KWALITY OVERSEAS PRIVATE LIMITED,LUDHIANA V. DEPUTY COMMISSIONER OF INCOME TAX, LUDHIANA

ITA 553/CHANDI/2024

AI Insights

The case involves Kwality Overseas Pvt. Ltd., which appealed against the order of the CIT(A)-5, Ludhiana, concerning the Assessment Year 2012-13. The primary contention was the ex-parte decision made by the CIT(A), which the assessee argued was unjustified. The assessee faced allegations of importing goods under various schemes and diverting them into the local market, among other violations. The Assessing Officer (AO) had made additions to the assessee's income based on these allegations, which were not contested due to the assessee's non-compliance with statutory notices. The CIT(A) dismissed the appeal for non-prosecution. The Tribunal found that the CIT(A) erred in not adjudicating on merits and restored the case to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775830 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 10-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: ASHWANI KUMAR; C.A
• Keywords: Set aside; Reassessment proceedings; Unexplained investment
• Section: 147; 144; 69

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 553/Chd/ 2024 िनधाŊरण वषŊ / Assessment Years : 2012-13 Kwality Overseas Private Limited 863, Industrial Area-A, Ludhiana बनाम The DCIT Ludhiana ˕ायी लेखा सं./PAN NO: AABCK6381J अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Ashwani Kumar, C.A राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 07/08/2025 उदघोषणा की तारीख/Date of Pronouncement : 10/09/2025 आदेश/Order PER KRINWANT SAHAY, AM: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-5, Ludhiana dt. 21/03/2024 pertaining to Assessment Year 2012-13. 2. In the present appeal Assessee has raised following grounds: 1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-5, Ludhiana is against law and facts on the file in as much as he was not justified to decide the appeal of the appellant ex-parte. 2. That the Learned CIT(A) was not justified in not adjudicating the various grounds of appeal on merit. 3. Briefly the facts of the case are that the assessee, M/s Kwality Overseas Pvt. Ltd., engaged in the business of textile manufacturing using handloom and power loom, filed its return of income for the Assessment Year 2012–13 on 24.09.2012, declaring Printed from counselvise.com 2 total income of Rs.46,94,121/-. Information was received from the Office of the Deputy Director of Income Tax (Investigation), Ludhiana, that the assessee had imported consignments of capital goods, fibre tow, and fabrics under various actual user schemes, such as EPCG, Target Plus Scheme, and Advance Authorization for Annual Requirement Scheme, but allegedly diverted the same into the local market in violation of the conditions of actual use and non-transferability of licenses. It was further alleged that certain consignments were imported through mis-declaration of description and value, including imports of Calvin Klein branded girls’ pyjamas in violation of intellectual property rights rules. The information also suggested that the assessee avoided import duty of Rs.1,96,07,905/- by undervaluing purchases of capital goods and raw materials, and that during the relevant year it had opened 21 current accounts with Yes Bank Ltd. wherein deposits of Rs.5,81,11,290/- were made without satisfactory explanation. Based on the above, the Assessing Officer initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, after recording reasons and obtaining approval. Despite repeated statutory notices issued under Sections 148, 142(1), and 143(2), the assessee failed to furnish requisite details or explanations regarding the undervaluation of imports and the source of bank deposits. A show-cause notice dated 23.11.2019 was also issued proposing additions of Rs.1,96,07,905/- as unexplained investment under Section 69 and Rs.5,81,11,290/- as unexplained money under Section 69A; however, no compliance was made. Accordingly, the AO Printed from counselvise.com 3 completed the assessment ex parte under Section 144 read with Section 147, determining the total income at Rs.8,24,13,320/- by making the above additions to the returned income, and further initiated penalty proceedings under Section 271(1)(b) for concealment of income and non-compliance with statutory notices. 4. Against the order of the Ld. AO the assessee went in appeal before the Ld. CIT(A) who has dismissed the appeal of the assessee for non prosecution despite various notices issued to him. 5. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 6. During the course of hearing the Ld. Counsel for the Assessee submitted that the AO passed the order under section 144 and the Ld. CIT(A) has also dismissed the appeal for non prosecution without deciding the issue on merits on the basis of material available on the record. Ld. Counsel requested that the matter may kindly be remand back to the file of AO. 7. Per contra, the Ld. DR relied on the orders of the lower authorities. 8. We have heard the rival contention of both the parties and perused the material available on the record. In the present case it is noticed that the assessment was framed ex parte under Section 144 r.w.s. 147 as the assessee failed to respond to statutory notices. The Ld. CIT(A) also dismissed the appeal for non- Printed from counselvise.com 4 prosecution without deciding the grounds on merits. Since the Ld. CIT(A) is required to adjudicate the appeal on merits by passing a speaking order, dismissal for non-prosecution cannot be sustained. In the interest of justice, we set aside the order of the CIT(A) and restore the matter to the file of the Assessing Officer for fresh adjudication after affording due opportunity to the assessee, who shall cooperate in the proceedings. 9. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 10/09/2025 Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "