar w.e.f. 01/04/2016, so the confirmation solicited by Assessing Officer from Patna address was unjustified. He was supposed to take the confirmation from the unit address i.e. from Narang Sugar Mills Nawabganj Gonda, who have actually supplied the liquor and have deducted the TCS.
The CIT(A) NFAC instead of examining the source, materiality and reliability of evidences gathered by AO but has fully relied on the proceedings and conclusions of the Assessing Officer, who along with CPC appeared to be highly prejudicial and disregarded the material facts of the case . The AO in his order in Para No 3.1 has mentioned that the CPC vide mail dated 08.11.2019 and 27 11 2019 has reported that the PAN of assessee as “suspected fraud case" and accordingly the CPC in a prejudiced manner has disallowed the claim of TCS of assessee in AY 2019-20 and 2021-22. The assessee preferred an appeal for these two years and got the relief from CIT(A). Copy of order is placed on record.
The CIT(A) NFAC has erred in confirming the order of AO without examining the veracity of contents of the letter from ITO(TDS) ward 73(1), which states that director of collector company himself has submitted in his office that TDS/TCS credits of the company have been misused by some dubious persons. Whereas the director of the collector company have given an undertaking to CBI that amount ff only TDS is being misused by some dubious persons, and have also given the list of 106 persons who have misused their TDS, such list does not contain name of assessee, further they have also given an undertaking to CBI that they don't have any complaint against misuse of TCS amount. However WARD 73(1) New Delhi has also forwarded a mail to Assessing officer in Lucknow in connection with assessment of an another assessee that only TDS is being misused. Whereas CIT(A) has confirmed the order of AO and disallowed the amount of and ignoring the content of undertaking submitted to CBI and a mail from ITO ward 73(1).
Assessee has been engaged in business of Liquor since last 35 years but there has been no dispute with regard to assessment Assessment Year:2017-18 4 of previous years. Neither the assessee has any outstanding demand payable to income tax department nor it has any cases pending regarding assessment except this one. Additional ground for appeal Most respectfully it is prayed with honour to kindly grant us an opportunity raise the additional ground for appeal as follows: 1. With due respect, we are enclosing herewith the certificate received from excise department with regard to sases AND excise duty paid by assessee on purchases made by assessee during the year. Following records are being placed to authenticate the sales and purchase made by assessee during the year. - Certificate received from Excise Department certifying sales made by assessee during the year. - Certificate received from Excise Department with regard to payment of excise duty by assessee during year. - VAT assessment order received from Sales Tax Department specifying the sales and purchases made by assessee during year. Further we would like to place reliance on Puspal Kumar Das where it was held that it would not be justified to treat the entire purchase as bogus if sales are genuine. Revised Additional Grounds of appeal We have to humbly submit that we have filed the above said appeal before the Hon'ble bench, which has now been fixed for hearing on dated 06th March 2024. It is submitted that the ground of appeals as taken are narrative in nature and we wish to take additional ground of appeal with regard to the change of jurisdiction of assessee from one city to another without communication to the assessee and legality of issue of notice u/s 143(2) , which was taken before CIT(A), but have not been taken in the original ground of Appeal before Hon'ble bench it is therefore requested that being the legal ground of appeal and relating to the root of the case .may please allowed to be taken. Further it is submitted that all facts are borne out from the records of Assessment Year:2017-18 5 the Assessing officer or CIT(A), and no fresh facts are likely to be investigated / introduced and therefore same may please be allowed to be taken in view of judgment of M/s National Thermal Plant Co Vs CIT as reported in 229 ITR 383 and oblige.
1. On the facts and circumstances of the case and in law, the notice issued u/s 143(2) by Income Tax officer ward 3(1) Varanasi is without jurisdiction because as per instruction No 01/2011 issued by CBDT appellants jurisdiction lies with ACIT, hence notice u/s 143(2) and consequential assessment order is bad in law and liable to be quashed.
2. On the facts and circumstances of the case and in law, the PAN of the assessee was originally configured with Varanasi Income tax office, change of jurisdiction from Varanasi to Lucknow without communication to the assessee as prescribed in section 127 cannot give a valid jurisdiction to the assessing officer in Lucknow , hence assessment made is bad in law and unsustainable and liable to be quashed.” (B) There was no representation from assessee’s side. In the absence of any representation from assessee’s side, this order is being passed after hearing learned D.R. and on the basis of materials on record.
(C) In this case, assessment order dated 19/12/2019 was passed u/s 143(3) of the Act whereby the assessee’s total income was determined at Rs.6,70,94,296/- as against returned income of Rs.33,61,420/-. In the aforesaid assessment order, an addition of Rs.6,70,94,296/- was made u/s 68 of the Act as unexplained cash credit. The assessee filed appeal in the office of the learned CIT(A). Vide impugned appellate order dated 11/10/2023, the assessee’s appeal was dismissed by the learned CIT(A). The relevant portion of the order of learned CIT(A) is reproduced as under:
(E) At the time of hearing, it was noticed by the Bench that in the appeal filed by the assessee in the office of the learned CIT(A), the assessee had contended as under:
“……………….At various places in the order the learned assessing officer has mentioned that "assessee has made submission as under", but the learned AO has not mentioned the appellant's submission, further he also mentioned in his order "letter of DCIT TDS Patna & ITO TDS Ward 73(1) New Delhi is scanned below" but no scan copy has been pasted by A.O, the copy of all these letter's & confirmation are available with us based on which we are very much sure that the learned assessing officer has committed the gross negligence in interpretation of these letter's and have not made any further enquiry to establish the real facts and have passed the order in a very very prejudiced manner.” (E.1) It is further noticed that in the assessment order, an addition of Rs.6,70,94,296/- was made as against returned income of Rs.33,61,420/-. However, the income of the assessee was assessed at the aforesaid figure of Rs.6,70,94,296/- without taking the assessee’s returned income into consideration.
(E.2) In response to a query from the Bench, the learned CIT (D.R.) for Revenue stated that he had no objection if the issue in dispute in the present appeal before us is restored back to the Assessing Officer with the direction to pass de novo order in accordance with law after providing reasonable opportunity to the assessee and after due consideration of all materials on record.
(F) We have heard learned D.R. We have perused the materials on record. It is found that the assessee’s contention, as mentioned in Assessment Year:2017-18 23 foregoing paragraph no. (E) is correct. It is further noticed that the learned CIT(A) took no cognizance of the mistake at the end of the Assessing Officer to assess the assessee’s income without taking the assessee’s returned income into consideration. It is obvious that the Assessing Officer has passed the assessment order without application of mind and in a casual manner without taking all the materials on record into consideration. In view of the foregoing and as learned D.R. has expressed no objection to this, we set aside the impugned appellate order of the learned CIT(A) and we restore all the issues in dispute to the file of the Assessing Officer with the direction to pass de novo order with proper application of mind and exercising due care and caution, and in accordance with law after taking all the materials into consideration and after giving reasonable opportunity to the assessee.
(G) In the result, the appeal of the assessee stands partly allowed. (Order pronounced in the open court on 12/08/2025)