OMKARA IMPEX AND MERCHANDISE LLP,AHMEDABAD V. THE ACIT, CIRCLE-3(3)(2), AHMEDABAD

ITA 809/AHD/2024

AI Insights

The case involves Omkara Impex and Merchandise LLP, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, confirming the Assessing Officer's order under Section 147 read with Section 144 of the Income Tax Act, 1961. The assessment was reopened based on information that the assessee had obtained accommodation entries of Rs.69,18,469 from Aryan Trading Co. The assessee did not comply with notices to substantiate the purchases, leading to a best judgment assessment treating the amount as bogus purchases. The Tribunal found that the CIT(A) had passed an ex-parte order without adjudicating on the merits and restored the matter for fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472264 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WAGHE PRASAD RAO
• Assessee Lawyers: KUSHAL FOFARIA
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Bogus purchase; Reopening of assessment; Principle of natural justice; Accommodation entries; Procedural lapse; Bogus
• Section: 147; 148; 142(1); 143(2); 271(1)(c)

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD \u0015ी टी.आर. से\u0019\u001aल क ुमार, \u0011ाियक सद\u001c एवं \u0015ी मकरंद वसंत महादेवकर, लेखा सद\u001c क े सम\"। ] ] BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.809/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : 2014-15 Omkara Impex and Merchandise LLP 301, Primate Judges Bungalows Road Bodakdev Ahmedabad – 380 054 बनाम/ v/s. The ACIT Circle-3(3)(2) Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: AAEFO 2861 K (अपीलाथ%/ Appellant) (&' यथ%/ Respondent) Assessee by : Shri Kushal Fofaria, AR Revenue by : Shri Waghe Prasadrao, Sr.DR सुनवाई की तारीख/Date of Hearing : 26 /02/2025 घोषणा की तारीख /Date of Pronouncement: 27 /02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 14/03/2024, passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], confirming the order of the Assessing Officer [hereinafter referred to as “AO”] under Section 147 r.w.s. 144 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the assessment year (AY) 2014-15. ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 2 Facts of the Case: 2. The assessee is engaged in the business of trading. The assessment was reopened under Section 147 of the Act based on information received that the assessee had obtained accommodation entries of Rs.69,18,469/- from M/s. Aryan Trading Co. in Financial Year (FY) 2013-14. Accordingly, a notice under Section 148 of the Act was issued on 31/03/2021, after obtaining approval under Section 151. The assessee did not file its return of income in response to the notice under Section 148 of the Act. The AO issued multiple notices under Sections 142(1) and 143(2) of the act, calling for details. However, the assessee remained non-compliant and failed to furnish supporting documents to substantiate the purchases. The AO passed a best judgment assessment under Section 144 on 31/03/2022, making an addition of Rs.69,18,469/- to the assessee’s income, treating the amount as bogus purchases/accommodation entry. The AO also initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income. 3. Aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A), NFAC, Delhi. Before the CIT(A), the assessee challenged the reopening of assessment under Section 147 of the Act, contending that it was without jurisdiction and bad in law. The assessee also objected to the best judgment assessment under Section 144 of the Act, arguing that it had sought time for making submissions, which was not adequately considered. Further, the assessee disputed the addition of Rs.69,18,469/-, claimed as alleged accommodation entry of purchases, and alternatively argued that if at all any disallowance was warranted, it should be restricted to the profit element ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 3 embedded in the purchases. The assessee also contested the consequential levy of interest and the initiation of penalty. 4. During the appellate proceedings before the CIT(A), multiple notices were issued to the assessee for compliance. However, the assessee failed to respond on several occasions. As per the record, the CIT(A) sent notices on 09/11/2022, 27/09/2023, 17/11/2023, and 29/12/2023, but the assessee did not submit any reply. The only action taken by the assessee was a request for adjournment on 13/12/2023, which was granted, but no further submissions were made. Consequently, the CIT(A) proceeded to decide the appeal ex- parte, solely based on the material available on record, without considering the merits of the case. The appeal was dismissed, and the addition of Rs.69,18,469/- was confirmed, along with the levy of interest and initiation of penalty proceedings. 5. The assessee preferred an appeal before us with following grounds of appeal: 1. The Ld. AO has erred in law and on facts of the case reopening the assessment u/s. 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and in not permissible either in law or on facts. 2. The Ld. CIT(A) has erred in law and on the facts in confirming Ex-parte assessment order framed by the Assessing Officer u/s. 144 of the Act in spite of the fact that the Appellant had sought time to make submissions. 3. The Ld. CIT(A) has erred in disposing the impugned assessment order without stating the points for determination, the decision arrived at by the Ld. AO as well as the reasons for the decision, thereby violating section 250(6) of the Act. 4. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.69,18,469/- as alleged accommodation entry of purchases. ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 4 5. Alternatively, and without prejudice the addition may be restricted to the profit embedded in alleged bogus purchases. 6. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s. 234A/B/C/D of the Act. 8. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in initiating penalty u/s. 271(1)(c) of the Act. 9. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 6. During the course of hearing before us, the learned Authorized Representative (AR) submitted that the assessee has now filed additional evidence to substantiate that the alleged accommodation entry of Rs.69,18,469/- was a genuine purchase and that the transaction was duly recorded in the books of accounts. The AR also contended that during the appellate proceedings before CIT(A), the assessee had sought an adjournment, but after granting only one adjournment, the CIT(A) passed the order without giving the assessee a further opportunity to present its case. The AR argued that natural justice was violated, and the case was not adjudicated on merits. 7. The learned Departmental Representative (DR) opposed the appeal, stating that the assessee had been non-compliant throughout the assessment and appellate proceedings. However, the DR did not raise any specific ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 5 objection to the matter being restored to the file of the AO for fresh adjudication. 8. We have carefully considered the submissions of both parties and perused the material available on record. It is evident that the CIT(A) passed an ex-parte order without adjudicating on the merits of the case. The record also shows that the assessee has now submitted additional evidence to substantiate the genuineness of the purchases, which was not considered by the AO or CIT(A). It is a settled legal position that justice should not be denied due to procedural lapses, provided the assessee demonstrates a bona fide reason for earlier non-compliance. Many courts have held that when an assessee has not been granted an adequate opportunity of being heard, the matter should be restored for fresh adjudication. 8.1. Further, as per Rule 29 of the ITAT Rules, 1963, additional evidence may be admitted at the appellate stage if it is necessary for rendering complete justice. The DR has not raised any objection in admitting such additional evidence. Since the additional evidence now produced by the assessee may have a bearing on the correct assessment of taxable income, we deem it fit to set aside the order of CIT(A) and restore the matter back to the file of the AO for fresh adjudication. 8.2. However, we also take note of the fact that the assessee has been repeatedly non-compliant, leading to prolonged litigation and wastage of judicial time. To ensure that such non-compliance does not recur, we impose a cost of Rs.5,000/- on the assessee as a deterrent measure. ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 6 8.3. In view of the above, we set aside the order of CIT(A) and restore the matter to the file of the AO with the following directions: • The AO shall examine the additional evidence filed by the assessee and verify the genuineness of purchases in accordance with law. • The assessee shall cooperate in the fresh proceedings and furnish all necessary documents before the AO. • The AO shall provide a reasonable opportunity of being heard to the assessee before passing a fresh order. • The assessee shall deposit the cost of Rs.5,000/- before the commencement of fresh proceedings. 8.4. Thus, the order of the CIT(A) is set aside, and the matter is restored to the file of AO for fresh adjudication, subject to payment of a cost of Rs.5,000/- by the assessee. 9. In the result, the appeal of the assessee is allowed for statistical purposes. pronounced in the Open Court on 27th February, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 27/02/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS ITA No.809/Ahd/2024 Omkara Impex and Merchandise LLP vs. ACIT Asst. Year : 2014-15 7 आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)-(NFAC), Delhi 5. िवभागीय #ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 26.2.2025 2. Date on which the typed draft is placed before the Dictating Member. : 26.2.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 27.2.25 7. Date on which the file goes to the Bench Clerk. : 27.2.25 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 Despatch of the Order : "