Remsons Industries Ltd. Vs ACIT (ITAT Mumbai)
Two Days to Defend 48 Service Providers Is Hardly a Fair Hearing—ITAT Restores Addition Where Evidence Filed Before CIT(A) Was Ignored
The controversy
The assessee, Remsons Industries Ltd., was engaged in manufacturing automobile parts. For AY 2021-22, it filed its return declaring a total income of ₹6,09,86,420.
The case was selected for complete scrutiny principally because of large payments attracting TDS u/s 194J and the mismatch or comparison between the payments reported under the assessee’s TAN and the returns filed by the corresponding recipients whose PANs appeared in Form No.26Q.
During assessment, the AO issued notices u/s 143(2) & 142(1), followed by show-cause notices. Though the assessee partly complied with the notices, it could not furnish confirmations and supporting documents relating to all the concerned service providers within the time allowed.
The AO consequently made additions in respect of the disputed payments and completed the assessment u/s 143(3) r.w.s. 144B on 28 December 2022.
Notices issued at the finishing line
The assessee’s principal grievance was that the final show-cause notices were issued immediately before the assessment was completed.
The show-cause notice dated 15 December 2022 required compliance by 17 December 2022. Another notice dated 19 December 2022 required compliance by 21 December 2022. The assessment order was thereafter passed on 28 December 2022.
Thus, the assessee was granted only a short period to collect and produce confirmations and other documents concerning a substantial number of service providers.
The assessee had six manufacturing plants at different locations and had made payments to several small vendors. During the video-conference hearing, its authorised representative explained that some of the parties had closed their businesses, while key persons connected with certain concerns had passed away during the Covid period. Several vendors were small concerns and could not readily be contacted.
The assessee therefore sought additional time to procure the necessary confirmations. Although it was permitted to upload further material, it could furnish only one additional confirmation before completion of the assessment.
Non-response to notices u/s 133(6)
The AO had also independently issued notices u/s 133(6) through e-mail to some of the service providers whose e-mail addresses were available with the Department. None of those parties responded.
The AO relied upon this non-response and recorded that the assessee had also failed to substantiate the payments made to the parties identified in the assessment proceedings.
The assessee, however, maintained that it had furnished a detailed list of payments made to the contractors and had substantially participated in the proceedings. Its inability to produce every confirmation within the brief period allowed could not, according to it, justify the additions without a proper examination of the available material.
Evidence filed before CIT(A) overlooked
In appeal, the assessee furnished detailed submissions and supporting documents before the CIT(A). The record showed that a submission dated 17 May 2024 had been electronically filed on 18 May 2024. A further response, along with relevant documents, was filed on 22 January 2026 pursuant to notice u/s 250.
The assessee contended that these submissions and documents were not taken into consideration by the CIT(A). Instead, the additions made by the AO were confirmed without examining the evidence produced during the appellate proceedings.
The assessee therefore requested the ITAT to restore the matter to the Jurisdictional AO for proper verification and fresh adjudication.
The Revenue argued that several opportunities had already been provided during assessment, including a video-conference hearing. It was submitted that, despite being allowed further time, the assessee had failed to furnish confirmations from the service providers and had produced a confirmation from only one party out of the 48 parties concerned.
ITAT’s ruling
The Mumbai ITAT found that the assessee had partly complied with the notices issued during assessment. However, the final show-cause notices were issued within a very short span before completion of the assessment.
The Tribunal also noticed that the assessee had expressly requested additional time to furnish confirmations and supporting documents relating to the service providers. More importantly, detailed submissions and evidence had subsequently been furnished before the CIT(A), but those documents did not appear to have been properly examined or adjudicated.
Since the evidence relied upon by the assessee required factual verification, the ITAT considered it inappropriate to decide the additions without examination by the Revenue authorities.
Accordingly, without expressing any opinion on the merits, the Tribunal set aside the CIT(A)’s order on the disputed issues and restored the matter to the Jurisdictional AO for fresh adjudication.
The assessee was directed to furnish all confirmations, particulars & supporting documents upon which it proposed to rely. The AO was directed to verify the material and decide the issues afresh after granting the assessee a reasonable opportunity of hearing.
At the same time, the Tribunal directed the assessee to remain diligent and extend the necessary cooperation for expeditious completion of the set-aside proceedings. The appeal was allowed for statistical purposes.
Author’s comments
The order reiterates that an opportunity must be real & effective, not merely reflected by the number of notices issued. Where information concerning numerous vendors is called for, granting two days to respond to a final show-cause notice may not provide a meaningful opportunity, particularly when the assessment is approaching limitation.
Equally, the non-response of third parties to notices u/s 133(6) cannot automatically become conclusive against the assessee. The assessee cannot compel an independent vendor to respond to the AO. Nevertheless, it must establish the expenditure through agreements, invoices, work records, ledger accounts, banking channels, TDS compliance & evidence of services actually received.
The CIT(A), being the first appellate authority on facts & law, must deal with material properly placed before it. Confirming an addition without examining detailed submissions and documents defeats the purpose of appellate proceedings.
The remand is not a deletion of the additions. It gives the assessee another opportunity—but also places upon it the responsibility of now producing a complete party-wise evidentiary trail before the Jurisdictional AO.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2021-22, date of order 18.02.2026. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity ‘Ld. AO’), order passed under Section 143(3) r.w.s. 144B, date of order 28.12.2022.
2. The brief facts of the case are that the assessee is a company and dealing in manufacturing of auto parts. The assessee has filed the return by declaring total income Rs.6,09,86,420/-. The Ld. AO had initiated the assessment under complete scrutiny for the reasons of large payments made u/sec. 194J to persons who have filed return of income in comparison to total payments on TAN and corresponding to PAN in form No.26Q for section 194J. The notice was initiated u/sec. 143(2) of the Act and the assessee had issued the show cause notice u/sec. 142(1) dated 02.11.2022. Finally, the Ld. AO issued notices on different dates, which were partly complied with by the assessee. The show-cause notice was served upon the assessee on 19.12.2022, requiring compliance by 21.12.2022. The assessee submitted its response to the said show-cause notice on 20.12.2022. However, the assessee was aggrieved that adequate and reasonable opportunity of being heard was not afforded, due to which it could not furnish all the relevant documents, including confirmations and details of the concerned parties. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A) and furnished its complete response on 22.01.2026. The relevant acknowledgement evidencing the response filed pursuant to the notice issued under section 250 of the Act has also been placed before the Bench. However, the Ld. CIT(A) dismissed the appeal and confirmed the addition made by the Ld. AO. Being aggrieved by the impugned appellate order, the assessee is in appeal before us.
3. The Ld. AR argued and contended that the show cause notice was duly initiated by the Ld. AO on 15.12.2022 and the assessment was completed dated 28.12.2022 even the 15 days time was not allowed to assessee to comply the complete scrutiny proceeding. The detail list was duly submitted before the Ld. AO related to the payment was made to the different contractors. But the Ld. AO had made the observations for noncompliance of the notice u/sec. 133(6) duly issued through e-mail. The relevant observations of the Ld. AO in page 16 of impugned assessment order is reproduced as below:
“1.That the Independent enquiries in respect of some of the service provider parties whose email was available with the department mentioned in Table-C were also conducted by this office by issuing notices u/s 133(6) of the Income Tax Act, 1961 to the supplier parties but no reply has been received from any of them. Even the assessee could not substantiate the amount with regard to the payments made to the parties mentioned in its reply to the notices issued u/s 142(1) and also to the show cause dated 15.12.2022.”
4. The Ld. AR further contended that before the Ld. CIT(A), the assessee had submitted the response. The Ld. AR advanced his argument related to the denial of reasonable opportunity to the assessee and a complete 15 days time was not allowed to the assessee from issuance of show cause notice to the completion of assessment. So, in any case the assessee was denied adequate and reasonable opportunity of being heard. The Ld. AR further contended that during the appellate proceeding, the assessee submitted all the relevant documents on 22.01.2026. On perusal of the said e-response, we find that the assessee is already made the submission on 18.05.2024 before the Ld. CIT(A) by a letter dated 17.05.2024. The Ld. AR contended that none of the documents was taken cognizance by the Ld. CIT(A) but the addition was confirmed arbitrarily. The Ld. AR has payed to restore the matter for further verification before the Jurisdictional Assessing Officer (JAO) for adjudication.
5. The Ld. DR argued and contended that the assessee was allowed the different dates for response the notices issued by the Ld. AO. finally, the video conference was granted by the Ld. AO. But the assessee was failed to comply before the Ld. AO. The Ld. DR invited our attention in para no.6.2 of the impugned assessment order which is reproduce as below:
“6.2 During the course of video conferencing, the authorized representative of the assessee company was pointed out that the assessee could not furnish many of the confirmation as some of the parties either have closed down its business of the key persons of these concerns have died to due corona. It has also been argued that most of the concerns to which payments were made were very small concerns and might not be in existence. It was informed during the conference that the assesse company has six plants at different places and there being small vendors of it, it was not able to contact to all the vendors. Hence all the confirmations could not be provided. The assessee had requested at the end of the conference that it could be given some time to furnish more confirmations. Keeping in view the request of the assessee, it was allowed to upload the balance information. Thus, the assessee has furnished confirmation from one party which was even not included in the total 48 service provider parties.”
6. We have considered the rival submissions and perused the material available on record. It is evident that, though the assessee had partly complied with the notices issued during the assessment proceedings, the final show-cause notices were issued within a short span of time before completion of the assessment. The show-cause notice dated 15.12.2022 required compliance by 17.12.2022, and the subsequent show-cause notice dated 19.12.2022 required compliance by 21.12.2022. The assessment was ultimately completed on 28.12.2022. The record further indicates that the assessee had sought additional time to furnish the confirmations and other supporting documents in respect of the service providers. We further find that, during the appellate proceedings, the assessee furnished submissions before the Ld. CIT(A), including the submission dated 17.05.2024 filed on 18.05.2024, and subsequently furnished further response along with relevant documents on 22.01.2026. However, the documents and explanations so furnished by the assessee do not appear to have been duly examined and adjudicated upon by the Ld. CIT(A). Thus, the evidences relied upon by the assessee require proper verification by the revenue authorities.
7. Considering the totality of the facts and circumstances, and without expressing any view on the merits of the additions, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) on the issues under dispute and restore the matter to the file of the Ld. JAO for fresh adjudication in accordance with law. The assessee is directed to furnish all the confirmations, details and supporting documents on which it seeks to rely. The Ld. JAO shall verify the same and decide the issues afresh after affording a reasonable opportunity of being heard to the assessee. The assessee is also directed to remain diligent and extend necessary cooperation for expeditious completion of the set-aside proceedings.
8. In the result, the appeal of the assessee bearing ITA No.2676/Mum/2026 is allowed for statistical purpose.
Order pronounced in the open court on 17th day of August 2026
