Hari Krushna Machintech Private Limited Vs DCIT (ITAT Ahmedabad)
In the case of Hari Krushna Machintech Pvt. Ltd. vs. DCIT (ITAT Ahmedabad), the Income Tax Appellate Tribunal (ITAT) addressed appeals relating to reassessment orders for Assessment Years 2012-13 and 2014-15. The appeals arose from ex-parte orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. The crux of the matter involved additions made by the Assessing Officer (AO), treating purchases of ₹11.84 crore as bogus based on alleged circular trading among related entities.
The AO reopened the assessments under Section 148 of the Income Tax Act, 1961, relying on information provided by the Investigation Wing. It was observed that the assessee allegedly participated in a circular trading arrangement involving entities such as AV Sales, OM Surgical, and Dishant Trading. Despite the assessee’s submission of returns consistent with earlier filings, the AO contended that the purchases lacked genuineness and added the amount to the total income. The CIT(A) upheld these additions in an ex-parte order, dismissing the assessee’s appeals without addressing the evidence on record.
The assessee argued before the ITAT that the CIT(A) violated principles of natural justice by failing to provide a fair opportunity for hearing. Additionally, it was contended that the purchases were reflected in the audited accounts and that the AO’s assessment was based on inadequate evidence. The Department, on the other hand, maintained that the assessee had been given sufficient opportunities but failed to produce relevant documents.
After reviewing the submissions, the ITAT found procedural lapses in the CIT(A)’s handling of the appeals. The Tribunal emphasized the necessity of adhering to principles of natural justice and providing the assessee with adequate opportunities to present evidence. Citing precedents like Guduthur Bros. v. ITO (1960) and ITO v. M. Pirai Choodi (2011), the ITAT remanded the matter back to the CIT(A) for a fresh adjudication. It directed the CIT(A) to take cognizance of all relevant materials submitted by the assessee and ensure a fair hearing.
In conclusion, the ITAT partly allowed the appeals for statistical purposes, underscoring the importance of procedural fairness in reassessment proceedings.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
