Ashapura Stone Industries Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad pulls up CIT(A) for ignoring remand directions; Restores bogus purchase addition dispute for fresh adjudication
Ahmedabad ITAT came down strongly on the CIT(A) for failing to comply with binding remand directions issued in an earlier order, terming the lapse a “gross dereliction of statutory duty” & contrary to judicial discipline.
Assessee, engaged in quarrying & trading of stone products, had advanced ₹50 lakh to M/s Umiya Industries for purchase of machinery. Based on Investigation Wing findings that Umiya was a paper entity providing accommodation entries, AO treated the advance as bogus & added it u/s 69. CIT(A) initially dismissed the appeal ex parte, but in June 2024, ITAT remanded the matter with specific instructions to: (i) grant effective hearing; (ii) allow cross-examination of the alleged supplier; (iii) record the statement of the bank officer who sanctioned a loan against the machinery; & (iv) decide afresh on merits.
In the second round, CIT(A) once again confirmed the addition without following any of these directions, relying solely on the Investigation Wing’s report & the untested statement of Shri Alpeshkumar Patel. Tribunal noted that none of the mandatory steps such as cross-examination or recording the bank officer’s statement, had been undertaken. It stressed that directions u/s 254(1) are binding on the lower authority, & their disregard undermines the principles of natural justice.
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