Facts of the Case

The assessee, Sultania Realtors Pvt. Ltd., filed its return of income for Assessment Year 2018-19 on 31.10.2018 declaring nil income. The assessment was reopened under Section 147 based on information from the Insight Portal and CBDT risk management strategy alleging bogus purchases of ₹94,26,275 from two entities, namely M/s Saraf Enterprise and M/s Ultra Trade Mart. Notices under Sections 148 and 142(1) were issued. The assessee filed only partial replies and did not furnish supporting documentary evidence to substantiate the purchases. Verification reports indicated that the supplier entities were paper companies issuing accommodation entries. Consequently, the Assessing Officer treated the entire amount of ₹94,26,275 as unexplained expenditure under Section 69C read with Section 115BBE and completed the assessment under Sections 147 read with 143(3) and 144B assessing total income at ₹94,26,280.

Issues Involved

Whether the CIT(A) was justified in dismissing the appeal ex parte for non-compliance without adjudicating the grounds on merits, whether adequate opportunity of being heard was provided to the assessee, and whether the appeal deserved to be restored for fresh adjudication in the interest of natural justice.

Petitioner’s Arguments

The assessee contended that the assessment as well as the appellate proceedings before the CIT(A) were completed ex parte. It was submitted that an adjournment application had been filed but was not considered. The assessee requested that the matter be restored to the CIT(A) for proper adjudication on merits after granting reasonable opportunity of hearing.

Respondent’s Arguments

The Revenue supported the orders of the Assessing Officer and the CIT(A) and contended that several opportunities were granted but the assessee failed to comply, justifying dismissal of the appeal and confirmation of the addition.

Court Order / Findings

The ITAT Kolkata observed that there was lack of proper compliance before both the Assessing Officer and the CIT(A). The Tribunal held that dismissal of the appeal by the CIT(A) without adjudicating the grounds on merits was not justified. In the interest of justice and fair play, the Tribunal set aside the order of the CIT(A) and restored the appeal to the file of the CIT(A) for fresh disposal on merits by passing a reasoned and speaking order. The Tribunal directed that adequate opportunity of being heard be provided to the assessee and that Rule 46A be followed, with opportunity to the Assessing Officer wherever required.

Important Clarification

The Tribunal clarified that appellate authorities are required to decide appeals on merits and should not dispose of matters ex parte without ensuring effective opportunity of hearing. Additions involving alleged bogus purchases and application of Section 69C require proper examination of facts and evidence after following principles of natural justice.

Final Outcome

The appeal filed by the assessee was partly allowed for statistical purposes. The order of the CIT(A), NFAC was set aside and the matter was restored to the CIT(A) for fresh adjudication on merits after granting reasonable opportunity of being heard to the assessee and the Assessing Officer.

Source Link- https://itat.gov.in/public/files/upload/1767179022-YHvEaT-1-TO.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.