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Facts
The assessee, engaged in IMFL trading, had additions made to his income under Section 143(3) for Assessment Year 2017-18, specifically an 8% profit on differential sales turnover (₹8,87,946) and unexplained cash credits of ₹3,80,000 from SBN deposits u/s 68. The CIT(A) upheld these additions, dismissing the assessee's appeal, purportedly for lack of documentary evidence.
Held
The Tribunal noted that the assessee had submitted voluminous documentary evidence online to the CIT(A) which was overlooked, constituting a violation of the principles of natural justice. Citing judicial precedents, the Tribunal set aside the CIT(A)'s order and remitted the case back to the CIT(A) for a fresh decision, directing consideration of all evidence already on record and the issuance of a speaking order under section 250(6).
Key Issues
1. Whether the additions regarding differential sales turnover and unexplained SBN deposits were valid. 2. Whether the CIT(A) violated natural justice by dismissing the appeal without considering the assessee's submitted documentary evidence. 3. Whether the provisions of Section 5A of the Income Tax Act, along with the Portuguese Civil Code, limit the assessment to 50% of the additions.
Sections Cited
253(1), 250, 143(3), 68, 5A, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH, GOA
Before: HON’BLE SHRI PAVAN KUMAR GADALE & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI; This appeal is instituted u/s 253(1) of the Income-tax Act, 1961 [‘the Act’] by the assessee which challenges DIN & Order No 1075327876(1) dt. 31/03/2025 passed by Addl./Jt. Commissioner of Income Tax, Appeal-6, Mumbai [‘Ld. CIT(A)/NFAC’] u/s 250 of the Act which confirmed order of assessment dt. 27/12/2019 passed u/s 143(3) of the Act by Income Tax Officer, Ward 2(2), Panaji, Goa [‘Ld. AO’].
ITAT-Panaji Page 1 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 2. We note that, the assessee individual was engaged in trading business of Indian made foreign liquor [‘IMFL’], who for the year under consideration filed his return of income on 26/10/2017 declaring income of ₹3,56,230/-. The case of the assessee, was selected for scrutiny and the consequential assessment u/s 143(3) of the Act was passed wherein two additions were made viz; (1) addition ₹8,87,946/- being 8% profit computed on differential trading/sales turnover of ₹1,10,99,332/- which remained as unexplained by the assessee and (2) addition of ₹3,80,000/- for being unexplained source of special bank note [‘SBN’] deposited during the demonetisation drive. Aggrieved by aforestated twin additions and the assessment the assessee filed an appeal online on 24/02/2020, which came to be dismissed in absence of documentary evidence.
ITAT-Panaji Page 2 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 3. Aggrieved thereby the assessee came in present appeal on following grounds ;
1. On the facts and circumstances of the case, the learned JCIT (A)-6, Mumbai erred in confirming an addition of Rs.8,87,946/- under business income being accounts and sales as per audited accounts and that the addition was made arbitrarily and without rejecting the books of accounts.
On the facts and circumstances of the case, the learned JCIT (A)-6, Mumbai erred in confirming an amount of Rs.1,10,99,332l- as unaccounted sales, calculated by AO as difference in the total credits in bank account and sales as per audited accounts.
On the facts and circumstances of the case, the learned JCIT (A)-6, Mumbai erred in confirming the addition on account of cash deposits during the demonetization period to the tune of Rs.3,80,000/- as unexplained cash credits u/s 68 without appreciating the supporting ITAT-Panaji Page 3 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 4. On the facts and circumstances of the case, the learned JCIT(A)-6, Mumbai and AO erred in making additions without appreciating the merits of the case and the relevant documentary evidences submitted in the course of assessment and appellate proceedings.
5. On the facts and circumstances of the case, the learned JCIT (A)-6, Mumbai and AO erred in confirming the additions entirely in the hands of the appellant without appreciating the fact the appellant is governed under the Portuguese Civil Code and the additions are assessable in the hands of the appellant only to the extent of 50% as per the provisions of section 5A of the Income Tax Act.
On the facts and circumstances of the case to , leave, to add, alter, amend, modify and correct the grounds of appeal at or before the time of hearing.
4. At the outset of hearing, the Ld. AR Pikale striking Ground No. 4 submitted that, in response to notices ITAT-Panaji Page 4 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 issued in first appellate proceedings, the assessee made twin online submissions, however the said submissions were overlooked by the Ld. CIT(A) while dismissing the appeal for the want of documentary evidences. Solidifying the online submissions from the record, the Ld. DR Uniyal expressed no-objection to the request of assessee for remand. Accordingly, we have heard rival party’s submissions on Ground No. 4 which inter-alia relates violation of principle of natural justice and subject to rule 18 of ITAT-Rules, 1963 we have also perused material placed on record and considered facts in the light of settled position of law, which are forewarned to parties.
At the outset we note that, against the order of assessment passed u/s 143(3) of the Act, the appellant filed first appeal before the Ld. CIT(A) wherein the appellant raised three grounds on merits ITAT-Panaji Page 5 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 and one ground in general. Of the three ground first two grounds relates to addition made owning to difference in sales turnover reported by audited books with that of sales proceeds credited into his bank account, whereas the remaining ground challenged addition of SBN as unexplained money/income. Vide para 6.2.3 and 6.3.3 the Ld. CIT(A) rejected the assessee’s claims and has countenanced twin additions and in turn dismissed the appeal in totum.
6. Pensively from para 6.2 and 6.3 of the impugned order (placed on pg 5 & 6) we note that, the Ld. CIT(A) came to dismiss both the issues and respective grounds of first appeal on the sole premise that in the impugned proceedings the appellant assessee failed to furnish requisite documentary evidences in support of claim to prove the difference of turnover accounted in audited books vis-a-vis turnover ITAT-Panaji Page 6 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 reflected in the bank accounts through cash deposits etc. and also explain the source of SBN deposits were out of the regular business activities carried out during the year under consideration. Per contra, from the copies of acknowledgements of written submissions we note that, appellant made two submissions namely; on 29/04/2022 and 07/09/2023 (Pg 39-40 & 67-68 of paper book). Thus it has been indisputably established by the appellant that, in the course of impugned first appellate proceeding the appellant did furnish requisite documentary evidences containing voluminous date/information in support of claim much before the passing of impugned. In view thereof the observation of the Ld. CIT(A) found factually incorrect. The Ld. DR Uniyal candidly solidified the facts as claimed by the appellant.
ITAT-Panaji Page 7 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 7. Admittedly former twin written submissions along-with voluminous supporting documents were filed by the appellant assessee online were much before passing of impugned order, however those material skipped the attention of Ld. CIT(A) and possibly owning to transition of appeal from physical mode to faceless regime. Nevertheless, on records facts remains unaltered that, the impugned order was passed without taking cognizance of key written submissions and documentary evidences filed by the appellant assessee.
Similar issue of passing of order without considering assessee’s key submission arose in ‘Grasim Industries Ltd. Vs CCIT’ [2024, 302 Taxman 194 (Bom)], wherein their Hon’ble lordships have held that, any adverse order passed by the Revenue Authorities disregarding assessee’s primary or key ITAT-Panaji Page 8 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 submissions would be violative of natural justice therefore deserves to be set-aside for de-novo consideration.
It shall be apt to also state here that, similarly the Hon’ble Jurisdictional High Court further in the case of ‘Vijay S Kulkarni Vs ITAT, Pune’ [2025, 171 Taxmann.com 696] after reiterating the core principle laid by Hon’ble Apex Court in ‘Delhi Transport Corp. Vs DTC Mazdoor Union’ [1999, AIR 564 SC] and ‘CIT Vs Chenniyappa Mudiliar’ [1969, 1 SCC 591] have categorically held that, adjudication by appellate authorities without due cognizance to material vis-à- vis submissions made therebefore would be violative of basic principle of natural justice and therefore such order/adjudication is devoid of representation. In the event such proceedings renders irregular in the laws of eye. ITAT-Panaji Page 9 of 10
Swapnil Prabhakar Naik Vs ITO ITA No.: 121/PAN/2025 AY: 2017-18 10. In view of the aforestated findings and settled position of law, for the stated reasons we hold impugned proceedings & order as irregular and in consequence set-aside for its remittance to the stage of its institution before Ld. CIT(A) with a direction to deal therewith a fresh accordance with law on the basis of evidences already placed on record and pass a speaking order in consonance with s/s (6) of section 250 of the Act, ordered accordingly. The Ground No 4 thus stands partly allowed for statistical purposes.
In result the appeal of the assessee is partly allowed for statistical purpose. In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned hereinbefore.