INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD., VEJALPUR V. 7NR RETAIL LIMITED, NAVRANGPURA

ITA 674/AHD/2025

AI Insights

The case involves an appeal by the Income Tax Department against the order of the CIT(Appeals), which set aside the assessment of 7NR Retail Ltd. for the Assessment Year 2017-18. The original assessment was based on information from a search operation that indicated involvement in bogus accommodation entries. The Assessing Officer (AO) made additions to the income of 7NR Retail Ltd. based on these findings. The CIT(Appeals) remanded the case back to the AO for a fresh assessment, citing that the AO had not properly examined or appreciated the evidence provided by the assessee. The Department's appeal to the Tribunal focused on the procedural error in the CIT(A)'s order, specifically the incorrect reference to the section of the Income Tax Act under which the original assessment was made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771862 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: ASEEM L THAKKAR
• Keywords: Set aside; Additional evidence; Principle of natural justice; Accommodation entries; Bogus
• Section: 147; 144; 142(1); 132; 68; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.674/Ahd/2025 (Assessment Year: 2017-18) Income Tax Officer, Ward-3(1)(1), Ahmedabad Vs. 7NR Retail Ltd., 9/G, Vardan Exclusive, Nr. Lakhudi Talav, Navrangpura, Ahmedabad-380009 [PAN No.AAACZ6298A] (Appellant) .. (Respondent) Appellant by : Shri B.P. Srivastava, Sr. DR Respondent by: Shri Aseem L Thakkar, AR Date of Hearing 06.08.2025 Date of Pronouncement 25.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 20.01.2025 passed for A.Y. 2017-18. 2. The Department has raised the following grounds of appeal: “(a) The Ld. CIT(A) has erred in law and on facts in setting aside the order to the file of AO for fresh assessment u/s. 251(1)(a) of the IT Act holding that the assessment order was passed ex-parte u/s 144 of the Act by ignoring the fact that during the assessment proceedings, the assessee has filed various replies in response to statutory notices issued and the order was passed u/s. 147 r.w.s. 144B of IT Act which is clearly mentioned in para 12 of the assessment order. (b) The Ld. CIT(A) has erred in law and on facts in not deciding the appeal on merits of the case. (c) The appellant craves leave to add, alter and / or to amend all or any the ground before the final hearing of the appeal.” Printed from counselvise.com ITA No. 674/Ahd/2025 ITO vs. 7NR Retail Ltd. Asst.Year –2017-18 - 2– 3. The brief facts of the case are that assessee filed its return of income under section 139(1) of the Act, declaring total income of ₹26,35,294/-. However, based on information from a search conducted under section 132 in the case of Jignesh Shah and Sanjay Shah Group, a group which was involved in providing bogus accommodation entries, the AO reopened the assessment under section 147 of the Act. In response, the assessee re-filed its return and submitted all details and supporting documents as required under notice issued under section 142(1) of the Act. The assessee submitted that its purchases and sales were genuine and he had proper documentation in support of the same, including bills and ledger accounts etc. However, the Assessing Officer rejected the submissions and proceeded to make additions on an ad hoc basis by treating 25% of the purchases as unexplained under section 69C of the Act, and thereby made an addition of ₹30,02,500, and further added a sum of ₹14,85,600/- by estimating additional gross profit on the alleged bogus sales under section 68 of the Act. 4. The assessee challenged the reassessment order before CIT(Appeals) and raised various grounds including illegal reopening of the case without proper evidence, denial of opportunity to cross-examine third-party witnesses, failure to supply materials relied-upon by the assessee, and additions having been made without rejecting audited books of accounts. The assessee submitted that the entire assessment was based on presumptions and that the Ld. Assessing Officer failed to follow the principles of natural justice. After reviewing the case records, Form 35, and additional evidences submitted by the assessee, the CIT(Appeals) noted that the assessee was not in a position to respond to earlier notices and had submitted relevant material Printed from counselvise.com ITA No. 674/Ahd/2025 ITO vs. 7NR Retail Ltd. Asst.Year –2017-18 - 3– during the appellate proceedings before him. Considering the newly restored powers granted by the Finance Act, 2024 which allowed the CIT(Appeals) to set aside best judgment assessment under section 144 of the Act, CIT(Appeals) exercised this power and set aside the assessment to the file of the Assessing Officer for de-novo consideration. The case was accordingly referred back to the Assessing Officer for conducting a fresh assessment. 5. The Department is in appeal before us against the order passed by CIT(Appeals). The only grievance of the Department is that in the order passed by CIT(Appeals), he has mentioned that assessment order was passed u/s 144 of the Act whereas in fact the order was passed u/s 147 of the Act. On going through the case records. we find that although the assessment order was passed under section 147 and not section 144 of the Act, the grievance raised by the Department is purely academic in nature. The CIT(A)’s order does not cause any prejudice to the interest of the Revenue, as the assessment has only been set aside for fresh consideration. It is also evident from the order that the CIT(A) has restored the matter back to the AO on the basis that the documentary evidence and submissions furnished by the assessee were not properly examined or appreciated by the AO at the assessment stage. Therefore, the intent and effect of the CIT(A)’s direction is to ensure proper adjudication after affording due opportunity, which is in line with the principles of natural justice. The appeal filed by the Department, in substance, does not challenge the merit or rationale of the CIT(A)'s decision to remand the matter for de-novo assessment. In view of the above discussion, and considering that no prejudice is caused to the Revenue due to the remand Printed from counselvise.com ITA No. 674/Ahd/2025 ITO vs. 7NR Retail Ltd. Asst.Year –2017-18 - 4– of the case to the file of AO, we hold that the appeal filed by the Department is infructuous and order of CIT(A) does not require any interference. 6. In the result, the appeal filed by the Department is dismissed. This Order pronounced in Open Court on 25/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 25/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 13.08.2025(Dictated by Hon’ble Member on his dragon software) 2. Date on which the typed drat is placed before the Dictating Member 14.08.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 21.08.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 25.08.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 25.08.2025 7. Date on which the file goes to the Bench Clerk 25.08.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "