Facts of the Case

The assessee, a partnership firm engaged in the business of trading of petrol and diesel as a dealer of Bharat Petroleum Corporation Ltd., filed its return of income for Assessment Year 2017-18 declaring total income of ₹5,45,220. The assessment was completed under section 143(3) of the Income Tax Act, 1961, determining total income at ₹6,89,28,948 by making various additions under sections 68, 69 and 40A(3).

Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The learned CIT(A), vide order dated 30.09.2024, dismissed the appeal. The assessee thereafter preferred an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the appellate order passed ex-parte without granting reasonable opportunity of hearing is sustainable in law.
  2. Whether substantial additions made under sections 68, 69 and 40A(3) require fresh adjudication.
  3. Whether the matter should be restored for de novo assessment in the interest of natural justice.

Petitioner’s Arguments

The assessee submitted that the impugned appellate order was passed ex-parte due to unavoidable circumstances, including the death of the mother of one of the partners, which resulted in non-compliance on certain hearing dates. It was contended that there was no intention to avoid proceedings and that the assessee was prevented from placing complete details before the lower authorities.

The assessee prayed that the matter be restored for fresh adjudication so that necessary evidence and explanations could be furnished.

Respondent’s Arguments

The learned Departmental Representative did not raise any objection to the request for restoration and left the matter to the discretion of the Tribunal.

Court Order / Findings

The Tribunal observed that the impugned appellate order was passed without affording reasonable opportunity to the assessee. Considering the nature of additions and the submissions made by the assessee, and noting the absence of objection from the Revenue, the Tribunal held that the matter deserved restoration.

Accordingly, the Tribunal set aside the impugned appellate order and restored all issues relating to additions made under sections 68, 69 and 40A(3) to the file of the Assessing Officer with a direction to pass a de novo order in accordance with law after providing reasonable opportunity of being heard to the assessee.

Important Clarification

The Tribunal reiterated that appellate and assessment proceedings must adhere to principles of natural justice. Orders involving substantial additions passed without providing adequate opportunity are unsustainable and require fresh adjudication on merits after due opportunity to the assessee.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770632658_MANGALAMSERVICESTATIONALLAHABADVS.ACITCENTRALALLAHABAD.pdf

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