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Facts
The assessee appealed against the order of the CIT(A) which confirmed the additions and disallowances made by the Assessing Officer (AO). The assessee had returned NIL income for the assessment year 2022-23, claiming carried forward unabsorbed depreciation. The AO made significant additions, treating part of interest expenses and sundry creditors as income, and also failed to grant set-off for carried forward unabsorbed depreciation and business losses. The CIT(A) passed an ex-parte order.
Held
The ITAT observed that the assessee failed to provide necessary details and explanations to both the AO and the CIT(A). However, considering the totality of facts and in the interest of justice, the Tribunal decided to remand the matter back to the Assessing Officer for de novo assessment, with the assessee agreeing to pay a cost of Rs. 10,000/-.
Key Issues
Whether the ex-parte order passed by the CIT(A) was valid and whether the additions/disallowances made by the AO, including the denial of set-off for brought forward losses, were justified, given the assessee's non-compliance.
Sections Cited
144, 144B, 37(1), 156, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order dated 01.10.2025 passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“the CIT(A) in short), under Section 250 of the Income-tax Act, 1961 (“the Act”), relating to the Assessment Year 2022-23.
The assessee has raised the following grounds of appeals:
1. On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, New Delhi has erred in confirming the order passed by the ITO, Ward 1, Bardoli (for the sake of brevity "The AO") u/s 144 r.w.s. 144B of the Act for the income assessed at Rs. 8,98,11,787/- against the returned income at Rs. NIL (after claiming carried forwards of unabsorbed depreciation for the year under appeal for Rs. 3,74,07,460/-), making various additions/disallowances for the aggregate amount of Rs. 12,72,19,247/- purely estimations/presumptions and merely on arbitrary and perverse observations, being without jurisdiction, bad in law, in-valid, illegal, predetermined, subjective, unwarranted of facts, is liable to be quashed or annulled in toto.
2. On the facts and in the circumstances of the case as well as in law, the CIT (Appeals), NFAC, Delhi has erred in passing ex parte order passed u/s 144 without considering the details on ITA No. 1205/Srt/2025 Asst. Year : 2022-23 - 2– records, which is in pure violation of the principles of natural justice, without jurisdiction, bad in law, illegal, invalid, arbitrary, void ab initio and hence liable to be quashed.
3. On the facts and in the circumstances of the case as well in law, both the lower authorities have erred in making adhoc disallowance to the extent of Rs. 1,98,42,948/- at the rate of 10% of interest expenses claimed being the expenditure incurred wholly and exclusively for the purposes of business u/s 37(1) of the Act, without appreciating in the right, lawful and proper perspectives the explanations supported with the corroborative evidences/materials, etc. placed during the assessment proceedings, but purely on estimations, arbitrary. illogical and irrational inferences and hence, liable to be struck down.
4. On the facts and in the circumstances of the case as well in law. both the lower authorities have erred in making adhoc addition to the extent of Rs. 10,73,76,299/- at the rate of 10% of the total sundry creditors appearing in the audited Balance Sheet treating it as income, without appreciating in the right, lawful and proper perspectives the explanations supported with the corroborative evidences/materials, etc. placed during the assessment proceedings, but purely on estimations, arbitrary. illogical and irrational inferences and hence, liable to be struck down.
On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed in granting the claim of set off of carried forward of unabsorbed depreciation of preceding years against the income assessed at Rs. 8,98,11,787/- out of the carried forwards of unabsorbed depreciation and business loss for the aggregate amount of Rs. 31,40,56,336/- (being assessed and available on the assessment records) and hence, the income assessed at Rs. 8,98,11,787/-and consequently, the demand of tax, interest, etc. raised for the amount of Rs. 3,36,75,097/- is without jurisdiction, patently in contravention of the provision of the law, subjective, arbitrary, unwarranted of assessment records and hence, liable to be annulled or nullified in toto.
On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, New Delhi has erred in overlooking the apparent mistake committed by the AO by adding the amount of refund of Rs. 46,52,160/- to the amount of total amount of demand of tax including the interest computed at Rs. 3,36,75,097/- and hence, the notice of demand u/s 156 of the Act issued for the alleged demand of tax, interest, etc. for Rs. 3,83,27,257/- being without jurisdiction, bad in law, suffers from the apparent mistake of law, invalid, unsustainable and hence, liable to be struck down.
Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.
On perusal of the records, it is observed that the assessee was afforded opportunities of hearing to furnish details, clarifications, and explanations to substantiate its claim. However, despite being granted sufficient opportunities, the assessee remained non-compliant and failed to furnish the requisite details or explanations before the Ld. CIT(A). Consequently, the Ld. CIT(A), based on the material available on record, upheld the action of the Assessing Officer and dismissed the appeal of the assessee. We further observe that the assessee also failed to submit any details or supporting evidence even before the Assessing
ITA No. 1205/Srt/2025 Asst. Year : 2022-23 - 3– Officer. During the course of hearing before us, the Ld. Counsel for the assessee prayed that, given an opportunity, the assessee would furnish all the necessary details, clarifications and explanations before the revenue authorities. Considering the totality of the facts and in the interest of justice, we deem it appropriate to remand the matter to the file of the Assessing Officer for conducting the assessment de novo. The Ld.AR agreed to pay a cost of Rs.10,000/- which shall be deposited into the “Prime Minister’s Relief Fund” within 30 days from the date of receipt of this order, and proof of such payment shall be furnished before the Assessing Officer. The assessee is directed to submit all relevant bank statements, documents and explanations before the Assessing Officer and to strictly comply with the notices issued by the revenue authorities without seeking any unnecessary adjournments.
In the result, the appeal of the assessee is allowed for statistical purposes in the terms indicated above.
The order is pronounced in the open Court on 21.01.2026.