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Judgment
Per Kavitha Rajagopal, J M:
This appeal is filed by the assessee, challenging the order of the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act', for short), pertaining to the Assessment Year (‘A.Y.s’ for short) 2023-24.
The assessee has raised the following grounds of appeal:-
“1.For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in passing an ex-parte order.
2.For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred both in law and on facts in confirming the addition of Rs. 5,38,68,401/- made by the Learned Assessing Officer on account of alleged bogus purchases by estimating additional profit element at 3.27% of the alleged non-genuine purchases, which is arbitrary, unjustified and liable to be deleted.
3.For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the action of the Ld. Assessing Officer in treating the purchases as non-genuine by heavily relying on the alleged survey findings conducted in the case of M/s Saraswati Spinning & Weaving Mills (SSWM) and on basis of material which were never confronted to the assessee and without following the principles of natural justice.
4.The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal at or before the time of hearing.”
Brief facts of the case are that the assessee is a partnership firm engaged in the business of manufacturing and supplying lead ingots and lead products, and filed its return of income for the year under consideration on 01.11.2023 declaring the income at Rs.1,22,10,570/- under the head "Profits and gains of business or profession." The case was selected for scrutiny under CASS and notice under section 143(2) was issued on 23.06.2024, followed by multiple notices under section 142(1), in the backdrop of a survey under section 133A of the Act conducted on 31.05.2023 in the case of M/s Saraswati Spinning and Weaving Mills (SSWM 'in short'), where it was found that SSWM was engaged in providing accommodation entries and showing substantial purchases from non-existent entities. On the basis that the assessee was identified as one of the parties with whom SSWM had financial transaction and relying on investigation findings that a very high proportion of SSWM's purchases were suspicious, the Assessing Officer examined the assessee's transactions and stock position and, not being satisfied with the explanation furnished by the assessee, proceeded to make additions while completing the assessment under section 143(3) of the Act.. The Assessing Officer has treated transactions with SSWM and other parties amounting to Rs.164,73,51,719/- as non-genuine and determined additional profit at 3.27% resulting in an addition of Rs.5,38,68,401/- to the returned income.
Aggrieved by the additions, the assessee preferred an appeal before the Ld. CIT(A), who, vide order dated 02.01.2026, dismissed the appeal on the ground that although various notices were issued during the appellate proceedings, the assessee failed to submit any evidence or documentation in support of their grounds of appeal. The Ld. CIT(A) while dismissing the appeal has held that the addition was based on specific material and logical inference and not merely on the survey in SSWM alone. The AO has demonstrated the bogus-billing nature of SSWM and its network, has linked the assessee's purchases to the same pattern and has also given the assessee several opportunities to furnish reliable third-party proof, which the assessee has failed to do. The assessee firm and SSWM have common partner and actively involved in fraudulent scheme of providing accommodation entries through fictitious purchase transaction. The impugned addition of Rs.5,38,68,401/-being only the profit element on such non-genuine purchases, was, therefore, upheld by the Ld. CIT(A). Aggrieved, the assessee is in appeal before us.
We have heard the rival submissions and perused the material available on record. It is observed that the Ld. CIT(A) has dismissed the appeal on the ground that although various notices were issued during the appellate proceedings, the assessee failed to submit any evidence or documentation in support of their grounds of appeal. Before us, the Ld. AR for the assessee prayed that the assessee be given one more opportunity to present its case before the CIT(A) stating that the assessee has got a good case on the merits.
The Ld. DR vehemently opposed to granting the assessee another opportunity for the reason that the assessee has been non-compliant before the first appellate authority.
On the above facts of the case, we deem it fit to extend the assessee with one more opportunity to present its case before the Ld.CIT(A) by adhering to the principles of natural justice and in the interest of justice dispensation. The assessee is directed to strictly comply with the proceedings before the Ld. CIT(A) who is to adjudicate all the grounds raised by the assessee, both legal as well as on the merits, in accordance with the provisions of law and on the merits of the case. The grounds of appeal raised by the assessee are hereby allowed for statistical purposes
In the result, the appeal filed by the assessee is allowed for statistical purpose as per the above observations.