Samyagya Engineers Private Limited vs Deputy Commissioner Of Income Tax

PER RAMIT KOCHAR, AM:

This appeal is filed by the assessee against the order passed by the learned Commissioner of Income Tax, Appeal, NFAC, Delhi [‘CIT(A)’ in short] dated 13.03.2026 u/s 250 of the Income Tax Act, 1961(DIN & Order No. ITBA/NFAC/S/250/2025-26/1087299767(1)), which in turn has arisen from the assessment order dated 17.12.2024 passed by the AO u/s 144B r.w.s. 147 of the Act (DIN No. ITBA/AST/S/147/2024-25/1071636562(1)).

Brief facts of the case are that the assessee has filed return of income declaring income of Rs. 97,09,050/-, on 16.09.2020. Revenue was in possession of information , that the assessee has entered into fictitious transaction totaling to Rs. 63,00,000/- . Proceedings u/s 147/148 of the 1961 Act were initiated against the assessee. SCN u/s 148A(b) of the 1961 Act was issued by the AO to the assessee, but the assessee did not responded, which then culminated into an order dated 06.04.2023 passed by the AO u/s 148A(d) of the 1961 AAct. The AO , then, issued notice dated 06.04.2023 u/s 148 of the 1961 Act against the assessee. In response thereof, the assessee filed return of income on 01.05.2023, declaring income of Rs. 97,09,050/-. Thereafter , statutory notices u/s 143(2), 142(1), SCN’s were issued by the AO to the assessee. The personal hearing was also conducted by the AO on 05.12.2024 . The assessee participated in reassessment proceedings. The genesis of the reopening of the concluded assessment was the search and seizure operations conducted by Revenue u/s 132 of the 1961 Act, on 29 premises of Shri Sanjay Jain , Girdhari Lal Mehta Constructions Private Limited , Inderjit Mehra Constructions Private Limited , Girdhari Lal Constructions Private Limited, wherein several incriminating documents , soft copies in laptop, mobile phones , whatsapp chats , cash , jewellary and other information related with bogus transactions by these entities either directly by Sanjay Jain or through his associates , were found and seized by Revenue. It transpired that Mr. Sanjay Jain is using several of his firms for providing bogus accommodation entries in the form of bogus sales and purchases.Mr. Sanjay Jain was also arranging cash against RTGS entries without issuance of an invoice against the beneficiary party. The assessee was introduced to Mr. Sanjay Jain via Kuldeep Mehta. The Revenue has made detailed enquiry and investigation in these matter including , inter-alia, modus operandi to undertake these bogus accommodation entries for sale/purchase transactions , which are recorded in details by the AO in the assessment order. The assessee was also held to be beneficiary of said bogus accommodation transactions of purchase to the tune of Rs. 66,40,624/- from Mr. Sanjay Jain (Rs. 46,87,500/-) and from Mr. Chandan Chawla (Rs.19,33,124/-) , which led to additions to the income of the assessee to the tune of Rs. 66,40,624/- by the AO u/s 69C r.w.s. 115BBE, vide reassessment order dated 17.12.2024 passed by the AO u/s 147 read with Section 144 r.w.s. 144B of the 1961 Act.

Aggrieved, the assessee filed first appeal with ld. CIT(A) . Despite several notices issued by the ld. CIT(A) during the course of appellate proceedings, the assessee only responded to four notice wherein it only sought adjournments, while rest of the notices issued by ld. CIT(A) remained un-responded by the assessee, which led to dismissal of the appeal of the assessee by ld. CIT(A) because as per ld. CIT(A), the assessee is not able to rebut the findings of the AO despite being given multiple opportunities. Thus, the ld. CIT(A) dismissed the appeal of the assessee , and the assessment order passed by ld. AO was confirmed.

Still Aggrieved , the assessee filed second appeal with ITAT. The ld. Sr. DR has relied upon the appellate order passed by ld. CIT(A), while the assessee has prayed that the matter may be restored back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee.

We have considered the entire material on records and heard rival parties. The facts in brief are enumerated above , and are not repeated. We have observed that the ld. CIT(A) dismissed the appeal of the assessee ex-parte without deciding the issues arising in the appeal on merits by passing a non speaking cryptic order. The ld. CIT(A) has claimed to have issued several notices during the course of appellate proceedings , but the assessee responded to four notices wherein adjournment were sought by the assessee , while for remaining notices, the assessee did not responded. The ld. CIT(A) has not specified the details of notices issued by him nor any details of mode of service nor whether service of notices got actually effected on the assessee , are mentioned by ld. CIT(A) in its appellate order. The ld. CIT(A) simply dismissed the appeal of the assessee ex-parte by affirming the reassessment order passed by the AO , without deciding the issues arising in the appeal on merits, mainly on account of non compliance by the assessee to the notices issued by ld. CIT(A). The appellate order passed by ld. CIT(A) is a non speaking order passed ex-parte in limine 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, and not even assessment records were called for by ld.CIT(A). The assessee has raised important issues in its grounds of appeal filed with ld. CIT(A), wherein it has raised issue that statements recorded by Revenue during search operations is not corroborated by any independent incriminating material, such statements are not put to cross examination, that corresponding sales is already brought to tax, the said parties from whom purchases are made are duly filing GST return regularly etc. , but the same were not adjudicated by ld. CIT(A) in its appellate order.The ld. CIT(A) did not made any enquiry to unravel the truth as to the aforesaid issues raised by the assessee in its appeal filed with ld. CIT(A). The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253 of the 1961 Act (Now Section 362 of the 2025 Act). The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A(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) (Now Section 359(4) of the 2025 Act) , 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 1961 Act(Now Section 359(4) of the 1961 Act), and liable to be set aside. Merely stating the reassessment 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) during appellate proceedings, and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes as the assessee did not comply with the notices issued by the 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.

In the result, the appeal filed by the assessee is allowed for statistical purposes.