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Facts
The assessee, a society providing credit facility, failed to file its return of income for AY 2018-19. The AO initiated assessment proceedings under Section 147, and after partial compliance, made additions to income based on adverse inferences due to non-compliance with show-cause notices. The CIT(A) dismissed the assessee's appeal for non-compliance with hearing notices.
Held
The Tribunal noted that the assessee's AR demonstrated that commission/contract receipts were already recorded in the books of account, contradicting the basis for two of the AO's additions. For the third addition, the assessee sought time to compile documents. The Tribunal found it appropriate to remand the case back to the AO.
Key Issues
Whether the additions made by the AO and sustained by the CIT(A) were justified, especially concerning the recording of income in the assessee's books and the procedure followed.
Sections Cited
147, 144B, 143(2), 142(1), 270A
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 25.11.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 01.03.2024 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal.
In this case, the assessee filed an Application, duly supported by an affidavit, for grant of urgent out-of-turn hearing. The Application was heard Page 1 of 6 Adim Jati Seva Sahakari Mydt. – AY 2018-19 and vide order-sheet dated 16.01.2026, early hearing was granted. Accordingly, this case has come up for hearing before us.
The background facts leading to present appeal are such that the assessee is a society engaged in the activity of providing credit facility to its members. For AY 2018-19, the assessee did not file any return of income.
The AO, on the basis of information in his possession, issued notice u/s 148 dated 18.04.2022 and initiated proceeding of assessment u/s 147. In response, the assessee filed return of income. Thereafter, the AO issued notices u/s 143(2)/142(1) which were complied by assessee. Ultimately, the AO issued a show-cause notice proposing for certain additions but the show-cause notice so issued by AO remained uncomplied by assessee.
Therefore, vide Para 3.5 of assessment-order passed, the AO drew certain adverse inferences and made three additions of Rs. 41,30,365/- (+) Rs. 89,618/- (+) Rs. 90,048/- and completed assessment. Aggrieved, the assessee carried matter in first-appeal but remained non-compliant to the notices of hearing issued by CIT(A), therefore the CIT(A) dismissed assessee’s appeal without granting any relief. Now, the assessee has come in next appeal before us.
The assessee has raised following grounds:
“1. That the impugned order passed by the Ld. NFAC is perverse, erroneous, not tenable on facts and in law, and has been passed in violation of the principles of natural justice.
Page 2 of 6 Adim Jati Seva Sahakari Mydt.
– AY 2018-19 2. That the Ld. NFAC has erred in law and on facts in sustaining the addition of 41,30,365/- made by the Ld. Assessing Officer (NaFAC) to the income of the Appellant Society. The addition has been made without proper application of mind and on incorrect appreciation of facts, ignoring that the Appellant had duly recorded the entire commission income in its regular books of account received from M.P. State Civil Supplies Corporation Ltd. and M.P. State Co-operative Marketing Federation Ltd. The impugned addition, being based on misreading of accounts and without any cogent verification or adverse finding, is arbitrary and unsustainable in law.
3. That the Ld. NaFAC has further erred in making an addition of 289,618/- being 8% of ₹11,18,979/-, without appreciating that the Appellant had already duly accounted for the said income in its books of account, resulting in impermissible double addition.
4. That the Ld. NaFAC has erred in making an addition of ₹90,048/- on account of income-tax refunds received pertaining to Assessment Years 2012- 13, 2013-14, and 2016-17, which do not constitute taxable income in the hands of the Appellant.
5. That the Appellant craves leave to add to, alter, amend, or withdraw any of the above grounds at or before the time of hearing of the appeal.”
At first, we re-produce the relevant portion of assessment-order passed by AO:
“3.5 Conclusion drawn 3.5.1 It is seen from Form No. 26AS that Commission of Rs. 6,04,290/- have been received from The MP State Co-Operative Marketing Federation Limited. Further commission at Rs. 34,42,839/- & Rs. 5,51,461/- has been received from MP State Civil Supplies Corporation Limited, totaling to Rs. 45,98,590/-, whereas, only commission of Rs. 4,68,225/- has been booked in the books of account. Thus, the commission of Rs. 41,30,365/- has not been brought to tax. Since all the expenses have already been claimed therefore, whole of the under reported amount is added to the income. Penalty proceedings u/s 270A of the Income Tax Act, 1961 for under reporting of income in consequence to mis-reporting are initiated. [Addition Rs. 41,30,365/-] 3.5.2 Further, Form No. 26AS reveals that you are in receipt of income from contract at Rs. 2,57,615/- & Rs. 8,61,364/-, totaling to Rs. 11,18,979/- from M P State Civil Supplies Corporation Limited and the same has not been booked in the books of account. Therefore, income @ 8% of such receipts at Rs. 89,618/- is added to the total income.
Page 3 of 6 Adim Jati Seva Sahakari Mydt.
– AY 2018-19 Penalty proceedings w/s 270A of the Income Tax Act, 1961 for under reporting of income in consequence to mis-reporting are also initiated [Addition Rs. 89,618/-] 3.5.3 It is further seen that you have received interest of Rs. 90,048/- on refunds for AYs 2012-13, 2013-14 & 2016-17, issued by Income Tax Department. This income has also not been reflected in the books of account. Therefore, the same is added to the income. Penalty proceedings u/s 270A of the Income Tax Act, 1961 for under reporting of income in consequence to mis-reporting are initiated. [Addition Rs. 90,048/-]”
Ld. AR for assessee carried us to the relevant portion of assessment- order, as re-produced above, and demonstrated that the AO has made first two additions of Rs. 41,30,365/- and Rs. 89,618/- on the footing that the assessee-society has not offered the commission/contract receipts from M.P.
State Co-operative Marketing Federation Limited/M.P. State Civil Supplies Corporation Limited. However, this is not a correct fact. Ld. AR invited our attention to following pages of Paper-Book to demonstrate that the assessee has already credited/recorded the commission/contract receipts in books of account:
Sl.No. Document Paper-Book Page 1 Audited Trading A/c 4 2 Certificate of M/s JNRG & Associates, Chartered 11-12 Accountants 3 Form 26AS 14 Page 4 of 6
Adim Jati Seva Sahakari Mydt.
– AY 2018-19 4 Bank statement in which the receipts are credited 18-33
5 Details of amounts received and the relevant pages 36-42 of books of account where entries of receipts made
Ld. AR submitted that for the third addition of Rs. 90,048/-, the assessee is making efforts to compile/collect relevant details/documents.
Therefore, Ld. AR submitted, the assessee is in a position and ready to make an effective representation before AO qua the additions made by AO.
Ld. AR also acknowledged that besides the documents filed in Paper-Book, the assessee will also file any other detail/document as may be required by AO. Therefore, in this situation, the present case ought to be remanded back to the file of AO for adjudication afresh. Ld. AR made a specific prayer to remand this case to the Jurisdictional AO (JAO) since the documents to be examined are either in hindi or regional language.
Ld. DR for revenue agrees with the prayer of Ld. AR but makes a request to direct the assessee to represent his case before JAO and do not seek unnecessary adjournments.
In view of above submissions of parties; having regard to the principle of natural justice and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of JAO, we remand this matter back to the file of JAO for adjudication afresh, at the Page 5 of 6
Adim Jati Seva Sahakari Mydt.
– AY 2018-19 risk and responsibility of assessee. The JAO shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by JAO and do not seek unnecessary adjournments failing which the JAO shall be at liberty to pass appropriate order in accordance with law. Ordered accordingly.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 30/01/2026