OCEAN INTERNATIONAL,FARIDABAD vs. INCOME TAX OFFICER, WARD-2(3),, FARIDABAD

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ITA 8647/DEL/2025Status: DisposedITAT Delhi28 January 2026AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal observed that in the assessment proceedings, the assessee had not provided adequate details, with the counsel submitting that notices were not received. It was also noted that the CIT(A) sustained the additions in the absence of any submissions from the assessee. Considering the totality of facts and circumstances, and in the interest of justice, the Tribunal deemed it appropriate to restore all appeals to the file of the AO for a fresh assessment. The order of the CIT(A) was set aside, and the appeals were restored to the AO for deciding the issues afresh after providing an adequate opportunity of being heard to the assessee. The Tribunal allowed the appeals of the assessee for statistical purposes. No specific finding was given on the merits of the grounds raised, as the matter was remanded for de novo adjudication.

What were the facts?

The assessee, Ocean International, filed appeals against orders of the Commissioner of Income Tax (Appeals)/NFAC, Delhi, for Assessment Years 2013-14 to 2017-18. The appeals challenged additions made by the Assessing Officer (AO) and upheld by the CIT(A). The assessee contended that the reopening under Section 147 was invalid, natural justice was violated at the AO level, the CIT(A) dismissed the appeal ex-parte without sufficient cause, additions on merits were unsustainable, and the interest and penalty proceedings were invalid. The assessee's counsel argued that the CIT(A) disposed of the appeals ex-parte and the assessment was made without adequate opportunity. The revenue's counsel had no serious objection to restoring the files to the AO for re-examination.

What were the issues?

1. Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961, was valid, considering the AO allegedly lacked independent 'reason to believe' based on tangible material and mechanically borrowed reasons from an Investigation Wing's report without prima facie evidence of income escapement. 2. Whether natural justice was violated at the AO level by not providing the full Investigation Wing report, the statement of Sh. Dalip Kumar, or an opportunity for cross-examination. 3. Whether the CIT(A) erred in dismissing the assessee's appeal ex-parte under Section 250 without sufficient cause, given the non-response was due to health issues, and whether the CIT(A) should have remanded the case or provided a further opportunity, thus violating audi alteram partem. 4. Whether the addition of Rs. 7,95,400/- as bogus purchases was sustainable without independent evidence beyond the Investigation Wing's report, especially when purchases were supported by the appellant's books of account and no sales were disputed. 5. Whether, without prejudice, the addition should have been restricted to the profit element instead of the full amount of Rs. 7,95,400/-, as only embedded profit is taxable in cases of alleged bogus purchases with undisputed sales, as per judicial precedents. 6. Whether interest under Sections 234A/B/C and penalty proceedings under Section 270A were invalid as they were consequential to the allegedly invalid addition. Assessee's contentions: Reopening was invalid as AO lacked tangible material; natural justice was denied by withholding reports and statements; CIT(A) erred in ex-parte dismissal due to health issues; additions were unsustainable without independent evidence; only profit element should be taxed; interest and penalty are consequential to invalid additions. Relied on judicial precedents for profit element taxation. Revenue's contentions: No serious objection to restoring files to the AO for re-examination.

Which sections of the Income-tax Act were involved?

Section 147,Section 250,Section 270A,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘SMC’: NEW DELHI

Before: SHRI C.N. PRASAD

For Appellant: Ms. Raaj Kumari Sohanpal Rawat
Hearing: 15.01.2026Pronounced: 28.01.2026

ORDER PER C.N. PRASAD, JM, These appeals are filed by the Assessee against different orders of the Ld.Commissioner of Income Tax (Appeals)/NFAC, Delhi [herein after referred as “CIT(A)”] order dated 17.11.2025 for the A.Y. 2013-14 to 2017-18.

2. The assessee has raised following common grounds in all these appeals except for the figures:- “1. Invalid Reopening u/s 147 The learned CIT(A) erred in law and on facts in upholding the reopening of assess that u/s 147 without appreciating that the AO had no independent 'reason to believe based on tangible material. The reasons were mechanically borrowed from the Investigation Wing's report without prima facie evidence of escapement of income, rendering the proceedings void ab initio.

2.

Violation of Natural Justice at AO Level: The learned CIT(A) erred in confirming the addition without considering that the AO denied natural justice by not providing the full Investigation Wing report, statement of Sh Dalip Kumar, or opportunity for cross-examination.

3. Ex-Parte Dismissal by CIT(A) Erroneous: The learned CIT(A) erred in dismissing the appeal ex-parte u's 250 without sufficient cause. The non-response to appellate notices was due to ongoing health issues, and Ld. CIT(A) should have remanded the case or provided 'further opportunity, violating audi alteram partem.

4. Addition on Merits Unsustainable: The learned CIT(A) erred in upholding the disallowance of Rs. 7,95,400/- as bogus purchases without independent evidence beyond the Wing's report. Purchases were genuine, supported by books of account of the appellant, and no sales were disputed. Addition based solely on third-party admission is invalid without corroboration.

5. Excessive Addition - Only Profit Element Taxable: Without prejudice, the learned CIT(A) erred in confirming the full addition of Rs. 7,95,400-instead of restricting it to the profit element. In cases of alleged bogus purchases with undisputed sales, only embedded profit is taxable, as held in various judicial precedents.

6. Interest and Penalty Proceedings Invalid: The learned CIT(A) failed to address that interest u/ss 234A/B/C (Rs. 1,87,364) and initiated penalty u/s 270A are consequential to invalid addition and should be quashed. 7 General Ground: The appellant craves leave to urge additional grounds and prays for costs. All grounds are without prejudice to each other.”

3.

The Ld. Counsel for the assessee at the outset submitted that the ld. CIT(A) disposed of the appeals exparte sustaining the additions made by the AO. The Ld. Counsel for the assessee submitted that even the assessment was made Page | 2 without providing adequate opportunity to the assessee to explain the queries raised on addition made in the assessment order. The Ld. Counsel for the assessee, therefore, submitted that the matter may be restored to the file of the AO for denovo adjudication.

4.

On the other hand the Ld. DR has no serious objection in restoring the files to the AO for reexamining of the issues.

5.

Heard rival submissions, perused the orders of the authorities below and the material placed before us. On hearing both the parties and perusing the order of the AO as well as CIT(A) order it is observed that in the assessment proceedings, it appears that, the assessee has not provided adequate details and the reason submitted by the ld. Counsel was that the assessee did not receive notices. It is also observed that the Ld. CIT(A) sustained the addition made by the AO in the absence of any submissions before him. Therefore, taking the totality of the facts and circumstances into consideration and in the interest of justice I feel it appropriate to restore all these appeals to the file of the AO for making assessment a fresh. Thus, the order of the Ld. CIT(A) is set aside and the appeals are restored to the file of the AO for deciding issues in appeal afresh after providing adequate opportunity of being heard to the assessee.

6.

In the result, the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open court on 28.01.2026.

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