INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD., VEJALPUR V. THE WARDROBE THEOREM, MOTERA

ITA 937/AHD/2025

AI Insights

The case involves cross appeals by the Income Tax Officer and The Wardrobe Theorem against the order of the CIT(A), which set aside the assessment order to the file of the Assessing Officer for a fresh assessment. The primary contention revolves around the reassessment of income for the Assessment Year 2016-17, where no return was initially filed by the assessee. The Assessing Officer had reopened the case based on high-value transactions reported on the Department's Insight Portal. The CIT(A) directed a re-assessment, which both parties appealed against, leading to the current tribunal's decision to further set aside the matter to the CIT(A) for a detailed examination of legal and factual issues.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707120 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 29-04-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Assessee Lawyers: SUNIL MALOO
• Keywords: Set aside
• Section: 147; 148; 131; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No. 937/Ahd/2025 (Assessment Year: 2016-17) Income Tax Officer, Ward-3(1)(1), Ahmedabad Vs. The Wardrobe Theorem, 401, Shree Balaj Mall, Visat to Gandhinagar Highway, Motera, Ahmedabad-380005 [PAN No.AAKFT2838F] (Appellant) .. (Respondent) C.O. No. 45/Ahd/2025 (in ITA No. 937/Ahd/2025) (Assessment Year: 2016-17) The Wardrobe Theorem, 401, Shree Balaj Mall, Visat to Gandhinagar Highway, Motera, Ahmedabad-380005 Vs. Income Tax Officer, Ward-3(1)(1), Ahmedabad [PAN No.AAKFT2838F] (Appellant) .. (Respondent) Appellant by : Shri Alpesh Parmar, CIT DR Respondent by: Shri Sunil Maloo, C.A. Date of Hearing 30.06.2025 Date of Pronouncement 08.07.2025 O R D E R PER NARENDRA PRASAD SINHA, AM: These cross appeals are filed by the Revenue and the Assessee against the order of National Faceless Appeal Centre ((in short “the CIT(A)”), Delhi dated 12.02.2025 for the A.Y. 2016-17. 2. The brief facts of the case are that no return of income was filed by the assessee for the A.Y. 2016-17. The Assessing Officer had received an information on Insight Portal of the Department that the assessee had ITA No. 937/Ahd/2025 & C.O. No. 45/Ahd/2025 ITO vs. The Wardrobe Theorem & The Wardrobe Theorem vs. ITO Asst. Year –2016-17 - 2– entered into a high value financial transaction with Umiya Trading Company (Proprietor: Sanketkumar R Patel). On the basis of this information the case of the assessee was reopened and a notice under Section 148 of the Act was issued on 25.06.2021. There was no compliance to the said notice and no return of income was filed. In the course of assessment proceedings, the assessee had given explanation regarding transaction of Rs.5,80,97,250/- made with Umiya Trading Company. The Assessing Officer had also made inquiry by issuance of summon under Section 131 to the concerned party and by obtaining and verifying the bank details. As the Assessing Officer was not satisfied with the explanation of the assessee regarding the transaction, the entire transaction of Rs. 7,62,71,900/- was considered as unexplained and added to income under Section 69 of the Act. The assessment was completed under Section 147 r.w.s. 144 of the Act on 23.05.2023 at total income of Rs. 7,62,71,900/-. 3. Aggrieved in the order of the Assessing Officer the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the matter was set-aside to the file of the Assessing Officer with a direction to provide opportunity to the assessee to explain the transaction and, thereafter, recomplete the assessment. 4. Aggrieved with the order of the CIT(A), both the Revenue as well as the assessee are in appeal before us. ITA No. 937/Ahd/2025 & C.O. No. 45/Ahd/2025 ITO vs. The Wardrobe Theorem & The Wardrobe Theorem vs. ITO Asst. Year –2016-17 - 3– 5. The grounds taken by the Revenue are as under: (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 AO has passed order u/s. 147 r.w.s. 144 framing best judgement assessment, as the appellant has failed to respond/justify/clarify to the various notices/questionnaires without appreciating that the assessee has filed reply in response to show-cause notice which has been incorporated in Para 4.1 of assessment order. This indicate that this order was not ex-parte and does not fall under Section 251(1)(a) of the IT Act. (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. 6. The assessee has taken the followings grounds in the Cross Objection: 1. The Ld. CIT(A) has erred in law and in facts by setting aside the Assessment Order and not adjudicating the ground of appeal challenging the reopening the assessment under Section 148 of the Income Tax Act, 1961. 2. The Ld. CIT(A) has erred in law and in facts by setting aside the Assessment Order and not adjudicating the ground of appeal challenging the addition of Rs. 7,62,71,900/-, wherein no transactions have been entered into by the respondent firm. 3. The respondent reserves the right to add, alter or modify or amend any of the grounds of the cross objection during the appellate proceedings. 7. Shri Alpesh Parmar the Ld. CIT DR submitted that the Ld. CIT(A) had mechanically set-aside the case to the file of the Assessing Officer for the reason that the assessment was completed under Section 144 of the Act. The Ld. CIT(A) did not consider the fact that the assessee had made compliance in the course of assessment proceedings and filed the explanation in respect to the transaction. Further, the Assessing Officer had also made independent inquiries in respect of the transaction. The Ld. ITA No. 937/Ahd/2025 & C.O. No. 45/Ahd/2025 ITO vs. The Wardrobe Theorem & The Wardrobe Theorem vs. ITO Asst. Year –2016-17 - 4– CIT-DR explained that the assessment order was completed under Section 144 of the Act by the Assessing Officer for the reason that no return of income was filed by the assessee and not for the reason that there was no compliance by the assessee. Under the circumstances the Ld. CIT(A) should have decided the matter on merits rather than setting-aside the matter to the file of the Assessing Officer with a direction to give adequate opportunity to the assessee. He submitted that the Assessing Officer had already allowed adequate opportunity in the course of original assessment proceedings which was availed by the assessee and, therefore, there was no requirement to set-aside the matter to the file of the Assessing Officer. 8. Per contra, Shri Sunil Maloo, the Ld. AR of the assessee submitted that the Ld. CIT(A) did not decide the legal ground taken by the assessee challenging the reopening the assessment under Section 148 of the Act. He submitted that the notice under Section 148 of the Act was not issued within the time limit under the provision of Income Tax Act read with TOLA. The Ld. AR further submitted that the assessee has challenged the addition of Rs.7,62,71,900/- on the ground that no such transaction was made by the assessee firm. Therefore, Ld. CIT(A) should have decided the grounds taken by the assessee on merits rather than setting-aside the matter to the file of the Assessing Officer. 9. We have considered the rival submissions. The grievance of both, the Revenue as well as the assessee, is against setting-aside the matter by the Ld. CIT(A) to the file of the Assessing Officer. It is found that the Ld. ITA No. 937/Ahd/2025 & C.O. No. 45/Ahd/2025 ITO vs. The Wardrobe Theorem & The Wardrobe Theorem vs. ITO Asst. Year –2016-17 - 5– CIT(A) had invoked the proviso to Section 251(1) of the Act, introduced w.e.f. 01.10.2024 whereby an option was given to the Ld. CIT(A) to set- aside the matter to the Assessing Officer in a case where an order of assessment was made under Section 144 of the Act. However, this amendment does not postulate that all the assessment orders passed under Section 144 of the Act are mandatorily required to be set-aside to the Assessing Officer. The use of word “may” in this proviso makes this provision discretionary in nature. Therefore, it was obligatory on the part of the Ld. CIT(A) to first decide whether the matter was required to be set- aside at all to the Assessing Officer. In the present case, it was not the case that the order under Section144 of the Act was passed without allowing any opportunity to the assessee and that there was no compliance on the part of the assessee in the course of assessment proceedings. Rather, in the present case the assessee had complied to the notices issued by the Assessing Officer in the course of assessment and had made its submissions in respect of the transactions in respect of which inquiry was initiated. Further, the submission made by the assessee was also duly incorporated in the assessment order. Under the circumstances, the Ld. CIT(A) should have decided the matter on merits rather than setting-aside the matter to the file of the Assessing Officer in a mechanical manner. Further, since the assessee had raised a legal ground in respect of reopening of the case, this matter was required to be first decided only by the Ld. CIT(A). This issue couldn’t have been set aside to the AO. Therefore, the action of the Ld. CIT(A) in setting-aside the matter to the ITA No. 937/Ahd/2025 & C.O. No. 45/Ahd/2025 ITO vs. The Wardrobe Theorem & The Wardrobe Theorem vs. ITO Asst. Year –2016-17 - 6– file of the Assessing Officer without deciding the legal ground raised by the assessee cannot be held as correct. 10. In view of the above facts, we are of the considered opinion that the matter requires to be set-aside to the file of Ld. CIT(A) with a direction to first decide the legal ground raised by the assessee and, thereafter, adjudicate the addition made by the Assessing Officer on merits. 11. In the result, both the appeals of the Revenue and the assessee are allowed for statistical purposes. This Order pronounced in Open Court on 08/07/2025 Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA P. SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/07/2025 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 03.07.2025 2. Date on which the typed draft is placed before the Dictating Member 04.07.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .07.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 08.07.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.07.2025 7. Date on which the file goes to the Bench Clerk 08.07.2025 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…………………………………… "