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Facts
The Revenue filed an appeal against the order of the Ld. CIT(A) who partly allowed the assessee's appeal. The assessment order passed by the AO made several additions including bogus share capital, disallowance of freight and forwarding expenses, and vehicle maintenance expenses. The assessee had initially filed incomplete details before the AO.
Held
The Tribunal observed that the AO did not provide a fair opportunity to examine the documents submitted by the assessee. The Ld. CIT(A) had deleted the additions based on written submissions. Therefore, the Tribunal set aside the order of the Ld. CIT(A) and remanded the case back to the AO for a fresh assessment.
Key Issues
Whether the Ld. NFAC erred in allowing the appeal of the assessee by deleting the additions made by the AO, and whether the AO was provided a fair opportunity to examine the evidence.
Sections Cited
68, 250, 143(3), 41(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI “B” BENCH: NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
Year : 2017-18] DCIT vs Dev Rubber Factory Pvt. Ltd. Circle-7(1) 15A/13, Upper Ground Floor, Delhi East Patel Nagar, New Delhi-110008. PAN-AAFCM1581L APPELLANT RESPONDENT Revenue by Shri Rajesh Kumar Dhanesta, Sr. DR Assessee by Shri Ankit Gupta, Adv. Date of Hearing 12.01.2026 Date of Pronouncement 16.01.2026 ORDER
PER MANISH AGARWAL, AM :
The present appeal is filed by Revenue against the order dated 30.05.2024 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. CIT (A), Delhi- 3/10359/2019-20 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 22.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18.
Brief facts of the case are that assessee company was engaged in the business of manufacturing tubes for automobile tyres and e-filed its return of income on 28.10.2017 declaring income at INR Page | 1 77,50,730/-. The case was selected for scrutiny assessment through CASS and notice u/s 143(2) was issued on 10.08.2018. Thereafter statutory notice u/s 142(1) alongwith questionnaire were issued on various dates from time to time and in response, the assessee has submitted its replies. After considering the submissions filed, assessment order was passed at an income of INR 3,95,31,243/- vide order dated 22.12.2019 u/s 143(3) of the Act by making following additions:- (i) Bogus share capital u/s 68 INR 53,50,000/- (ii) Addition on account of rate & taxes INR 9,56,145/- (iii) Addition of bogus freight and forwarding expenses and business expenses INR 59,25,588/- (iv) Addition of vehicle maintenance expenses and business expenses INR 81,89,820/-
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 30.05.2024, partly allowed the appeal of the assessee.
Aggrieved by the order of ld. CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal:- 1. “Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 53,50,000/- on account of bogus share application money as per provisions u/s 68. of the IT Act, 1961?
2. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to RS. 59,25,588/- on account of disallowance made against freight and forwarding expenses? Page | 2
3. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 81,89,820/- on account of disallowance made against vehicle maintain expenses? 4. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 1,13,53,960/-on account of unexplained/bogus sundry, creditors as per the provisions of u/s 68 of the IT Act, 1961? 5. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 81,88,822/- on account of static sundry creditors as per the provisions of u/s 41 of the IT Act, 1961?”
5. Heard the contentions of both parties and perused the material available on record. From the perusal of order of AO, it is seen that assessee has not filed complete details before the AO with respect to the share capital and further no evidence was filed with respect to freight and forwarding expenses, patrol expenses and despite of repeated reminders, assessee had failed to file confirmations of sundry creditors even on sample basis. Under these circumstances, AO was compelled to make the additions on account of share capital received during the year and disallowance was made out of “freight and forwarding expenses” and “petrol expenses” and further, made addition of sundry creditors by holding the same as unexplained credits and further applied provision of section 41(1) of the Act.
6. It is observed that before ld. CIT(A), assessee filed all the relevant information to establish genuineness and creditworthiness Page | 3 of the share capital subscribers and further filed copies of bills to prove the genuineness of expenditure incurred on account of “freight and forwarding expenses and petrol expenses”. Regarding sundry creditors, assessee has filed confirmations of various parties and further filed copies of ledger accounts before ld. CIT(A). These documents were sent to the AO for Remand Report however, no Remand Report was submitted by the AO and ld. CIT(A) deleted the additions/disallowances made.
7. It is further observed that at the fag end of the assessment proceedings i.e. 19.12.2019, the assessee has sent all the details before the AO which were filed before ld. CIT(A) through registered post though last date of hearing was concluded on 11.12.2019 and window for filing submissions online through ITBA portal was closed and all the opportunities allowed by AO were exhausted. Under these circumstances, the AO had made the additions/disallowances.
In view of above facts and circumstances of the case, we are of the considered opinion that AO was not provided fair and reasonable opportunity to examine all these documents and according to ld. Sr. DR for the Revenue, ld. CIT(A) simply decided the issue in favour of the assessee on the basis of the written submissions without going into the merits of details so filed. Therefore, we set aside the order of ld. CIT(A) and remanded back to the file of AO with the directions to verify all the details filed by the assessee in terms of letter dated 19.12.2019 and pass the order denovo fresh in accordance with law. Page | 4 The assessee is also directed to file all the evidences in addition to the details filed to establish its case. With these directions, all grounds of appeal raised by the Revenue are partly allowed for statistical purposes.
In the result, appeal of the Revenue is partly allowed.
Order pronounced in the open Court on 16.01.2026.