The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has come down heavily on the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), for failing to comply with its earlier binding directions in a reassessment case involving a disputed addition of Rs. 50 lakh.
The bench of Sanjay Garg (Judicial Member and Makarand V.Mahadeokar (Accountant Member) has observed that the CIT(A) has not summoned the supplier for cross-examination, nor called upon the bank officer, as explicitly required by the Tribunal. Rather than complying with the judicial directions, the appellate authority has merely reiterated untested findings from the investigation wing, once again relying on the same statement of Shri Alpeshkumar Patel, without giving the assessee any opportunity to rebut it. This flies in the face of the binding directions of the Tribunal and offends the most basic principles of natural justice.
The bench stated that the conduct of CIT(A) amounts to a gross dereliction of statutory duty. The Tribunal’s order was not a mere advisory opinion, but a binding adjudication under section 254(1) of the Income Tax Act. Non- compliance with such directions vitiates the proceedings and undermines the rule of law. In this case, despite the solemn directions issued in the earlier round, the CIT(A) has, by act of omission, rendered the entire appellate proceeding a farce. Such defiance, even if arising from indifference or administrative inertia, amounts to judicial insubordination and warrants strict consequences.
The appellant/assessee is engaged in the business of quarrying and trading in stone products. In the course of reassessment proceedings initiated u/s 147 based on an information received from the office of the Dy. Director of Income-tax (Investigation), it was alleged that M/s. Umiya Industries, operated by Shri Alpeshkumar Vitthalbhai Patel, was a paper concern which had provided accommodation entries. The Assessing Officer, relying solely on the statement of Shri Alpeshkumar Patel, treated the assessee’s advance of Rs.50,00,000/- to Umiya Industries towards purchase of machinery as bogus and made addition u/s 69 of the Act.
Despite the above directions, the CIT(A), NFAC again confirmed the addition of Rs.50,00,000/-, without executing any of the directions issued by the Co-ordinate Bench. The CIT(A) neither was the supplier summoned for cross-examination, nor was any statement of the bank officer recorded. The order is wholly silent on compliance with any of the binding directions of the Co-ordinate Bench, and instead reiterates conclusions based on the same untested evidence previously found inadequate.
The ITAT observed that repeated non-compliance with appellate directions, even if unintentional, undermines judicial efficacy and public confidence in the appellate process.
The tribunal requested the Central Board of Direct Taxes (CBDT) to take note of this issue and, if deemed necessary, issue suitable guidance to the field and appellate authorities to ensure that remand directions of the Tribunal are scrupulously followed in all cases, particularly where specific procedural safeguards are mandated.
Case Details
Case Title: Ashapura Stone Industries Versus ITO
Case No.: ITA No.725/Ahd/2025
Date: 07/08/2025
Counsel For Appellant: Hardik Vora, AR
Counsel For Respondent: Hargovind Singh, Sr.DR
