KAMAKSHI DIAMONDS PRIVATE LIMITED,SURAT V. ITO WARD 1(1)(3), SURAT

ITA 994/SRT/2024

AI Insights

The case involves Kamakshi Diamonds Pvt. Ltd., which appealed against the order of the CIT(A) confirming the addition of Rs.15,00,000 under section 69C of the Income Tax Act, 1961, related to a transaction with M/s Delight Diam P. Ltd., a company allegedly involved only in providing accommodation entries. The Assessing Officer (AO) had initially added this amount to the assessee's income, considering it a bogus purchase. The CIT(A) upheld this addition after the assessee failed to respond adequately to the notices. The Tribunal found that the CIT(A) had passed an ex parte order without sufficient compliance from the assessee, who claimed non-compliance was due to unavoidable circumstances, including illness. The Tribunal decided to give the assessee another opportunity to present its case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473305 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: SHUBHAM JAIN
• Keywords: Reassessment proceedings; Bogus purchase; Accommodation entries; Competent authority; Bogus
• Section: 147; 148; 144; 250; 69; 69C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.994/SRT/2024 Assessment Year: (2016-17) (Hybrid hearing) Kamakshi Diamonds Pvt. Ltd. Office No.203, 2nd Floor Panchratna Apartment, Dalgrya Sheri, Mahindrapura, Surat-395 003 बनाम/ Vs. Income Tax Officer, Ward- 1(1)(3), Surat, Aaykar Bhawan, Majura Gate, Opp. New Civil Hospital, Surat-395 001 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAECK 0477 A (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Shubham Jain, CA राजˢ की ओर से /Respondent by Shri Mukesh Jain, Sr-DR सुनवाई की तारीख/Date of Hearing 11/03/2025 उद ्घोषणा की तारीख/Date of Pronouncement 13/03/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 08.08.2024 by the CIT(Appeals)/National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] for the assessment year (AY) 2016-17, which in turn arises out of assessment order passed by Assessing Officer (in short ‘AO’) u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 30.05.2023. Grounds of appeal raised by the assessee are as under: “1. Whether on the facts and circumstances of the case, the notice issued by the learned Assessing Office under section 148 of the Act and the 2 ITA No.994/SRT/2024/AY.16-17 Kamakshi Diamonds Pvt Ltd. consequential reassessment proceedings under section 147 of the Act are justifiable in law when the notice under section 148 of the Act has been issued after obtaining approval from the Competent Authority under section 151(i) and not section 151(ii) when 3 years from the end of the relevant assessment year had already elapsed. 2. Whether on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) was justified in upholding the addition made by the learned Assessing Officer to the notice of the appellant to the tune of Rs.15,00,000 under section 69 of the Income tax Act, 1961. 3. Appellant craves leave to add, alter modify or delete any ground(s) either before or during the course of appellate hearing.” 2. Facts of the case in brief are that assessee filed its return of income declaring total income of Rs.61,980/- for the assessment year 2016-17 on 16.10.2016. The AO received information from DDIT(Inv)-2, Surat that a company by the name M/s Delight Diam P. Ltd. was not engaged in any diamond trading. During the course of inquiry proceedings, the Director of the M/s Delight Diam P. Ltd., Shri Deepak Babel stated that the company was engaged only in providing accommodation entries and there was no actual business activities carried out by the company. The assessee-company had transaction of Rs.15,00,000/- with the above entity. In view of the above, the AO provided various opportunities to assessee which is tabulated at para-2 of the assessment order. It is clear therefrom that AO issued various statutory and show cause notices and after considering the submission of the assessee, he added Rs.15,00,000/- u/s 69C of the Act towards the bogus purchase from 3 ITA No.994/SRT/2024/AY.16-17 Kamakshi Diamonds Pvt Ltd. M/s Delight Diam Pvt. Ltd. in the order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 30.05.2023. Aggrieved by the addition made by AO, assessee preferred appeal before CIT(A). 3. The CIT(A) issued three notices to the appellant but it failed to respond to the notices of hearing. The CIT(A) has observed that assessee even failed filed any return of income in response to notice u/s 148 of the Act. Apart from giving confirmation from M/s Delight Diam Pvt. Ltd. to the AO, the assessee did not provide any evidence to dispute the investigation by the DDIT (Inv). The appellant did not respond to the notices dated 14.06.2024, 28.06.2024 and 15.07.2024 issued by CIT(A). Therefore, CIT(A) presumed that appellant had no other submission than the one submitted before AO. He confirmed the addition made by the AO and dismissed the appeal. Aggrieved by the order of CIT(A), the assessee has filed present appeal before the Tribunal. 4. Before us, Ld.AR of the assessee submitted that adequate opportunity of hearing was not granted by the CIT(A). He has filed an affidavit of Shri Kuldeep Shripal Jain, Director of assessee-company, who stated that only one hearing notice was issued by CIT(A) before passing the ex parte order. He stated that he was severely ill during May and June, 2024 and doctor advised complete rest during the said period. Because of above reason, appellant could not file submission before CIT(A) but it had filed complete submissions before AO. In view of the above, Ld. AR of the assessee requested that one more opportunity may be given to the appellant to argue its case on merit before 4 ITA No.994/SRT/2024/AY.16-17 Kamakshi Diamonds Pvt Ltd. CIT(A). He undertakes to be vigilant and furnish explanation and details expeditiously. 5. On the other hand, Ld.Sr-DR for the Revenue supported the orders of lower authorities. He has, however, no objection if the matter is restored back to the file of CIT(A) for fresh adjudication. 6. We have heard both the parties and perused the materials available on record. We find that CIT(A) has passed ex parte order. Evidently, the assessee did not comply with the notices issued by CIT(A). Hence, the addition made by AO was confirmed by CIT(A). Ld. AR of assessee submitted that non- compliance by assessee was not deliberate but due to unavoidable circumstances. We find that the CIT(A) has dismissed the appeal of assessee on the ground of non-compliance. Considering the facts and circumstances of the case and the fact that the assessment order was confirmed by CIT(A) by an ex parte order, we are of the considered view that the assessee deserves one more opportunity to contest its case on merit. In the interest of justice, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) with a direction to adjudicate the appeal fresh in accordance with law after granting adequate opportunity of hearing to assessee. The assessee is directed to be vigilant and to furnish all details and explanation as needed by CIT(A) and not 5 ITA No.994/SRT/2024/AY.16-17 Kamakshi Diamonds Pvt Ltd. seek adjournment without valid reason. With this direction, the grounds of appeal raised by the assessee are treated as allowed for statistical purposes. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced on 13/03/2025 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ ACCOUNTANT MEMBER सूरत /Surat Ǒदनांक/ Date: 13/03/2025 Dkp Outsourcing Sr.P.S* आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ (अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडª फाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलȣय अͬधकरण, सूरत "