N.C. Jewellers vs DCIT

PER RAMIT KOCHAR, AM:

These two appeals are filed by the assessee against two separate order(s) of Learned Commissioner of Income Tax (Appeals)-29, New Delhi [CIT(A), in short] both dated 21.11.2025, which in turn have arisen from the separate assessment orders dated 28.03.2024 and 31.03.2024 respectively passed by the AO u/s 147 of the Income Tax Act, 1961, for assessment year(s) 2019-20 and 2020-21 respectively.

Both the captioned appeals filed by the assessee have common issues , and hence they were heard together and disposed off by this common order.

First, we will take up the appeal of the assessee in ITA No.513/Del/2026 for assessment year: 2019-20. Brief facts of the case are that the assessee is engaged in trading of Bullion. The assessee originally filed return of income u/s 139(1) of the 1961 Act , on 31.10.2019 , declaring total income of Rs. Nil. A search and seizure operations u/s 132 of the 1961 Act was carried out by the Revenue in the case of the assessee, The details of the searched persons and premises where searches were carried out by Revenue are mentioned in the assessment order. The case of the assessee was reopened by Revenue u/s 148 of the 1961 Act , with the approval of learned Principal Commissioner of Income Tax (Central)-03, Delhi. Notice u/s 148 was issued by the AO to the assessee , on 31.08.2022. Thereafter, Statutory notices u/s 142(1) were issued by the AO to the assessee , seeking details etc. from the assessee . The assessee participated in assessment proceedings. The AO on perusal of the Profit and Loss Account of the assessee observed that the assessee has shown total sales of Rs.50,38,55,776/-. The assessee has shown Gross Profit of Rs.44,10,239/- and Net loss of Rs.4,95,105/-, showing G.P @ 0.87% of total sales and net profit is negative. The AO issued notices u/s 133(6) of the Act to 12 parties on test check basis, from whom the assessee has made purchases. It was observed by the AO that during the proceedings for Assessment Year 2021-22, the Department established that the assessee is having bogus transactions with the four parties (listed and detailed in assessment order at page 10-11) , wherein purchases to the tune of Rs. 467,95,83,307 were shown by the assessee which were treated as bogus by Revenue. Accordingly, 1% of total purchases made from these parties by the assessee were disallowed and added back to the income of the assessee for the assessment year 2021-22.

Aggrieved, the assessee filed first appeal with ld. CIT(A). During appellate proceedings, the Ld. CIT(A) issued as many as three notices to the assessee, but there was no compliance by the assessee. The Ld. CIT(A) dismissed the appeal of the assessee ex-parte without discussing the issues arising out of the appeal on merits, mainly on the ground of non prosecution of its appeal by the assessee and that the assessee has not filed any justification/evidence to controvert the findings made by the AO while making additions despite several opportunities given to the assessee.

Aggrieved, the assessee has now filed second appeal with the Tribunal. The Ld. Counsel for the assessee submitted that the assessee could not file reply during the course of appellate proceedings mainly for the reasons that parents of the assessee were suffering from ill-health . It was submitted that an application for adjournment was filed in response to notice dated 12.11.2025 issued by ld. CIT(A), but the same was overlooked by ld. CIT(A), and instead appeal was dismissed by Ld. CIT(A). It was submitted that the prejudice has been caused to the assessee by refusal to grant adjournment by Ld. CIT(A), and by dismissal of the appeal of the assessee. It is stated by Ld. Counsel for the assessee that if one more opportunity is granted to the assessee, and matter is restored back to the file of Ld. CIT(A), the assessee will make due compliance and file all necessary details before the Ld. CIT(A). Thus, the Ld. Counsel for the assessee prayed that the matter may be restored back to the file of the Ld. CIT(A) for fresh adjudication of the appeal of the assessee on merits in accordance with law.

We have considered the contentions of both the parties, and perused the materials on record. Brief facts of the case are enumerated in the preceding para’s of this order , and are not repeated . The ld. CIT(A) issued three notices viz. 07.04.2025, 14.10.2025 and 12.11.2025 during appellate proceedings, but there was no response from the assessee. The Ld. CIT(A) dismissed the appeal of the assessee ex-parte and confirmed the additions as were made by the AO, mainly on the ground of non-prosecution of its appeal by the assessee , wherein no further evidences/submissions could be filed by the assesssee before ld. CIT(A) to controvert the findings of the AO. It is claimed by the assessee that due to ill-health of his parents, the assessee could not attend to the appellate proceedings conducted by ld. CIT(A). It is also stated that an adjournment application was filed by the assessee with ld. CIT(A) wrt notice dated 12.11.2025, but the same was not considered by ld. CIT(A), and instead appeal was dismissed. The appellate order passed by ld. CIT(A) is a non speaking order passed ex-parte without deciding the issue arising in the appeal on merits. The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6) of the 1961 Act (Now Section 359(4) of the Income-tax Act, 2025) , as ld. CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. Reference is drawn to provisions of Section 250(6) of the 1961 Act (Now Section 359(4) of the Income-tax Act, 2025), wherein ld. CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) even did not made any enquiry as is contemplated u/s 250(4) of the 1961 Act (Now Section 359(3)(b) of the 2025 Act), and not even assessment records were called for by ld. CIT(A). The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253 (Now Section 362(1) of the 2025 Act). The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A of the 1961 Act (Now Section 365 of the 2025 Act). The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) of the 1961 Act (Now Section 359(4) of the Income-tax Act, 2025) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act (Now Section 359(4) of the Income-tax Act, 2025), and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents/evidences before ld. CIT(A) is not sufficient. The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO, which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support its contentions. Thus, the assessee is equally responsible for its woes as the assessee did not comply with the notices issued by ld. CIT(A). Keeping in view the entire factual matrix as culled out above in the preceding para’s of this order, it will be fair to both the parties as well in the interest of justice, that the appellate order of ld. CIT(Appeals) be set aside and the matter be remanded back to the file of ld. CIT(Appeals) for fresh adjudication after giving proper opportunity of being heard to both the parties w.r.t. the issues arising in the appeal .The assessee is directed to comply with the notice issued by ld. CIT(Appeals) during the appellate proceedings in set aside remand proceedings, otherwise ld. CIT(A) shall be free to decide the appeal ex-parte on merits in accordance with law, after complying with provisions of Section 250(6) of the 1961 Act (Now Section 359(4) of the 2025 Act). We clarify that we have not commented on merits of the issues. Thus, the appellate order passed by ld. CIT(A) is set aside and matter is restored back to the file of ld. CIT(A) for fresh adjudication. The appeal of the assessee is allowed for statistical purposes. We order accordingly.

The Appeal of the assessee in ITA no. 513/Del/2026 for assessment year 2019-20 is allowed for statistical purposes. We order accordingly.

Since, the facts in appeal for assessment year 2020-21 are similar as were in appeal for assessment year 2019-20 (except for difference in amounts) , hence, our decision rendered, herein above, in the case of assessee in ITA No.513/Del/2026 for assessment year 2019-20, shall apply mutatis mutandis to assessee’s appeal in ITA No.514/DEL/2026 for assessment year 2020-21. Accordingly, this appeal filed by the assessee is also allowed for statistical purposes.

The Appeal of the assessee in ITA no. 514/Del/2026 for assessment year 2020-21 is allowed for statistical purposes. We order accordingly.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.