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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal is directed against the order dated 25.09.2025 of Learned Co mmissioner of Income Tax (Appeals)-25 (hereinafter referred to as the “CIT(A)”), passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made u/s 68, 69A & 69C of the Act, vide assessment order dated 20.02.2024 were confirmed.
The facts of the case are t hat the assessee filed the original return of income for A.Y. 2016-17 on 29.07.2016 declaring total income of Rs. 2,99,150/-. Subsequently, a search and seizure operation u/s 132 of the Income Tax Act, 1961 was conducted on 18.10 .2019 in the case of Alank it Group, Sh. Alok Kumar Agarwal, his son Sh. Ank it Agarwal and the ir associates/employees. During the course of search, incr iminating documents and digital data were allegedly found indicating that the group was engaged in providing accommodation entr ies and facilitating bogus transactions thro ugh shell entities. Certain documents pertaining to the assessee were also found fro m the premises searched, lead ing to initiation of proceedings u/s 153C of the Act against the assessee. Pursuant thereto, notice u/s 153C dated 20.02.2023 was issued to the assessee. In response, the assessee filed return of income on 02.03.2023 declar ing the same inco me of Rs.2 ,99,150/-. During assessment proceedings, the Assessing Officer relied upon seized material allegedly recovered from the premises of Sh. Sunil Kumar Gupta, an employee/associate of Alankit Group, including tally data and excel sheets, to allege that various concerns co ntro lled by Alankit Group were engaged in accommodatio n entry activities. The Asse ssing Officer further alleged that M/s Diwakar Co mmercial Pvt. Ltd. was a bogus entry providing company managed under the control of Sh. Alok Kumar Agarw al. Accordingly, the Assessing Officer made additio ns of Rs. 30,04,438/- u/s 68 o n account of alleged unexplained credits received from M/s Diw akar Commercial Pvt. Ltd.; Rs. 30,00,000/- u/s 69A on acco unt of alleged unexplained payments; Rs. 10,0 00/- u/s 69A on account of alleged unexplained cash receip ts; and Rs.1,80,433/- u/s 69C towards alleged commission expenditure @ 3% paid for obtaining accommodatio n entries.
Aggrieved by the assessment order, assessee filed appeal before the ld.CIT( A) which was dismissed ex-pate on the ground that despite notice sent on seven dates, assessee failed to file respo nse and has sought adjo urnment o n 29.05.2024 and 17.04.2025 .
Aggrieved by the impugned appellate ex-parte order, the assesse is in ap peal before us and has raised the fo llowing grounds of appeal:
“1 . For that in vi ew of the facts and i n t he circumstances, Ld. CIT(A ) er red i n passi ng the ex-parte order and in vi ew of the facts and in the circumstances the impugned appeal may ki ndly be set aside for re-adj udication and it may be held accordi ngly .
2.Witho ut pr ejudice to Ground No. 1 above, L d. CIT(A) has erred in af fi rming the validity of the impugned orde r pass ed by AO u/s 153C/ 143(3) and in view of the facts and in the circumstances it may be held accordi ngl y.
3.Witho ut prej udic e to Gr ounds No. 1 & 2 above , Ld. CIT(A) err ed i n not app reciati ng the fact that t he alle ged satisfacti on so recorded i n the case of Alankit Group and alli ed pers on wi thout satisfying the requir ement of s ec. 153C in that respect and such satisfactio n is mechanical and as s uch the impugned pr oceedi ngs and t he consequent order are bad i n law and it may be held accordi ngl y.
4.Witho ut prejudice to Grounds N o. 1 to 3 above, Ld. CIT(A) was wholly unjus ti fied i n affi rmi ng t he additi on of Rs. 30,04,438/- u/s 69A and i n view of t he facts and in the circums tances such additi on is l iable to b e deleted and it may be held accordi ngly.
5.Witho ut prejudice to Grounds N o. 1 to 4 above, Ld. CIT(A) was wholly unjus ti fied i n affi rmi ng t he additi on of Rs. 30,00,000/- u/s 68 and i n view of the facts a nd in the circums tances such additi on is l iable to b e deleted and it may be held accordi ngly.
6.Witho ut prejudice to Grounds N o. 1 to 5 above, Ld. CIT(A) was wholly unjus ti fied i n affi rmi ng t he additi on of Rs. 10,000/- u/s 69A and in view of the facts and i n t he circumstances such addition is liable to be del et ed and it may be held accordingl y.
7.Witho ut prejudice to Grounds N o. 1 to 6 above, Ld. CIT(A) was wholly unjus ti fied i n affi rmi ng t he additi on of Rs. 1,80,433/- u/s 69C and i n view of t he fac ts a nd in the circums tances such additi on is l iable to b e deleted and it may be held accordi ngly.
8.Witho ut prejudice to Gro unds No. 1 to 7 above, the impugned additions have been made merely based on the alleged s tateme nt of person of Alankit G roup and t he alleged i ncrimi nat ing doc uments wi t hout even providing the same to the appellant or wit hout even al lowi ng cr oss-exami nati on of such person / doc uments a nd as s uch t he consequent additions are in vi olati on of natur al justice and henc e the ad ditions so made i n such respect is bad in law and it may be held accordi ngl y.
9.Witho ut prej udice to the afor esaid, the impugned order u/s 153C and conseque nt or der, t he appr oval so obtai ned u/s 153D is mechanical and does not satisf y the requirement of sec. 153D and i n vi ew of t he fact s and in the circumstanc es the c ons equent o rder u/s 153C i s bad in law and it may be held accordi ngl y.
10.For that in vi ew of the facts and i n t he circumstances, Ld. CIT(A) was wholly unj ustifi ed in chargi ng interes t u/s 234A, 234B, 234C & 234D res pectivel y and such acti on of Ld. CIT(A) is bad and illegal and it may be held accor di ngl y.”
The Ld . AR would sub mit that the impugned order has resulted into miscarriage of justice as principle of natural justice has not been followed because no effective opportunity of hearing was given as the assessee had never received the notice after 17.04.2025 when adjournme nt was sought and therefore the matter may be restored to the file of the Ld. CIT(A) for decid ing afresh. Learned DR o n the other hand while supporting the judgment of the learned CIT(A) has left to the discretion of the court to consider the submissions of the assessee as per law.
We have co nsidered the rival submission and examined the record, Section 250(2)(a) lays down as under:
“250(2 ) The fol lo wing shall have the right to be heard at the heari ng o f the appeal-
(a)the appellant, either i n person or by an authori zed repres entative;”
Thus, the hear ing mandated by Section 250(2)(a) of the Act is no t a mere formality but a mandatory statutory requirement for following the principle of natur al justice by the quasi-judicial authority.
In view of the ab ove facts and circumstances, it is evident that the impugned order has been passed w ithout effective hearing and principle of natural justice has no t b een followed For these reaso ns, the impug ned order is not maintainable and according ly set aside. T he end of justice shall be met in case the matter is restored to the file of the Ld. CIT(A) for deciding the issue afresh by affording an effective o pportunity of hearing and considering the submissions to be made by the appellant/assessee. The assessee/appellant is also directed to make the necessary submissions/ detailed material before the Ld. CIT(A) w ithin the period of 60 days of this order.
In the result, the appeal of the assessee is allowed for statistical purposes.