Case Law Details
Manbhawan Exim Pvt. Ltd Vs ITO (ITAT Surat)
The Income Tax Appellate Tribunal (ITAT), Surat, considered three appeals filed by the assessee against separate appellate orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Years (AYs) 2013-14, 2014-15, and 2017-18. These appeals arose from reassessment orders passed under Sections 147 read with 144B of the Income Tax Act, 1961. As the issues involved in all three appeals were similar, they were heard together, with AY 2013-14 treated as the lead case.
The assessee raised multiple grounds challenging the orders of the CIT(A). The assessee contended that the CIT(A) passed an ex-parte order without granting a fair opportunity of hearing. It also challenged the legality of the reassessment proceedings initiated under Section 147, claiming that the proceedings for AY 2013-14 were time-barred under Section 149. The assessee further argued that the assessment order had been passed under incorrect provisions by referring to Section 144 along with Section 144B. Additional grounds challenged the additions made under Sections 69C and 68 of the Act, including additions relating to alleged suspicious purchases and unexplained cash credits. The assessee submitted that amounts received were linked to genuine sales transactions already accounted for in the profit and loss account and that further additions would amount to double taxation. The assessee also challenged initiation of penalty proceedings under Section 271(1)(c) and levy of interest under Sections 234B and 234C.
The Tribunal recorded that the assessee, a private limited company, filed its return of income for AY 2013-14 on 01.10.2013 declaring total income of Rs.59,000. The return was processed under Section 143(1), and total income was determined at Rs.95,720 on 29.03.2016. Subsequently, based on information received from the Investigation Wing alleging that the assessee was a beneficiary of bogus entities, including M/s Kanika Gems Pvt. Ltd., which was allegedly involved in money laundering, the assessment was reopened. During reassessment proceedings, additions were made for alleged bogus purchases amounting to Rs.65,00,000 under Section 69C and alleged bogus sales/unexplained cash credits amounting to Rs.4,33,50,000 under Section 68 of the Act.
The assessee challenged the reassessment order before the CIT(A). The Tribunal noted that despite seven opportunities being granted by the CIT(A), the assessee filed only partial responses on 25.02.2025 and 27.03.2025. Due to incomplete compliance, the CIT(A) confirmed the additions made by the Assessing Officer and dismissed the appeals.
Before the Tribunal, counsel for the assessee submitted that the assessee was prepared to produce all necessary documents and details before the appellate authority if another opportunity of hearing was granted. The Departmental Representatives opposed the request and sought confirmation of the additions made by the lower authorities.
After hearing both sides and examining the record, the Tribunal observed that the assessee had failed to file complete details before the CIT(A) and had only partially complied with the notices issued during appellate proceedings. However, considering the principles of natural justice, the Tribunal decided to grant the assessee one more opportunity to present its case. The Tribunal imposed costs of Rs.5,000 for each assessment year, namely AYs 2013-14, 2014-15, and 2017-18, payable to the Income-tax Department within two weeks from receipt of the order. The assessee was directed to produce proof of payment before the CIT(A). Subject to payment of the costs, the Tribunal restored the appeals to the file of the CIT(A) for fresh adjudication on merits after granting one final opportunity of hearing to the assessee. The Tribunal also directed that the assessee be given a final opportunity to submit all necessary evidence and documents before the CIT(A). It further observed that the facts in the remaining two appeals for AYs 2014-15 and 2017-18 were similar. Accordingly, all three appeals were allowed for statistical purposes.
Order was pronounced under Rule 34 of the ITAT Rules, 1963 on 06.05.2026.
FULL TEXT OF THE ORDER OF ITAT SURAT
These three appeals are filed by the assessee as against the separate appellate orders dated 29.09.2025, 26.09.2025 and 26.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the separate reassessment orders passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2013-14, 2014-15 & 2017-18 respectively. Since the issues involved in all these appeals are similar, with consent of both parties, these appeals were clubbed and heard together for the sake of convenience and brevity. ITA No.1289/SRT/2025 for AY 2013-14 is taken as the ‘lead case’.
2. The grounds of appeal raised by the assessee in ITA No. 1289/SRT/2025 for AY 2013-14 are as follows:
“1. On the facts and circumstances of the case and in law, the 1 learned CIT(A) erred in passing ex-parte order without providing fair opportunity of being heard to the appellant.
2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO of initiating reassessment proceeding under section 147 of Income Tax Act, 1961 which is bad in law and require to be quashed.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to consider that reassessment proceedings under 3 section 148 is in violation of provisions of section 149 of Income Tax Act, 1961 as the proceeding for A.Y. 2013-14 is time barred.
4. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the action of Ld. AO of passing the assessment order under wrong section i.e., 147 r.w.s 144 r.w.s 144B instead of passing assessment order under section 147 r.w.s 144B of the Income Tax Act, 1961 and thus the entire proceedings is required to be quashed.
5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made by Ld. AO being 5 100 percent of genuine purchases of Rs.65,00,000/- from Kanika Gems Pvt Ltd as suspicious purchase under section 69C of the Income Tax Act, 1961.
6. On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming the action of Ld AO in making the addition of Rs.43,50,000 as unexplained cash credits under 6 section 68 of the Income Tax Act, 1961 without considering the facts that the appellant has genuine sales transactions of Rs.41,00,000/- and the balance amount which was received as advances has been returned to the said party.
7. On the facts and circumstances of the case and law, the Ld CIT(A) failed to consider that no addition under section 68 as unexplained cash credits can be made on account of amount received against sales made to sundry debtors and any additions of the same would lead to double taxation.
8. On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming the action of Ld AO of making additions under section 68 as unexplained cash credits in spite of the fact that the appellant had received the said amount against the sales made to M/s Money Gems and the said sales were already credited to profit & loss account and considered while computing total income of the appellant.
9. On the facts and circumstances of the case and law, the Ld. 9 CIT(A) erred in confirming the action of Ld AO in initiating the penalty proceedings u/s 271(1)(c) of Income Tax Act, 1961.
10. On the facts and circumstances of the case and law, the Ld CIT CIT(A) erred in confirming the action of Ld AO in charging interest under section 234B and 234C of the Income Tax Act, 1961.”
3. Brief facts of the case are that the assessee is a private limited company, filed its return of income for AY 2013-14 on 01.10.2013, declaring total income of Rs.59,000/-. Regular assessment u/s 143(1) of the Act was completed on 29.03.2016, determining the total income of Rs.95,720/-. Based on the information from Investigation Wing, the assessee is a beneficiary of the bogus entities, namely, M/s Kanika Gems Pvt. Ltd., which is involved in alleged money laundering. Therefore, the assessment was re-opened. During the reassessment proceedings, the assessee submitted that relevant documents which resulted in making addition of bogus purchase, amounting to Rs.65,00,000/- and bogus sales amounting to Rs.433,50,000/- u/s 69C and 68 of the Act respectively.
4. Aggrieved by the reassessment order, the assessee filed appeal before the Ld. CIT(A). In spite of seven opportunities were given by the Ld. CIT(A), the assessee filed partial response on 25.02.2025 and 27.03.2025 and therefore, Ld. CIT(A) confirmed the additions made by the Assessing Officer (in short, ‘AO’) and dismissed the assessee’s appeal.
5. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before this Tribunal. The Ld. Counsel appearing for the assessee pleaded that it is prepared to file all necessary details and documents before the appellate authority, if one more opportunity of hearing be given to the assessee.
6. On the other hand, Ld. CIT-DR and Ld. Sr. DR for the Revenue strongly opposed the submission and requested to confirm the additions made by the lower authorities.
7. We have heard rival submissions and perused the materials available on record. Since the assessee failed to file details before the Ld. CIT(A) and only made partial compliance. In the interests of principle of natural justice, we deem it appropriate to impose a cost of Rs.5,000/- (Rupees five thousand only) for each Assessment Years, i.e., AYs 2013-14, 2014-15 and 2017-18 payable by the assessee to the Income-tax Department within two weeks of receipt copy of this order and produce payment of cost receipt, before the Ld. CIT(A). Subject to the payment of cost, the appeals are restored to the file of Ld. CIT(A) and decide them on merits by giving one more opportunity of hearing to the assessee. Needless to say, that the assessee may be given final opportunity to produce all necessary details and evidences before the Ld. CIT(A) and decide the matter on the merits of the case. There is no change in the facts of the remaining two appeals filed by the assessee for the assessment years 2014-15 and 2017-18 respectively.
8. In the result, the appeals filed by the assessee in ITA Nos.1289 to 1291/SRT/ statistical purposes.
Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 06-05-2026
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