ANSHUL AGARWAL,UTTAR PRADESH V. INCOME TAX OFFICER, WARD-3(1)(1), MUZAFFAR NAGAR - UTTAR PRADESH

ITA 7549/DEL/2025

AI Insights

The case involves Sh. Anshul Agarwal, a proprietor of M/s Imagins Ltd., who appealed against the additions made by the Income Tax Officer under Section 68 of the Income Tax Act, 1961, concerning unexplained sundry creditors and deposits during the demonetization period. The CIT(A) dismissed the appeal ex-parte, citing the appellant's failure to respond to notices. The Tribunal found that the CIT(A) had not adequately followed the principles of natural justice, leading to the setting aside of the CIT(A)'s order and remanding the case for a fresh hearing.

• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: 2017-2018
• Appeal Filed On: 21-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: SOMIL AGARWAL; DEEPESH GARG
• Keywords: Set aside; Principle of natural justice
• Section: 143(3); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Brajesh Kumar Singh, Accountant Member ITA No. 7549/Del/2025 :Asstt. Year: 2017-18 Sh. Anshul Agarwal, 31/23, Sidharth Colony, Uttar Pradesh-251001 Vs Income Tax Officer, Ward-3(1)(1), Muzaffarnagar, U.P.-251001 (APPELLANT) (RESPONDENT) PAN No. AHDPA1316R Assessee by: Sh. Somil Agarwal, Adv. & Sh. Deepesh Garg, Adv. Revenue by: Ms. Ankush Kalra, Sr. DR Date of Hearing: 24.03.2026 Date of Pronouncement: 24.03.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal is directed against the order dated 17.09.2025 of Learned Commissioner of Income Tax (Appeals), Chennai [hereinafter referred to as the “CIT(A)”], passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the appeal of the assessee was dismissed and addition made by the AO vide Assessment Order dated 24.12.2019 u/s 68 of the Act were confirmed. 2. Brief facts as culled out from the proceedings are that assessee is a proprietorship concern doing business in the name and style of M/s Imagins Ltd. for wholesale trading of footwear. The assesseee e-filed return on 30.10.2017 declaring Printed from counselvise.com ITA No. 7549/Del/2025 Anshul Agarwal 2 income of Rs.3,07,980/-. The case was selected for scrutiny through CASS for complete scrutiny and accordingly notice u/s 143(2) of the Act was issued on 13.08.2019 along with questionnaire. The assessee has filed reply with respect to the each questions part of the questionnaire. However, the AO was not satisfied with the explanation and proceeded to make addition of Rs.40,98,100/- in respect to sundry creditors, namely M/s Ashirwad Footwear, further addition of Rs.50,07,482/- u/s 68 was made on account of unexplained sundry creditors in respect of M/s Shoe Agency. The further addition of Rs.3,71,000/- u/s Section 68 of the Act was made in respect of M/s Lifestyle on the ground that the identity and genuineness of the said party could not be established. The AO further made addition of Rs.18,03,321/- in respect of firm M/s Ekans Retail. Further, the AO made further addition of Rs.84,35,500/- alleged deposited during the demonetization period. 3. Aggrieved by the said additions, the assessee preferred appeal before the ld. CIT(A) who has dismissed the same ex- parte on the ground that assessee has failed to produce any document or make any submissions in response to the notice issued. Printed from counselvise.com ITA No. 7549/Del/2025 Anshul Agarwal 3 4. We have heard the learned AR and the ld. DR. We have heard the ld. DR who has supported the judgment of the ld. CIT(A) stating that the assessee has failed to avail the opportunity given by the ld. CIT(A) and therefore prayed for dismissal of the appeal. 5. We have considered the submission made on behalf of the Revenue and examined the impugned order. It would be clear from the observation of the ld. CIT(A) contained in para 4.1 onward, extracted below that the ld. CIT(A) has not followed the principle of natural justice and opportunity of effective hearing has not been given: “4.1 The appeal was filed by the appellant on 10-01- 2020 against the Assessment Order u/s 143(3) of the Act dated 24-12-2019. I connection to the appeal, opportunities were provided to the appellant t substantiate his grounds of appeal on following dates: Sr. No. Date of hearing(s) 1 07-01-2021 2 14-02-2023 3 27-02-2023 4 05-04-2023 5 14-07-2025 6 09-09-2025 The appellant replied on 12-01-2021 seeking adjournment, however no further submissions were made. Against all other notices there was no response from the appellant. In the view of above, it evident that the appellant is not interested in filing any details during the proceedings and avail the opportunity under the principle of natural justice. In response to the notices issued, even adjournment was not sought. In such situation, the only conclusion which can be drawn Printed from counselvise.com ITA No. 7549/Del/2025 Anshul Agarwal 4 that the appellant is not interested in pursuing the appeal.” 6. We have considered the rival submission and examined the record, Section 250(2)(a) lays down as under: “250(2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorized representative;” 7. Thus, the hearing mandated by Section 250(2)(a) of the Act is not a mere formality but a mandatory statutory requirement for following the principle of natural justice by the quasi-judicial authority. 8. In view of the above facts and circumstances, it is evident that the impugned order has been passed without effective hearing and principle of natural justice has not been followed For these reasons, the impugned order is not maintainable and accordingly set aside. The end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective opportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) within the period of 60 days of this order. Printed from counselvise.com ITA No. 7549/Del/2025 Anshul Agarwal 5 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 24/03/2026. Sd/- Sd/- (Brajesh Kumar Singh) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 24/03/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR Printed from counselvise.com "