KUSUMBEN RAJENDRAKUMAR SONI,AHMEDABAD V. THE ITO, WARD-6(1)(1), AHMEDABAD

ITA 244/AHD/2025

AI Insights

The case involves Kusumben Rajendrakumar Soni, the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The appeal was concerning the assessment year 2021-22, where the appellant's purchases amounting to Rs.5,21,27,915 were treated as non-genuine, leading to an addition to her income. The appellant contested that the addition was based on conjectures and surmises without proper consideration of her submissions and evidence. The Tribunal found that the assessment and the subsequent appeal decision were made without adequate opportunity for the appellant to contest the findings, thus breaching the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652611 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH PARMAR
• Assessee Lawyers: JIGNESH PARIKH
• Keywords: Set aside; Corroborative evidences; Principle of natural justice; Initiation of penalty proceedings; Bogus

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 244/Ahd/2025 (िनधा[रण वष[ / Assessment Year : 2021-22) Kusumben Rajendrakumar Soni F-501, Shilalekh, Opp. Police Stadium, Shahibaug, Ahmedabad-380004, Gujarat बनाम / Vs. The ITO Ward-6(1)(1), Ahmedabad Öथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AFSPS6540J (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Jignesh Parikh, AR Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Ritesh Parmar, CIT. DR Date of Hearing 24/04/2025 Date of Pronouncement 16/06/2025 (आदेश)/ORDER PER SMT. ANNAPURNA GUPTA, AM: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 03.12.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2021-22. 2. The grounds raised by the assessee are as under: ITA No. 244/Ahd/2025 [Kusumben Rajendrakumar Soni vs. ITO] - 2 – “1. The learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the addition of Rs.5,21,27,915/- by treating the entire purchases as non-genuine and alleging the same as unaccounted money. The addition is based on conjectures and surmises, without properly considering the appellant’s submissions, supporting evidence, and confirmations.” 2. The order is in violation of the principles of natural justice, as adequate opportunity was not granted to the appellant to rebut the findings of the Assessing Officer (AO) or cross-examine the parties whose statements or non-compliance were relied upon. 3. The learned AO and CIT(A) erred in attributing non- compliance by third parties (vendors and customers) to the appellant. The appellant cannot be penalized for the non- response of third parties to notices issued under Section 133(6). 4. The initiation of penalty proceedings under Section 270A for alleged misreporting of income is unwarranted, as the appellant has disclosed all details and cooperated with the proceedings in good faith.” 3. The solitary issue in the present appeal pertains to addition made to the income of the assessee by treating the entire purchases as non-genuine amounting to Rs.5,21,27,915/-. The solitary contention of the Ld. Counsel for the assessee before us against the confirmation of the impugned disallowance by the Ld. CIT(A) was that the same had been confirmed without dealing with the assessee’s contention that the addition was made in gross violation of the principle of the natural justice without affording adequate opportunity of hearing to the assessee and without considering the material that was placed on record before the AO. 4. The facts relating to the case are that the assessee is an individual and had filed her return of income of the impugned year declaring total income of Rs.4,01,960/-. The assessee is stated to ITA No. 244/Ahd/2025 [Kusumben Rajendrakumar Soni vs. ITO] - 3 – be involved in the business of trading of gold, which was commenced during the F.Y. 2019-20 pertaining to A.Y. 2020-21, i.e the immediately preceding year. The case of the assessee was selected for scrutiny and during assessment proceedings the assessment unit observed that the assessee had made purchase of Rs.5,21,42,915/- only from three parties i.e. M/s. Arihant Jewellers Prop: Shri Hardik Rasiklal Shah Rs.2,17,66,264/-, M/s. Viram jewelers Prop: Shri Vishal Ganeshbhai Adesara Rs.3,03,61,651/- & M/s. Bap Fibres Prop: Jayvin Amrutlal Patel Rs.15000/-. To ascertain the genuineness of the transaction of purchases notices u/s.133(6) of the Act were issued to three parties, out of which, only one i.e. Jayvin Amrutlal Patel, Proprietor of M/s. Bap Fibres confirmed his transaction with the assessee, though, he stated to have sold only cloths to the assessee. Accordingly, the case was referred to the Designated Verification Unit (DVU) for verification of the genuineness of the transaction. The DVU reported that notices were delivered to all the parties but none responded. Accordingly, show cause notice was issued to the assessee as to why the purchases made by the assessee from these parties be not treated as ingenuine and disallowed. In the absence of any response from the assessee to the show cause notice, the AO treated the entire purchases as in- genuine and added the same to the income of the assessee, which was confirmed by the Ld. CIT(A). 5. The contention of the Ld. Counsel for the assessee before us that it was pointed out to the Ld. CIT(A) that the assessee had ITA No. 244/Ahd/2025 [Kusumben Rajendrakumar Soni vs. ITO] - 4 – sought adjournment of 15 days on 1st December, 2022 and without considering the same, the assessment unit closed its portal, which the assessee realized when it attempted to upload its submissions dt. 6th December, 2022 on 7th December, 2022. He pointed out that the assessee thereafter filed the complete submission on mail to the Jurisdictional AO requesting him to forward it to the assessment unit. He contended that it was submitted to the Ld. CIT(A) that the assessee had also filed grievance electronically alongwith copy of submission containing the balance confirmation from the two parties, but however, the Ld. CIT(A) did not take into consideration the above submissions of the assessee and the documents, which were filed by the assessee to the Jurisdictional AO to prove the genuineness of the purchases made by it. He further pointed out that the assessment unit relied on the investigation report of proprietor of M/s. Viram jewelers i.e. Shri Vishal Ganeshbhai Adesara and on the purchases made by the assessee from the same. Likewise, he pointed out that even the sales made by the assessee were found to be not genuine to the tune of Rs.4,29,52,810/- based on an enquiry carried out by the assessment unit by issuing notice to the parties to whom sales were made more, particularly, M/s. Meet Jewels to whom sales of Rs.4.19 Crore was made and the transaction with whom was found to be suspicious. Ld. Counsel for the assessee contended that none of this adverse information was confronted to the assessee by assessment unit and this fact was brought to the notice of Ld. CIT(A) also who took no cognizance of the same. Ld.Counsel therefore contended that the order passed by the Ld. CIT(A) ITA No. 244/Ahd/2025 [Kusumben Rajendrakumar Soni vs. ITO] - 5 – needed to be set aside and the assessee be given a proper opportunity of hearing to present its case. 6. The Ld. DR, however, relied on the orders of the authorities below. 7. We have heard rival submissions. We are in agreement of the Ld. Counsel for the assessee that the assessment in the present case needs to be redone. The assessee has fairly demonstrated before us that necessary details and information regarding the genuineness of the purchases, which were disallowed by the AO, were filed though not to the assessment unit but the Jurisdictional AO requesting him to forward it to the assessment unit but the same was neither done nor any cognizance taken of the same by the assessment unit. The assessee has also pointed out that the assessment unit conducted enquiries with respect to the sales made by the assessee also and found the same to be suspicious but none of the materials in this regard was confronted to the assessee. Ld. DR was unable to controvert the above. It is clear that the addition on account of non-genuine purchases has been made without giving a fair opportunity of hearing to the assessee and against the principles of natural justice. Moreover, we have noted that the assessment unit has found both the purchases and sales to be not genuine, which in fact means that they have found business conducted by the assessee to be bogus. But addition has been made only on account of purchases found to be not genuine which is not inconsonance with the findings of the assessment unit from the investigation conducted by it showing the entire business ITA No. 244/Ahd/2025 [Kusumben Rajendrakumar Soni vs. ITO] - 6 – conducted by the assessee to be bogus. In the light of the same, it is crystal clear that the assessment has been done in an ad hoc manner without any application of min or without adhering to the principles of natural justice. We, therefore, set aside the assessment order directing the AO to redo the assessment afresh after giving the assessee due opportunity of hearing confronting it with all materials in his possession and adhering with the principles of natural justice. The Ld.AO is thereafter directed to pass order in accordance with law. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. This Order pronounced on 16/06/2025 Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 16/06/2025 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "