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Judgment
PER BRAJESH KUMAR SINGH, AM,
This appeal filed by the assessee is directed against the order dated 06.12.2024 of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment order dated 30.12.2017 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the Ward 6(2), Delhi (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2015-16.
Brief facts of the case : During the year the assessee company was engaged in the business of Tour operators for inbound Tourist. Return declaring loss of Rs. (11,74,002)/ - was e-filed by the assessee company on 30.09.2015 which was processed u/s 143(1) of the 1.T. Act, 1961. The case was selected for "Complete Scrutiny" through CASS. Notice u/s 143(2) was issued on 19.03.2016 which was duly served upon the assessee. A detailed questionnaire along with notice u/s 142(1) was issued on 22.08.2017.
The AO made the disallowance of advance from customers Rs. 1,10,00,000/-for the reason that the assessee failed to furnish any confirmation/details in respect of the said advance. The relevant extracts of the assessment order is reproduced as under:
“5. Advance from customers Rs 1,10,00,000/-.
5.1During the course of assessment proceedings, it is seen that assessee company has received advance from customer at Rs 1,10,00,000/- from M/s Marco Polo during the year. Assessee company has not filed any confirmaƟon/supporƟng details Accordingly, vide order sheet entry dated 29.12.2017, AR was show cause as to why the same should not be added back u/s 68 of the IT Act, 1961. On request case was adjourned for 30.12.2017, no jusƟficatory reply filed from the assessee side on the given date, assessee company has failed to substanƟate the genuineness of transacƟon by not providing confirmaƟon/details, inspite of providing more than sufficient opportuniƟes. In view of non compliance from the assessee, I have leŌ with no other opportunity, but to treat the same as unexplained in the hands of assessee, hence, an amount of Rs 1,10,00,000/- is being added back to the assessee company u/s 68 of the IT Act, 1961.
(AddiƟon: Rs 1,10,00,000)”
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee. The relevant extracts of the said order are reproduced as under:
“6.1Ground No.1: In this ground the appellant has challenged the addition of Rs.1,10,00,000/- u/s.68 of. the Act. The appellant has received advance of Rs. 1,10,00,000/- from M/s. Marco Polo during the year. The confirmation and supporting details regarding the transaction was not filed by the appellant, hence the AO made the addition.
6.1.1Now, before me in the appellate proceedings, the appellant has filed written submission. I have gone through the written submission. It has been mentioned that the appellant has received advance from M/s. Marco Polo. M/s. Marco Polo as per the appellant is a known name in Jaipur and appellant is having commercial relationship with M/s. Marco Polo.
6.1.2From the submission of the appellant, the nature of transaction is not clear. Creditworthiness of M/s. Marco Polo has not been proved before the AO and has not been proved before me. Appellant has not mentioned the nature of business of M/s. Marco Polo. The nature of refundable security deposit is not known. It is also not known from submission why this amount was taken from M/s. Marco Polo and when it was retuned back. The appellant has failed to provide any details and nature of business done with M/s. Marco Polo before the AO and before me in the appellate proceedings. The appellant has mentioned that the AO should be directed to collect this information from the AO of Jaipur of M/s. Marco Polo. The appellant has done so called business with M/s. Marco Polo. The nature of transaction and the nature of business have not been proved. The onus was on the appellant to prove the nature of advance and the nature of the transaction. Since the appellant has failed to discharge the onus, the addition made by the AO is confirmed and ground No.1 of the appellant is dismissed.”
(emphasis supplied by us)
Aggrieved with the above order, the assessee has filed an appeal before us on the following grounds of appeal:
“1.That under facts and circumstances, Ld. CIT (A) now NFAC Delhi grossly erred in law as well as on merits in dismissing the appeal.
2.That under facts and circumstances, Ld. A.O. has not given the sufficient time to present the case. The SCN was issued on 29.12.2017 for a reply by 30.12.2017. The Assessment order was passed on 30.12.2017.
3.That under the facts and circumstances, the Ld. CIT (A) now NFAC Delhi grossly erred in law as well on merits in not allowing the addition of Rs. 1,10,00,000/- U/s 68 as unexplained credit entry in books of the assessee as a refundable security deposit from M/s Marco Polo Jaipur PAN AACFM3624J. The Ld. A.O. had not made any effort and not even make independent enquiry by way of issuing notice U/s 133(6) to cross verify the transaction.
4.That under the facts and circumstances, the assessee has duly submitted a copy of legal notice issued by M/s Marco Polo Jaipur on the assessee for recovery of refundable security deposit during appeal proceedings which was not considered.”
The Ld. AR filed a written submission dated 12.11.2025 in support of the above grounds and submitted that submitted that the assessee had received a legal notice from M/s Marcopolo which clearly stated that Business Agreement was carried out on 29.04.2014 and the amount given to the assessee was a refundable security deposit. Further, it has been submitted that this new evidence received by the assessee during the pendency of the appeal before the Ld. CIT(A) which was submitted to the Ld. CIT(A) but the Ld. CIT neither mentioned nor rebutted the same in the order which implies that this was also not considered while framing the order which was against the principle of natural justice. In view of these facts the Ld. AR submitted that the order of the Ld. CIT (A) may be set aside and the matter be restored to the file of the AO for fresh adjudication. The relevant extracts of the submission of the assessee are reproduced as under:
“In continuation of our response submitted on 02/09/2025, we would like to reiterate the below mentioned points. Please note that they already form part of our earlier submissions-
1.We had already submitted the email trail where marco polo confirmed on 16/03/2019 the amount of refundable security of Rs 1,10,00,000 and had submitted their confirmations. It has not been considered by Ld. AO who had framed Remand Report as well as Ld CIT(A) while passing the order.
2.In the Remand Report point no 4 (4.1)(iii) Ld. AO had submitted that M/s Marco polo had not filed any copy of ITR, Balance Sheet, Profit & Loss account and Audit Report whereas from the notice for comments on additional grounds u/s 250(4) of the Act, it can be noticed that Ld. AO had never asked about any specific document which he required for the creditworthiness of the M/s Marco Polo.
For reference, we are submitting you a format of notice u/s 133(6), which was issued to our other client by any other ITO. If section 250(4) notice was issued by the Ld AO in this format then M/s Marco Polo would have submitted proper documents to the Ld. AO. It means that Ld. AO had not used his presence of mind for issuing notice.
3.On letter dated 10/12/2019, we submitted that the assessee has received a legal notice from M/s Marcopolo which clearly states that Business Agreement was carried out on 29.04.2014 and the amount given to the appellant was a refundable security deposit. This was the new evidence received by the appellant during the CIT(A) appeal, which was submitted to the Ld. CIT(A). However, CIT has neither mentioned nor rebutted the same in the order which implies that this was also not considered while framing the order. This is against the principle of natural justice.
Requesting the Bench to provide the benefit to the appellant by considering the submissions.”
On the other hand, the Ld. Sr. Dr supported the orders of the authorities below.
We have heard both the parties and perused the material available on record. In the above submission, the assessee submitted that it had submitted the email trail where Marco Polo confirmed on 16/03/2019 the amount of refundable security of Rs 1,10,00,000/- and had submitted their confirmations which has not been considered by the AO who had framed Remand Report as well as Ld. CIT(A) while passing the order. Further, it was submitted that the evidence regarding the legal notice from M/s Marcopolo which clearly stated that Business Agreement was carried out on 29.04.2014 and the amount given to the assessee was a refundable security deposit, filed before the Ld. CIT (A) vide their letter dated 10/12/2019 was neither mentioned nor rebutted in the order of the Ld. CIT(A) which implies that this was also not considered while framing the order. The above submission of the assessee could not be controverted by the revenue and on perusal of the order of the Ld. CIT (A) it is seen that the above evidences were not considered by the Ld. CIT (A) while dismissing the appeal of the assessee. Further, only one day time was given by the AO to the assessee submit its reply on 30.12.2017 vide show cause notice dated 29.12.2017, which is against the principle of natural justice.
Therefore, in the interest of justice and to give one more opportunity to the assessee to present its case, we set aside the order of the Ld. CIT (A) and restore the matter to the file of AO for deciding the issue afresh after giving a reasonable opportunity of being heard and in accordance with law. Grounds of appeal filed by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.