Kansara Popatlal Tibhovandas Metal Pvt Ltd Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad Restores ₹4.78 Cr Addition Case – Assessee to Pay ₹10,000 Cost- Premature Order Violates Natural Justice – Tribunal Remands Case to CIT(A)
Assessee, a private limited company engaged in manufacturing, filed its return declaring income of ₹35.21 lakh. During scrutiny, AO noticed sundry creditors of ₹10.52 crore. As assessee failed to furnish confirmations, PAN, ITRs & bank details for many creditors, AO treated ₹4.52 crore as unexplained cash credits u/s 68. Further, creditors of ₹24.47 lakh (pending >3 years) & ₹72,675 (Priya Road lines) were treated as cessation of liability u/s 41(1). Thus, AO made total additions of ₹4.78 crore & assessed income at ₹5.13 crore.
On appeal, despite issuance of 8 notices between 2019 & 2025, Assessee did not respond. CIT(A) therefore dismissed the appeal ex parte on 03.07.2025.
Before Tribunal, Assessee argued that CIT(A) issued notice dated 01.07.2025 giving time till 08.07.2025, but order was passed prematurely on 03.07.2025, violating principles of natural justice.
ITAT noted that while assessee’s conduct showed negligence in ignoring notices for six years, the last notice indeed granted time till 08.07.2025. Passing order before expiry of time deprived assessee of opportunity. Hence, in interest of justice, matter was remanded back to CIT(A) for de novo adjudication with direction to grant due hearing. However, given assessee’s past negligence, ITAT imposed cost of ₹10,000 to be deposited in PM Relief Fund as condition precedent for rehearing.
