Facts of the Case

The assessee, Precision Infratech Private Limited, filed two appeals before the Income Tax Appellate Tribunal against separate orders dated 07.10.2025 passed by the National Faceless Appeal Centre for Assessment Years 2018-19 and 2023-24.

For Assessment Year 2018-19, reassessment proceedings under Section 147 resulted in an addition of ₹70,00,000 under Section 69C in respect of alleged bogus loan and advance taken from M/s Dishman Pharmaceuticals & Chemicals Ltd., along with invocation of Section 115BBE and consequential interest and penalty proceedings.

For Assessment Year 2023-24, the assessment under Section 143(3) resulted in a disallowance of ₹14,20,56,020 under Section 37 by treating purchases from M/s Porwal Metal Company and M/s Bharat Metal Industries as non-genuine, along with consequential interest and penalty proceedings.

While disposing of the appeals, the CIT(A), NFAC mistakenly adjudicated the appeal for AY 2018-19 on the basis of facts relating to AY 2023-24 and vice versa.

Issues Involved

Whether the appellate orders passed by the CIT(A) were sustainable in law when facts of two different assessment years were interchanged, whether such orders reflected non-application of mind, and whether the matters required restoration for fresh adjudication based on correct facts.

Petitioner’s Arguments

The assessee submitted that the CIT(A) completely failed to adjudicate the correct grounds for each assessment year and instead relied on facts pertaining to the other year. It was argued that for AY 2018-19, no addition on account of bogus purchases was made, yet the CIT(A) discussed and adjudicated such issue, whereas for AY 2023-24, the addition on account of bogus purchases was replaced by discussion on bogus loan of ₹70,00,000. The assessee contended that such gross factual errors demonstrated complete non-application of mind and violated principles of natural justice, warranting setting aside of the appellate orders.

Respondent’s Arguments

The Revenue fairly conceded before the Tribunal that the CIT(A) had interchanged the facts of the two assessment years while passing the appellate orders and raised no objection to restoration of the matters for fresh adjudication.

Court Order / Findings

The ITAT Ahmedabad observed that for Assessment Year 2018-19, the Assessing Officer had made an addition of ₹70,00,000 on account of bogus loan, whereas the CIT(A) decided the appeal on the issue of bogus purchases of ₹14,20,56,020, which did not arise in that year. Similarly, for Assessment Year 2023-24, the Assessing Officer had made an addition on account of bogus purchases, but the CIT(A) adjudicated the issue of bogus loan.

The Tribunal held that such interchange of facts clearly demonstrated complete non-application of mind by the CIT(A) and rendered the appellate orders unsustainable in law. In view of this fundamental error, the Tribunal deemed it appropriate to set aside both appellate orders and restore the matters to the file of the CIT(A) with a direction to adjudicate the appeals afresh on the basis of correct facts and grounds for each assessment year.

Important Clarification

The Tribunal clarified that appellate authorities are duty-bound to adjudicate appeals on the basis of correct assessment records and issues arising in the relevant year. Any order passed without application of mind or by relying on facts of another assessment year violates principles of natural justice and cannot be sustained.

Final Outcome

Both appeals filed by the assessee were allowed for statistical purposes. The impugned orders passed by the CIT(A), NFAC for Assessment Years 2018-19 and 2023-24 were set aside and the matters were restored to the file of the CIT(A) for fresh adjudication in accordance with law after considering the correct facts for each year.

 Link to download order - https://www.mytaxexpert.co.in/uploads/1769063525_PRECISIONINFRATECHPRIVATELIMITEDAHMEDABAD.pdf

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