DCIT Vs Gujarat Mercantile Co-op Bank Ltd. (ITAT Ahmedabad)
AO reopened the case & added ₹70 lakh treating a transaction as bogus, despite Assessee filing detailed submissions & documents. CIT(A) found that AO ignored the evidence & virtually passed the order ex parte, without granting a proper & meaningful opportunity. Instead of deciding on merits, CIT(A) set aside the assessment u/s 251(1)(a) & sent the matter back to AO for fresh adjudication after full hearing.
Revenue argued that the assessment was not ex parte & CIT(A) should have decided the appeal directly. However, ITAT held that natural justice was clearly violated, & when facts need verification, remand is the correct approach. Hence, the Tribunal upheld the CIT(A)’s decision, dismissed the Revenue’s appeal, & treated the assessee’s supporting cross objection as disposed of.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, vide order dated 24.10.2024 relevant to the Assessment Year 2017-18. The assessee has filed Cross Objection No.71/Ahd/2025 against the Revenue’s appeal.
2. The Revenue has raised the following grounds of appeal:
(a) The Ld.CIT(A) has erred in law and on facts in setting aside the order to the file of AO for fresh assessment u/s 251(1)(a) of the IT Act holding that the assessment order was passed ex parte u/s 144 of the Act by ignoring the fact that during the assessment proceedings, the assessee has responded on 01.05.2023 in response to Show cause Notice issued on 30.04.2023 and the order was passed u/s 147 r.w.s. 144B of IT Act which is clearly mentioned in para 12 of the assessment order. This indicates that this case was not ex-parte.
(b) The Ld.CIT(A) has erred in law and on facts in not deciding the appeal on merits of the case.
(c) The appellant craves leave to add alter and/or to amend all or any the ground before the final hearing of the appeal.
3. The brief facts of the case are that the assessee is a Co-operative Bank and has been maintaining proper books of accounts duly audited by the statutory auditors. Thereafter, the assessee filed its Return of Income on 23.10.2017. The case was selected for scrutiny, and the assessment under section 143(3) of the Income Tax Act, 1961, was completed on 30.10.2019, wherein an addition of Rs. 69,860/- was made being the difference between the computation of income as per the Return of Income and Annexure 8 submitted to the Assessing Officer. The assessment order does not indicate any non-cooperation on the part of the assessee; rather, it records that the assessee had furnished written submissions and necessary documents from time to time during the assessment proceedings. Subsequently, a show-cause notice was issued to the assessee requiring it to explain why the transaction with M/s. Kavita Enterprise amounting to Rs. 70,00,000/-should not be treated as bogus. The assessee duly complied by filing various written submissions along with the requisite details and supporting documents from time to time. However, the Assessing Officer treated the said transaction as bogus and made an addition of Rs. 70,00,000/-, thereby determining the total assessed income at Rs. 1,12,68,010/-.
