TaxTMI 
TaxTMI 
2026 (6) TMI 1405
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....d filed the Appeal in the ITAT. The assessment year (A.Y.) in question is A.Y. 2021-2022. By the present Appeal the Appellant-Assessee has raised the following substantial questions of law - i. Whether on the facts and circumstances of the case and in law, the Tribunal has erred by not setting aside the assessment order which has been passed without complying with the mandatory provisions of section 144B of the Act? ii. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in disallowing 12.50% of the expenditure disallowed by the Respondent by ignoring certain material facts which were accepted by the Respondent to be true and correct? Or in the alternative, the following re-framed question of law : "Whether in the facts and circumstances of the case, the proceedings require reconsideration by the Tribunal in the context of the Petitioners' contention regarding the applicability of Section 144 of the Income Tax Act and the percentage of expenditure disallowed by the Tribunal?" 2. Before adverting to the relevant facts involved in the present appeal, it will be pertinent to reproduce specific findings of th....
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....ence. Considering these facts, we find no infirmity in the impugned order passed by the Ld. CIT(A). Therefore, the impugned appeal order is upheld. 9. In the result, the appeal of the assessee bearing ITA No.4553/Mum/ 2024 and the appeal filed by the revenue bearing ITA No.4561/Mum/2024 are dismissed." 3. Briefly the facts are as follows:- i. The Appellant-Assessee is involved in the business of painting and advertising, like wall painting, digital wall painting, board advertising and mini hoardings. During the previous year 2020-21 relevant to A.Y. 2021-22, the Appellant had declared in the return of income (ITR) an income of Rs. 1,36,89,870/-. The books of account of the Appellant-Assessee were duly audited under section 44AB of the Act. Post filing of the ITR, a notice dated 28th June 2022 under Section 142(1) of Act was issued to the Appellant-Assessee, requiring the Appellant-Assessee to furnish a point-wise reply to the questionnaire issued along with the notice. In response to the aforesaid notice, the Appellant-Assessee by their letter dated 18th August 2022 furnished all the relevant details, i.e., bank statement, audited financial statements, tax audi....
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....uppliers were either non-filers, or had no business income, or reflected a substantially lower turnover in the ITR. On the basis of the aforesaid show-cause notice, the genuineness of the transactions which the Appellant-Assessee had entered into with the suppliers were sought to be doubted. v. On 15th December 2022, the Appellant-Assessee furnished a detailed response in respect of all the points as sought for in the aforesaid showcause notice dated 9th December 2022, along with all the relevant evidence and material. Thereafter, on 23rd December 2022, an assessment order of even date was passed by the AO, whereby income of the Appellant-Assessee was assessed at figure of Rs. 18,68,33,127/- as opposed to the income returned by the Appellant- Assessee in its ITR for an amount of Rs. 1,36,89,870/-. By way of the aforesaid assessment order, the AO denied to the Appellant-Assessee the deduction of Rs. 17,31,43,257/- on account of purchases and labour charges and treated the same as unexplained expenditure and added back the entire amount of Rs. 17,31,43,257/- to the income of the Appellant-Assessee under Section 69C read with Section 115BBE of the Act and also initiated penal....
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.... transactions was not established, since the parties who had supplied the goods to the Appellant-Assessee did not respond to the notice under Section 133(6) of the Act, physical verification of three parties could not be carried out, 9 out of 28 parties had not filed their ITRs, and some of the parties had not declared their business income in the ITRs. ix. Being aggrieved by the impugned order passed by the ITAT, the Appellant-Assessee filed Miscellaneous (Rectification) Application No. 184/Mum/2025 under Section 254(2) of the Act before the ITAT, seeking to rectify its impugned order on the ground that mistakes had crept in to the impugned order, inasmuch as the ITAT had not taken into consideration that on the basis of the material on record which was submitted before the ITAT, the question of non-genuineness of the transactions did not arise and the finding that the suppliers are non-existent was incorrect, and that the ITAT had erred in holding that identity, genuineness and creditworthiness of the suppliers was not established. In the aforesaid Miscellaneous Application, the Appellant-Assessee categorically raised the contention that the AO in the show-cause notice d....
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.... "9. For all these reasons, we are clearly of the view that the ITAT misdirected itself when it held that the Rectification Application filed by the Petitioner was barred by the law of limitation. It was clearly filed within time. 10. Having said so, one still has to examine whether this Writ Petition ought to be entertained and the matter be remanded back to the ITAT to hear the Rectification Application afresh. Having heard Mr. Pardiwalla, the learned senior counsel appearing on behalf of the Petitioner, as well as Mr. Gupta, learned advocate appearing on behalf of the Revenue, we are of the view that since the Petitioner has already filed Income Tax Appeal No.753 of 2025 challenging the original order passed by the ITAT dated 10th December 2024, we need not send the aforesaid Rectification Application back to the ITAT. We find that the interest of the Petitioner would be adequately protected if he is permitted to canvass all the grounds raised in the present Petition pertaining to the merits of the matter in the appeal filed challenging the original order. 11. In view of the aforesaid facts, we dispose of the above Writ Petition by clarifying that all the g....
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....r (b) in any other case, a show cause notice stating the variations prejudicial to the interest of assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such show cause notice, on the assessee, through the National Faceless Assessment Centre; Section 144B(6)(xi) (6) For the purposes of faceless assessment- (xi) the Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre and the units set up, in an automated and mechanised environment. Standard Operating Procedure (SOP) for Assessment Unit (AU), Verification Unit (VU), Technical Unit (TU) and Review Unit (RU) under the Faceless Assessment provisions of Section 144B of the Income-tax Act. N. Process of Assessment N.1 Show Cause Notice (SCN) shall be issued in the prescribed format (Annexure AU-7), in all cases where any variation prejudicial to ....
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....herefore, his submission that the impugned order had failed to take into consideration that the Appellant-Assessee had no control about the whereabouts of the suppliers, and merely because physical verification of the suppliers never took place, which was never put to the Appellant-Assessee, the ITAT by way of impugned order, ought not to have discarded the documentary evidence placed before it to come to the conclusion that the genuineness and creditworthiness of the transactions was not proved. He therefore submitted that considering that the very jurisdictional issue regarding the non-compliance of the provisions of Section 144B of the Act had not been decided by the ITAT by its impugned order, the aforesaid matter needs to be remanded back to the ITAT to give its findings on the aforesaid issue and also on all other issues regarding the genuineness/creditworthiness of the transactions which the Appellant-Assessee had entered into with its suppliers. 6. Per contra, Mr. Gupta appearing on behalf of Revenue vehemently opposed the submissions as made on behalf of learned counsel on behalf of the Appellant-Assessee and submitted that the impugned order passed by the ITAT is a wel....