MADAN GOPAL SIKAWAT HUF,SURAT vs. NATIONAL FACELESS ASSESSMENT CENTRE, SURAT

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ITA 1080/SRT/2024Status: DisposedITAT Surat08 September 2025AY 2014-154 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had sought adjournments to file details and documents because they were not available. However, the AO did not grant sufficient time and passed an ex-parte assessment order without adjudicating on merits. Citing the principles of natural justice and fair play, the Tribunal decided to grant the assessee one more opportunity to plead their case before the AO. Consequently, the order of the CIT(A) was set aside, and the matter was remitted back to the AO for de novo adjudication. The assessee was directed to be more vigilant in the future and submit all documents and evidence promptly. For the penalty appeal, since the quantum assessment was restored, the penalty under Section 271(1)(c) would not survive. However, the AO was granted liberty to initiate fresh penalty proceedings in accordance with law. The Tribunal allowed both appeals for statistical purposes.

What were the facts?

The assessee, Madan Gopal Sikawat HUF, filed two appeals (ITA Nos. 1080 & 1081/SRT/2024) against orders of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2014-15. ITA No. 1080/SRT/2024 challenged additions made in quantum assessment, while ITA No. 1081/SRT/2024 challenged the validity of a penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer (AO) had passed an ex-parte order under Section 147 read with Sections 144 and 144B of the Act. The assessee's counsel stated that the assessee sought adjournments to file documents but the AO proceeded ex-parte. The revenue did not object to remitting the appeals back to the AO.

What were the issues?

1. Whether the reopening of the case under Section 147 and issuance of notice under Section 148 of the Act by the AO, and its confirmation by the CIT(A), were valid? 2. Whether the addition of Rs. 21,65,065/- on account of bogus Long Term Capital Gains (LTCG) claimed by the assessee, and confirmed by the CIT(A), was justified? 3. Whether the addition of Rs. 1,29,903/- on account of commission paid for acquiring accommodation entries, and confirmed by the CIT(A), was justified? Assessee's Contention: The assessee argued that the AO passed an ex-parte order without adjudicating on merits, despite the assessee seeking adjournments to file necessary documents and evidence. The assessee was ready to submit these before the lower authority and requested the appeals be restored to the AO for fresh adjudication. Revenue's Contention: The Revenue's Sr. DR raised no objection to the Bench remitting the appeals back to the AO for deciding afresh.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 144B,Section 271(1)(c),Section 254(1)

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

ITA No.1080/SRT/2024
ITA No.1081/SRT/2024
ITA No.129/SRT/2025

Read from the judgment's own cause title. This page is filed under one of them.

िनधा�रती की ओर से /Assessee by Shri Rajesh C Shah, CA राज� की ओर से /Revenue by Shri Ajay Uke– Sr-DR सुनवाई की तारीख/Date of hearing 24.07.2025 उद्घोषणा की तारीख/Date of pronouncement 08.08.2025 Order under section 254(1) of Income Tax Act PER DINESH MOHAN SINHA, JUDICIAL MEMBER:

These two appeals by assessee are directed against separate orders of National Faceless Appeal Centre, Delhi [for short to as “Ld. NFAC/Ld.CIT(A)”] both dated 28.08.2024 for same assessment year i.e., 2014-15, in , the assessee has challenged the validity of penalty levying under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 22.09.2022. As certain facts in both appeals are common, thus, both the appeals were clubbed and heard together. Appeal in quantum assessment in ITA (A.Y.11-12) Narpatsinh P Solanki No.1080/SRT/2024 is treated as “lead” case and are decided by common order. The assessee has raised the following ground of appeal:-

“1. The Ld. AO has erred in reopening the case u/s 147 of the Act and in issuing the notice u/s 148 of the Act and also the Ld. CIT(A) has erred in confirming the same.

2. The Ld.AO has erred in making the addition of Rs.21,65,065/- being bogus LTCG claimed also the Ld.CIT(A) has erred in confirming the same.

3. The Ld. AO has made addition of Rs.1,29,903/- on account of commission paid for acquiring such accommodation entry and also the Ld. CIT(A) has erred in confirming the same.

4.

The appellant reserves the right to add, alter, amend or withdraw any grounds of appeal."

2.

At the outset of hearing, the Ld. Counsel for the assessee submits that during the assessment proceedings, the assessee sought adjournment to file details and documents. However, details and documents were not available with the assessee, so assessee was requesting for some more time to file documents and evidences. However, AO meanwhile passed ex- parte order u/s 147 r.w.s. 144 r.w.s. 144B of the Act without adjudicating the issue on merit. The ld. Counsel further submitted that now the assessee is ready to submit required documents and evidences before the lower authority, therefore, both these appeals may be restored to the file of AO for fresh adjudication.

3.

On the other hand, the Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue has raised no objection if the Bench remit back both the appeals to the file of AO for deciding afresh.

(A.Y.11-12) Narpatsinh P Solanki 4. We have heard the submissions of both the parties and have perused the material placed on record. We find that the adjournments were sought by the assessee to file details and documents, as because no details and documents were available with the assessee. But the AO has not given time to file such documents to the assessee. We find that AO passed assessment ex parte by the AO on merit, therefore, one more opportunity should be granted to the assessee to plead his case before the AO. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interests of justice, we restore the matter back to the file of AO for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee. Therefore, we deem it fit and proper to set aside the order of the Ld. CIT(A) and remit the matter back to the file of the AO to adjudicate the issue afresh on merits. The assessee is also directed to be more vigilant in future and not to take any adjournment without any valid reason. The assessee is also directed to submit all the documents, evidences and replies as soon as possible without any further delay. In the result, grounds of appeal raised by the assessee are allowed for statistical purposes only.

(AY 11-12) 5. Considering the above facts and we have restored the matter back to the file of AO grounds of appeal raised in quantum assessment, therefore, the penalty imposed under sections 271(1)(c) of the Act will not survive. However, the Assessing (A.Y.11-12) Narpatsinh P Solanki Officer is given liberty to initiate fresh penalty in accordance with law. In the result, the penalty proceeding is also allowed for statistical purposes.

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