KANSARA POPATLAL TIBHOVANDAS METAL PVT. LTD.,AHMEDABAD V. DCIT, CIRCLE-2(1)(1), AHMEDABAD

ITA 1405/AHD/2025

AI Insights

The case involves Kansara Popatlal Tibhovandas Metal Pvt. Ltd., a private limited company engaged in manufacturing, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal arose from an assessment order under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2016-17. The primary issues in the appeal included the confirmation of additions under sections 68 and 41(1) of the Act, unjustified charging of tax under section 115BBE, and procedural violations in the appellate order. The Income Tax Appellate Tribunal noted the assessee's lack of response over six years to multiple notices but also recognized the failure to provide a proper opportunity of hearing in the last notice, leading to the decision to remand the case back to the CIT(A) for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773252 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 05-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Unexplained cash credit; Initiation of penalty proceedings; Bogus
• Section: 143(3); 271(1)(c); 68; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Siddhartha Nautiyal, Judicial Member And Shri Makarand Vasant Mahadeokar, Accountant Member Kansara Popatlal Tibhovandas Metal Pvt. Ltd. 7/A, Kamal Nayan Apartment, Sardar Patel Nagar, Navrangpura, Ahmedabad-380009 Gujarat PAN:AABCK2339N (Appellant) Vs The DCIT, Circle-2(1)(1), Ahmedabad (Respondent) Assessee Represented: Shri Parin Shah, CA Revenue Represented: Shri Amit Pratap Singh, Sr.D.R. Date of hearing : 23-09-2025 Date of pronouncement : 24-09-2025 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 03.07.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2016-17. ITA No: 1405/Ahd/2025 Assessment Year: 2016-17 Printed from counselvise.com I.T.A No. 1405/Ahd/2025 A.Y. 2016-17 Page No Kansara Popatlal Tibhovandas Metal Pvt. Ltd. vs. DCIT 2 2. The assessee has raised the following Grounds of Appeal: 1. Ld. NFAC erred in law and on facts in confirming addition of Rs. 4,52,65,614/- u/s 68 of the Act by treating sundry creditors as unexplained cash credit. 2. Charging of tax as per section 115BBE is unjustified. 3. The order passed by lower authorities invalid, bad in law and required to be quashed. 4. Ld. NFAC erred in law and on facts in confirming addition of Rs. 25,20,513/- u/s 41(1) of the Act. 5. Ld. NFAC erred in law and on facts in passing order in violation of section 250(6) of the Act and accordingly, Appellant prays that appeal may be set aside to lower authorities to adjudicate same on merits. 6. Ld. NFAC erred in law and on facts in passing order on 03.07.2025 prior to last date of submission i.e. 08.07.2025 granted in notice of hearing. 7. Charging of interest u/s 234A, 234B and 234C are unjustified. 8. Initiation of penalty proceedings u/s 271(1)(c) is unjustified. 3. The brief facts of the case are that the assessee, a private limited company, is engaged in the business of manufacturing. The assessee filed its original return of income on 12.10.2016 declaring a total income of Rs. 35,21,930/-. The case was selected for scrutiny and during the assessment proceedings, it was noticed that the assessee had shown trade payables amounting to Rs.10,52,84,905/-. Despite repeated opportunities, the assessee failed to furnish complete details such as confirmations, PAN, ITRs, bank statements and other evidences for the creditors. In respect of certain creditors outstanding for more than three years, the Assessing Officer held that the liabilities had ceased to exist. After a detailed verification, the Assessing Officer was of the view that liabilities amounting to Rs. 24,47,838/- had remained unpaid for Printed from counselvise.com I.T.A No. 1405/Ahd/2025 A.Y. 2016-17 Page No Kansara Popatlal Tibhovandas Metal Pvt. Ltd. vs. DCIT 3 more than three years, and since the assessee failed to prove any subsisting liability or subsequent payments, the same was treated as cessation of liability. In addition, liability of Rs. 72,675/- in the case of Priya Roadlines was also treated as having been ceased. Accordingly, the Assessing Officer made a total addition of Rs. 25,20,513/- under section 41(1) of the Act to the income of the assessee. Further, the Assessing Officer observed that since the assessee failed to produce basic and complete details for a large number of sundry creditors, he held that the assessee had not discharged the onus cast upon it under section 68 of the Act. While some creditors were accepted as genuine where ledgers or bills were produced, for other creditors totalling to Rs. 4,52,65,614/- the assessee did not provide proper evidence. Accordingly, the Assessing Officer treated the same as unexplained and bogus creditors and added back to the income of the assessee under section 68 of the Act. Accordingly, the total income of the assessee was computed as Rs. 5,13,08,057/- after making additions under sections 41(1) and 68 of the Act. 4. In appeal before Ld. CIT(A), despite issuance of as many as eight notices over a period of 6 years from 23-09-2019 to 27-05-2025, there was no appearance on part of the assessee whatsoever. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee on account of non-compliance and non-appearance. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Printed from counselvise.com I.T.A No. 1405/Ahd/2025 A.Y. 2016-17 Page No Kansara Popatlal Tibhovandas Metal Pvt. Ltd. vs. DCIT 4 6. Before us, the counsel for the assessee drew our attention to notice dated 01-07-2025 issued by Ld. CIT(A), giving next date of hearing as 08-07-2025 to file written submissions, but he proceeded to pass the order on 03-07-2025 itself. Accordingly, it was submitted that the assessee was not provided an opportunity of hearing to cause appearance on the last date of hearing. 7. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. 8. We have heard the rival contentions and perused the material on record. Though, the assessee may not have been given opportunity of hearing with respect to last notice issued by Ld. CIT(Appeals), but at the same time we note that the conduct of the assessee has also not been above par. Ld. CIT(A) has been issuing notices for almost 6 years, but there has been no response on part of the assessee whatsoever. We find that while the conduct of the assessee throughout the proceedings before the Ld. CIT(A) has not been satisfactory, yet at the same time, it is also evident that the assessee was deprived of the opportunity to appear and represent its case on the date of hearing fixed as per the last notice. In the larger interest of justice and fair play, we deem it fit to restore the matter back to the file of the Ld. CIT(A) for de-novo adjudication after granting adequate opportunity of hearing to the assessee. However, given the lack of diligence shown by the assessee in the appellate proceedings spanning over six years, we hereby impose a cost of Rs. 10,000/- on the assessee, which shall be deposited with Printed from counselvise.com I.T.A No. 1405/Ahd/2025 A.Y. 2016-17 Page No Kansara Popatlal Tibhovandas Metal Pvt. Ltd. vs. DCIT 5 the Prime Minister’s Relief Fund before the next date of hearing before us Ld. CIT(A). The Ld. CIT(A) shall verify the payment of the said cost before proceeding with the appeal. 9. In the result, the appeal of the assessee is allowed for statistical purposes in the manner indicated above. Order pronounced in the open court on 24-09-2025 Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 24/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "