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Judgment
These two appeals in the case of M/s Decco Appliances Pvt. Ltd. (in ITA No. – 7495/Del/2025 and 7496/Del/2025) and further, the two appeals in the case of Sri Atul Jain (in ITA No.- 7497/Del/2025 and 7498/Del/2025, by the assessee are directed against the respective orders of Ld. Commissioner of Income Tax (Appeals)-30, New Delhi-110055 [hereinafter referred to as the ‘Ld. CIT(A)] all dated 10.10.2025 arising out of the respective Assessment Orders dated 31.03.2024 passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the Joint CIT(OSD), CC-29, New Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Years (A.Y.) 2019-20 and 2022-23.
All these four appeals have common issues and were heard together and are disposed by the common order for the sake of convenience and brevity. The ITA No.- 7495/Del/2025 in the case of Decco Appliances Pvt. Ltd. for A.Y. 2019-20 is taken as the lead case.
The original return of income under section 139(1) of the Income-tax Act, 1961(hereinafter referred to as the "Act") was e-filed by the assessee on 26.09.2019 vide acknowledgement no. 177215981260919 declaring income of Rs. 40,26,360/-. A search and seizure operation was carried out on the various premises of Sudha Gupta, Devendra Gupta and its associates including the assessee, on 24.08.2022 by the Investigation Wing of Income Tax department. Shri Atul Jain (Proprietor of M/s MB Deco International) and Decco Appliances Pvt Ltd were also covered vide warrant during the search operation. During the search and seizure action office premises of assessee, Decco Appliances were covered and the AO noted that the Decco Group entities and its promoters were found to be involved in below mentioned broadly classified tax evasion issues: -
Sales Suppression through cash sale of manufactured goods,
Unaccounted cash sales of scrap generated,
Bogus and unverifiable expenses to reduce taxable profits
Cash investment in fund-raising scheme of Mother's Pride Group
Use of unaccounted cash for purchase of immovable properties
Based on the findings and recommendations of the Investigation wing, the assessment proceedings were initiated by the AO in the instant case after the approval of competent authority and notice u/s 148 of the Income tax Act dated 24.03.2023 in DIN No. ITBA/AST/S/148 1/2022-23/1051225745(1) was issued and duly served on the assessee. In response to the notice as 148 of the Act, the assessee filed its return of income for A.Y 2019-20 on 29.04.2023, declaring the total income of Rs. 40,26,360/-. Thereafter, detailed questionnaires along with notice u/s 142(1) of the Act were issued on various dates which was duly served on the assessee. In response thereto, the AO noted that the assessee filed necessary details online through ITBA portal on various dates and the same were examined and placed on record by the AO.
The AO further noted that Mother's Pride and Presidium Group of Schools is a chain of schools run by Smt. Sudha Gupta and Sh. Devendra Gupta, and Mother’s Pride is a chain of pre-primary schools while Presidium is a chain of senior-secondary schools and the schools of the group are spread across the country, predominantly in Delhi-NCR region. Further, the AO noted that the schools were being run under various trusts/societies or private limited companies controlled by Gupta family or through franchise model. The AO also noted that the premises related to the school group were covered during the search operation whereby issues related to systematic tax evasion by the group were identified, which primarily included-
Raising funds from public through a Ponzi investment scheme,
Diversion of funds of trusts/societies for personal expense,
Mis-match in fee-collection data as per fee software & tally data and;
Heavy cash consideration paid for purchase of farm house by Gupta family
and unexplained investment on construction on farmhouse.
During the assessment proceedings, show cause notice 23.03.2024 was issued to the assessee. In response to the show cause notice dated 23.03.2024, the assessee filed its submission dated 29.03.2024. The submission filed by the assessee were examined by the AO and the AO in view of the various shortcomings as noted by her in the books of accounts of the assessee observed that in view of the facts, findings and discussions in the assessment order the books of accounts of the assessee were liable to be rejected since it could not be ascertained whether the assessee had correctly computed the profit after taking into account genuine expenses incurred by the assessee.
Thereafter, the AO noted that comparative gross profit of three concerns in the same line of business and found that there average GP was 11% whereas the assessee GP declared by the assessee was 7.39%. The difference between assessed GP ratio and offered GP ratio i.e. Rs. 1,00,05,424/- was added to the total income of the assessee for year under consideration vide order u/s 147 r.w.s. 144 of the Act, dated 31.03.2024.
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 on the ground that the assessee did not make any submission in respect of the grounds of appeal filed by the assessee. The relevant extracts of the order of the Ld. CIT(A) is reproduced as under:
5.This appeal arises from the assessment order dated 31.03.2024, passed by the Joint CIT(OSD), CC-29, New Delhi, under section 147 read with section 144 of the Income-tax Act, 1961, for the A.Y. 2019-20. …………………….xxx…………………..
5.1It is observed from the record that despite multiple opportunities being granted for hearing, the Appellant or its authorized representative remained absent and failed to file any written submissions on the date of hearing. Since the Appellant failed to appear or make any submission, the appeal is being decided based on the grounds of appeal, the statement of facts filed with Form No. 35, the Assessing Officer's (AO) order, and the material available on the assessment record.
6. issues and Grouping of Grounds of Appeal
The assessment was completed under section 147 r.w.s. 144 of the Act, rejecting the books of account under section 145(3). The grounds of appeal have been grouped as per the underlying issues raised:
Group A: Validity of Assessment Proceedings (Grounds 2 to 4)
The Appellant has challenged the initiation of proceedings under section 147 and the issuance of notice under section 148, along with the approval granted under section 151. The assessment was completed under section 147 r.w.s. 144 of the Act. The Appellant filed its return in response to the notice under section 148 dated 24.03.2023. The AO, having completed the assessment under the provisions of section 147/144, had the requisite jurisdiction. In the absence of any specific and cogent rebuttal or documentary evidence provided by the Appellant regarding the approval or reasons recorded, the order of the AO is presumed to be correct in law. In light of the Appellant's failure to make any submission or advance arguments, the grounds challenging the validity of the assessment proceedings are dismissed.
Group B: Rejection of Books of Account and Estimation of GP (Grounds 5 to 9)
The Appellant contests the rejection of books under section 145(3) and the resultant addition of Rs. 1,00,05,424/- by adopting a GP rate of 11%.
AO invoked section 145(3) of the Act, citing irregularities such as non-availability of the complete inward register for the year and failure to produce the day-to-day stock register. The inability to quantify bogus purchases due to the categorization of parties (genuine, part bogus, total bogus) led the AO to invoke best judgment assessment under section 144.
For the estimation of income, the AO relied on a GP rate of 11%, which was determined by taking the average GP of three comparable entities shortlisted from the database of the Bureau of Indian Standards (BIS) for A.Y. 2021-22. This is a permissible method under the best judgment assessment. Regarding the principle of natural justice (Ground 7), the Appellant failed to appear to request particulars of the comparable companies, in spite of multiple opportunities. The argument concerning the "special OEM status and low margins" (Ground 8) cannot be substantiated as the Appellant failed to make a submission providing evidence or comparative data. The AO's action in rejecting the books of account and estimating the GP at 11% is confirmed. Grounds 5 to 9 are dismissed.
(emphasis supplied by us)
Aggrieved with the said order, the assessee is in appeal before the Tribunal on the following grounds of appeal:
“1.That the Ld. CIT(A) has passed the impugned ex-parte order dated 10.10.2025 pursuant to the hearing notice dated 01.10.2025, without considering the bonafide request for adjournment sought by the Appellant due to ineluctable personal engagements and pre-occupation of its directors in various statutory compliances, whimsically holding the same to be without any plausible reasons and thus grossly violating the principles of natural justice.
2.That the Ld. CIT(A) has grossly violated the statutory mandate of Section 250(6) of the Act in dismissing valid grounds raised by the Appellant in a summary manner citing non-appearance of the Appellant or its authorized representative as the only reason, whereas Ground Nos. 7, 9, 10 and 11 were self-explanatory and capable of adjudication on their own merits.
3.That the Ld. CIT(A) grossly erred in arbitrarily dismissing the appeal and unlawfully upholding the arbitrary additions of Rs. 1,00,05,424/- made by the Ld. AO ignoring the statement of facts filed with form No. 35 and the detailed submissions of the Appellant filed during assessment proceedings, available on ITBA portal.
4.That the Appellant craves leave to add, amend, or withdraw any ground(s) of appeal at the time of hearing.”
The Ld. AR submitted that the Ld. CIT(A) has passed the impugned ex-parte order dated 10.10.2025 pursuant to the hearing notice dated 01.10.2025, without considering the bona fide request for adjournment sought by the Appellant due to ineluctable personal engagements and pre-occupation in various statutory compliances, whimsically holding the same to be without any plausible reasons and thus grossly violating the principles of natural justice. The Ld. AR further submitted that in these circumstances, it is respectfully submitted that the interest of justice would be best served if the impugned order is set aside and the matter is remanded back to the Ld. CIT(A) for adjudication on merits after providing a reasonable opportunity of being heard to the Appellant. The relevant extracts of the submissions of the assessee are reproduced as under:
“ The Appellant most respectfully submits as under:
1 Ground No. I raised in the present appeal reads as under
"That the Ld. CIT(A) has passed the impugned ex-parte order dated 10.10.2025 pursuant to the hearing notice dated 01.10.2025, without considering the bonafide request for adjournment sought by the Appellant due to ineluctable personal engagements and pre-occupation in various statutory compliances, whimsically holding the same to be without any plausible reasons and thus grossly violating the principles of natural justice."
2 The brief facts relevant to the present ground are that a hearing notice under Section 250 of the Income Tax Act, 1961 dated 01 10 2025 was issued by the Ld. CIT(A), requiring the Appellant to file written submissions on or before 08.10.2025
3.Owing to unavoidable and bona fide circumstances, the Appellant filed a request for adjournment on 07.10.2025 through the e-filing portal, bearing Acknowledgement No. 957512411071025. In the said application, the Appellant had specifically explained the circumstances necessitating the adjournment
4 It was submitted that hearing notices had been issued in multiple appeals relating to the Deco Group, all fixed for compliance on the same date i.e. 08.10.2025 These included
10 appeals pertaining to Atul Jain (Proprietor of M/s MB Deco International) for AY 2014-15 to AY 2023-24, and
7 appeals pertaining to Decco Appliances Private Limited for AY 2017-18 to AY 2023-24
The Appellant had further submitted that all the above appeals arise out of post. search assessments, involving multiple complex issues across several assessment years. The preparation of comprehensive written submissions and compilation of paper books in such matters is inherently time-consuming and requires careful collation of records for the fair and effective presentation of the Appellant's case
Apart from the above, the Appellant was also engaged in statutory compliances relating to tax audits, filing of income-tax returns, GST compliances, and company law requirements, which coincided with the relevant period.
It was also stated that the ongoing festival season demanded considerable business-related attention of the Appellant Further, there was a family wedding scheduled in early November, which also required the involvement and attention of the Appellant
Additionally, the counsel/consultant of the Appellant was also facing time constraints owing to similar seasonal professional commitments, particularly in relation to statutory compliances during the relevant period.
In view of the above bona fide circumstances, the Appellant had humbly prayed that the matter may kindly be adjourned to any convenient date in November 2025, preferably in the latter half of the month, so that the Appellant could place complete submissions and assist the appellate authority effectively.
5.However, the Ld CIT(A), without considering the aforesaid request in its proper perspective, proceeded to pass the impugned order ex-parte on 10.10.2025. The request for adjournment was mechanically rejected in Para 5.1 at Page No 48 of the appellate order, observing as under
‘……the appellant sought an adjournment, the same could not be entertained without any plausible reason..
6.It is respectfully submitted that the above observation is factually incorrect and contrary to the record, inasmuch as the adjournment request clearly contained detailed and bona fide reasons explaining the circumstances which prevented the Appellant from filing the submissions within the short time granted
7 The rejection of the adjournment request and the consequent passing of the ex-parte order has resulted in a serious violation of the principles of natural justice, as the Appellant was effectively deprived of a reasonable opportunity to present his case before the first appellate authority
8.It is further submitted that the present appeal arises from search assessments, and in several other connected appeals involving similar issues on merits, written
9.In these circumstances, it is respectfully submitted that the interest of justice would be best served if the impugned order is set aside and the matter is remanded back to the Ld. CIT(A) for adjudication on merits after providing a reasonable opportunity of being heard to the Appellant
10.The Appellant undertakes to fully cooperate in the appellate proceedings and shall ensure prompt compliance with any directions that may be issued by the Ld. CIT(A)
11.The Appellant, therefore, humbly prays that the impugned ex-parte order may kindly be set aside and the matter restored to the file of the Ld. CIT(A) for fresh adjudication on merits in accordance with law
12 In case any further clarification is considered necessary, the matter may kindly be listed for clarification, if so required.”
The Ld. Sr. DR supported the orders of the authorities below.
We have heard both the parties and perused the material available on record. On perusal of the order of the Ld. CIT(A), it is stated in para 5.1 of his order that it is observed from the record that despite multiple opportunities being granted for hearing, the Appellant or its authorized representative remained absent and failed to file any written submissions on the date of hearing. Even though as contended by the assessee that the appellant sought an adjournment, the same could not be entertained without any plausible reason, is not mentioned in para no. 5.1 of the appellate order as contended by the assessee but the fact is that the appeal of the assessee was decided ex-parte by the Ld. CIT(A). Moreover, the assessee in its adjournment petition had submitted that all the above appeals arise out of post-search assessments, involving multiple complex issues across several assessment years and the preparation of comprehensive written submissions and compilation of paper books in such matters is inherently time-consuming and requires careful collation of records for the fair and effective presentation of the assessee's case, is reasonable cause for seeking adjournment in the given facts of the case. Further, the assessee in its written submission has undertaken to fully cooperate in the appellate proceedings and shall ensure prompt compliance with any directions that may be issued by the Ld. CIT(A). Therefore, keeping the entire facts in the perspective, we are of the considered view that the assessee deserves one more opportunity to represent its case before the Ld. CIT(A). Therefore, in the interest of justice and to give one more opportunity to the assessee, the order of the Ld. CIT(A) is set aside and the matter is restored to the file of the Ld. CIT(A) to decide this appeal afresh after giving reasonable opportunity of being heard to the assessee and in accordance with law.
The Assessee is also directed to co-operate in the appellate proceedings, and will be at liberty to submit any details/ evidence in support of its appeal / claim (s).
In the result, appeal of the assessee in 7495/Del/2025 is allowed for statistical purposes.
As the facts and circumstances in ITA Nos. 7496/Del/2025, 7497/Del/2025 and 7498/Del/2025 are identical to those in the lead case, our decision rendered in ITA No. 7495/Del/2025 shall apply mutatis mutandis to these appeals as well. Accordingly, ITA Nos. 7496/Del/2025, 7497/Del/2025 and 7498/Del/2025 are also allowed for statistical purposes.
To sum up, all the four appeals of the assessee are allowed for statistical purposes.