Luxor Nano Technology Pvt. Ltd. Vs ACIT (ITAT Delhi)
The ITAT Delhi partly allowed the assessee’s appeal for statistical purposes in respect of the assessment framed under Section 143(3) for AY 2016-17.
The assessee first challenged the validity of the notice issued under Section 143(2), contending that it violated CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.06.2017. The Tribunal held that the issue stood covered against the assessee by the Delhi High Court’s decision in Bharat Bansal vs. National Faceless Assessment Centre, which held that administrative circulars do not override statutory provisions, scrutiny formats are internal administrative guidelines, and such circulars do not create enforceable rights for taxpayers. Accordingly, the challenge to the notice was rejected.
On the merits, the Tribunal considered the addition of ₹50 lakh under Section 68 relating to an alleged loan transaction from an alleged entry-provider shell company. It examined the CIT(A)’s order and observed that although it ran to 58 pages, most of it merely reproduced the assessment order, grounds of appeal, and the assessee’s written submissions. The Tribunal found that the actual adjudication was confined to a brief discussion of the Directorate of Investigation, Kolkata report and did not contain a speaking order or proper findings on the facts of the assessee’s case.
The Tribunal therefore set aside the issue relating to the ₹50 lakh addition and restored it to the file of the CIT(A) with directions to adjudicate the matter afresh by passing a speaking order after providing the assessee sufficient opportunity of hearing.
The Tribunal also noted that the disallowance of interest of ₹92,213 under Section 36(1)(iii) and the addition of ₹1,50,000 under Section 69C were connected with the disputed loan transaction. Since the principal issue had been restored for fresh adjudication, these connected additions were also remitted to the CIT(A) with similar directions. Consequently, the appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is emanating from the order of the Ld. Commissioner of Income Tax (Appeals-30), New Delhi dated 25.06.2025 in appeal No. CIT(A), Delhi-5/10193/2018-19 pertaining to assessment year 2016-17. Assessment in this case was framed by the ACIT, Circle 15(2), New Delhi u/s. 143(3) of the Act vide order dated 25.12.2018.
2. The first issue in this appeal of the assessee is as regards to the order of the CIT(A) confirming the action of the Assessing Officer in issuance of notice u/s. 143(2) of the Act in violation of CBDT Instruction F.No. 225/157/2017/ITA-II dated 23.6.2017. For this, assessee has raised the following Ground No. 2:-
“2. That on the facts and in the circumstances of the case, notice issued u/s 143(2) of the Act dated 26.9.2017 is invalid, bad in law and liable to be quashed being the same was issued in violation of CBDT Instruction F.NO. 225/157/2017/ITA-II( dated 23.06.2017.”
3. At the outset, it is noticed that this issue now stands covered against the assessee and in favour of the Revenue by the decision of the Hon’ble Delhi High Court in the case of Bharat Bansal vs. National Faceless Assessment Centre in WP (C) No. 2238/2026 dated 17.2.2026 wherein, the Hon’ble Delhi High Court has held that the administrative circulars do not override statutory provisions and that scrutiny format are internal administrative guidelines and not enforceable contracts. Such circulars do not create justiciable rights for the taxpayers. In view of the same, the objection that notice has not been issued in proper format as per Circular and are void for nondisclosure of reason, no longer survives. Therefore, respectfully following the aforesaid precedent, the ground no. 2 raised by the assessee stands rejected.
4. The next issue on merits is as regards the order of the CIT(A) confirming the action of the AO in making addition of Rs. 50 lacs being loan transaction from alleged entry provider shell company u/s. 68 of the Act. For this, assessee has raised ground nos. 3, 4, 5, 6 & 7 which are argumentative, hence, need not be repeated.
5. We have heard the Ld. Sr. DR and gone through the facts and circumstances of the case. We have gone through the order of the Ld. CIT(A) and noted that the order of the CIT(A) is of 58 pages and page no. 1 to 42 is the reproduction of either of the assessment order or the grounds of appeal; Page No. 42 to 54 are the reproduction of assessee’s written submissions; Page No. 55-56 is actually adjudication wherein simplicitor the CIT(A) has discussed only the Investigation Report of Directorate of Investigation, Kolkata on the alleged entry provider. We have gone through the findings of the Ld. CIT(A) and noticed that there is no speaking order or proper adjudication on actual facts of the assessee’s case, thus, we have no other alternative except to set aside the issue back to the file of the CIT(A) to give a proper finding on the facts of assessee’s case and adjudicate the issue by passing a speaking order. In terms of above, we restore back the issue in dispute to the file of the CIT(A) with the directions to decide the same afresh and pass a speaking order on the issue in dispute, after affording sufficient opportunity of hearing to the assessee.
6. Coming to issue of disallowance of interest paid of Rs. 92,213/-u/s. 36(1)(iii) and addition of Rs. 1,50,000/- being estimation of commission u/s. 69C of the Act, both the additions are related to the above loan entry of Rs. 50 lacs. Since we have already remitted back the issue of loan of Rs. 50 lacs to the file of the CIT(A), as aforesaid, for fresh adjudication, thus, this connected issue of addition of Rs. 92,213/- and Rs. 1,50,000/- also stand remitted back to the file of the Ld. CIT(A) with the aforesaid similar directions for fresh adjudication.
7. In the result, the Assessee’s appeal is partly allowed for statistical purposes.
Order pronounced in the Open Court on 03.07.2026.
