Facts of the Case

The assessee, Bipinbhai Kantilal Vakta, filed an appeal against the order dated 17.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi for Assessment Year 2016-17. The Assessing Officer had treated sales made to M/s Vama Exports Ltd. as bogus and made an addition of ₹44,12,219 by estimating profit at 10% of such alleged bogus sales.

During appellate proceedings, notices under Section 250 were issued by the CIT(A) on 17.06.2025, 15.07.2025 and 28.08.2025 calling for details and explanations. Due to non-compliance, the CIT(A) passed an ex parte order confirming the addition. Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether the CIT(A) was justified in disposing of the appeal ex parte without adjudicating the matter on merits, whether confirmation of estimated profit addition on alleged bogus sales without granting effective opportunity violated principles of natural justice, and whether the matter required restoration for fresh adjudication.

Petitioner’s Arguments

The assessee submitted that non-compliance before the CIT(A) occurred due to failure on the part of staff of the tax consultant and the assessee, constituting sufficient cause. It was contended that the CIT(A) ought to have adjudicated the appeal on merits instead of passing an ex parte order. The assessee further submitted that if granted an opportunity, he would comply with notices and furnish all relevant details, clarifications and explanations regarding the genuineness of sales made to M/s Vama Exports Ltd.

Respondent’s Arguments

The Revenue relied upon the order of the CIT(A) and submitted that multiple notices were issued and the assessee failed to comply, justifying ex parte disposal of the appeal.

Court Order / Findings

The ITAT Ahmedabad observed that the CIT(A) had passed the impugned order ex parte due to non-compliance with notices. The Tribunal noted the submission of the assessee that he was willing to comply and furnish all requisite details if one more opportunity was granted.

Considering the submission and in the interest of justice, the Tribunal held that the matter deserved to be remanded. The Tribunal set aside the ex parte order and restored the matter to the file of the CIT(A) for de novo adjudication on merits. The assessee was directed to submit all relevant details, explanations and documents and to comply with notices without seeking unnecessary adjournments.

Important Clarification

The Tribunal clarified that appellate proceedings must result in adjudication on merits and not merely confirmation of additions for non-prosecution. Where an assessee shows willingness to comply, principles of natural justice require granting a reasonable opportunity before sustaining additions such as estimated profit on alleged bogus sales.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The ex parte order passed by the CIT(A), NFAC was set aside and the matter was restored to the file of the CIT(A) for fresh adjudication on merits after granting adequate opportunity of being heard to the assessee.

Source Link- https://www.mytaxexpert.co.in/uploads/1769062458_BIPINKANTILALVAKTAAHMEDABADVS.THEITOWARD121AHMEDABAD.pdf

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