Loading judgment…
Facts
The assessee's total income was assessed at Rs. 1,50,59,895/-, a significant increase from the returned income of Rs. 0/-. Additions were made for repayment of loan and purchase of stock. The assessee's appeals to the CIT(A) were dismissed.
Held
The Tribunal held that the period for compliance with notices fell within the Covid-19 lockdown, making it impossible for the assessee to comply. Therefore, the CIT(A) ought not to have confirmed the assessment order.
Key Issues
Whether the assessment order and the CIT(A)'s order are valid when the assessee could not comply with notices due to the Covid-19 pandemic?
Sections Cited
253, 144, 69C, 246A, 142(1), 129, 271(1)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: DR. MANISH BORAD & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by order in first appeal Number: CIT(A)-3, Bhopal/IT/12262/2017- 18 dated 06.12.2024 passed by Ld. CIT(A), passed U/s 250 of the Act which is hereinafter referred to as the “impugned order”. Page 1 of 7 previous year period is from 01.04.2017 to 31.03.2018.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 144 of the Act, the assessee’s total income exigible to tax was computed & assessed at Rs.1,50,59,895/-. The total income as
per the return of income was of Rs.0/-. The addition of Rs.1,36,00,192/- was made on account of repayment of loan as short term borrowings was reduced from Rs.22,14,52,410/- to Rs.20,78,51,498/-. Yet another addition was made of Rs.14,59,703/- being 10% of purchase amount u/s 69C of the Act. The aforesaid assessment order bears No:-
ITBA/AST/S/144/2021-22/1033679082(1) & that same is dated 25.06.2021 which is hereinafter referred to as the “Impugned Assessment Order”.
2.2 That the assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has Page 2 of 7 reasons stated therein.
2.2 That the assessee being aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in form no.36 against the “Impugned Order” which are as under:-
“1.That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in making and Ld. CIT(A) in confirming addition of Rs. 1,36,00,192/- u/s. 69C of the Income Tax Act, 1961 as unexplained expenditure by alleging that repayment of short-term borrowings by the assessee during the year remains unexplained, by recording incorrect facts and findings and without observing the principles of natural justice. 2.That having regard to the facts and circumstances as of the case, Ld. AO has erred in law and on facts in making and Ld. CIT(A) in confirming addition of Rs. 14,59,703/- being 10% of purchase of stock in trade amounting to Rs. 14597033/ u/s. 69C of the Income Tax Act, 1961 unexplained expenditure by alleging that ledger account of purchase wherein inadvertently the amount of purchase of stock in trade was written as Rs. 11846105/-instead of Rs. 14597033/, by recording incorrect facts findings and without observing the principles of natural justice.
3. That on the facts and in the circumstances of the case Ld. AO has erred in passing and Ld. CIT (A)-3, Bhopal has erred in confirming the impugned order without affording any opportunity of being heard against the principles of natural justice.
Page 3 of 7 A.Y. 2018-19 4.That the Impugned assessment and appellate order so passed is illegal and wrong. 5.That the appellant craves leave to add, amend, alter or delete all or any of the grounds of appeal and all the above grounds are mutually exclusive to each other.
Record of Hearing 3.1 That the hearing in the matter took place before this Tribunal on 23.10.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “Impugned Order” is illegal, bad in law, and not proper. It thus deserves to be set aside by this Tribunal in exercise of it’s Appellate Jurisdiction. The Ld. AR has placed on record of this Tribunal a compilation from pages 1 to 28. Basis Impugned Assessment order passed u/s 144 of the Act it was contended that notice u/s 142(1) was dated 16.03.2020 & the assessee was asked to comply with it by 15.04.2020, the assessee could not comply as Covid-19 had already started by that date. Once again a notice u/s 129 was issued to assessee on 18.11.2020 which too assessee could not comply due to Covid-19. Even notice u/s 271(1)(d) dated 29.12.2020 could not be complied
Page 4 of 7 02.04.2021 seeking compliance by 07.04.2021 too remained unattended due to Covid-19. In brief it was contended that due to Covid-19 there was non compliance & Impugned Assessment Order of Ld. AO is ex-parte & the Ld.CIT(A) ought to have set aside the same. Per contra Ld. DR contended that the period which is being discussed & debated is of covid-19 period & it was not possible for anyone during Covid-19 period to comply with any notice(s) issued by the Income Tax Department. In brief the Ld. DR for the revenue has concurred with the submission made by the Ld. AR of the assessee on issue of the Covid-19.
Observations & findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case and the conentions canvassed before us.
4.2 We have carefully perused the records of the case.
4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered view that period
Page 5 of 7 19 with nationwide lock down declared 25.03.2020.
4.4 In view of the aforesaid we hold that Ld. CIT(A) ought not have confirmed the “Impugned assessment Order”.
4.5 In view of the aforesaid we set aside the Impugned Order & remand the case back to the file of Ld. AO.
Order 5.1 In the premises Impugned Order is set aside as & by way of remand back to the file of Ld. AO on denovo basis.
5.2 In view of the aforesaid the appeal of the assessee is allowed for statistical purposes.
Order pronounced by putting on notice board in terms of Rule 34 of ITAT, Rules, 1963, on 30.10.2025.