ITAT Remands Case for Reconsideration, Cites Faulty Examination by Tax Department

The ITAT Ahmedabad allowed the appeal for statistical purposes, considering the tax authorities’ negligence. The tribunal held that the case was not properly examined by the tax department and consequently sent it back for fresh consideration.

The Dantol Dudh Utpadak Sahakari Mandli Limited has filed the appeal before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, challenging an order dated May 13, 2025, passed by the NFAC, Delhi, under Section 250 of the Income Tax Act, 1961. The case concerns the Assessment Year 2019-20.

The assessee had challenged two key additions: Rs 50.91 lakh for alleged inflated sales and Rs 16.78 lakh for unexplained investments and debtors. When the tribunal analysed the facts of the case, it noted that the tax authorities had made these additions mainly based on bank transactions (deposits and withdrawals made during the year in consideration), without proper examination of supporting documents. Further, inconsistencies were observed in tax authorities’ reasoning, such as alleging both inflated purchases and sales, which could cancel each other out.

Additionally, the assessee had challenged the validity of the reopening of the assessment under Section 147 of the Act. However, the tribunal held the reopening valid since it was based on bank transactions directly linked to the additions made.

Considering the aforementioned findings, the tribunal decided not to give any final decision in the present case but instead sent the case back to the tax authorities for fresh adjudication and directed them to give the assessee a proper opportunity of hearing and to present evidence. In conclusion, the appeal was allowed for statistical purposes.