ITAT Mumbai Sets Aside Technical Dismissal by CIT(A): Faceless Appeal Record Migration Failure Cannot Prejudice Assessee
Case Background
Vicky Agro Food Products & Suppliers Pvt. Ltd. Vs ITO (ITAT Mumbai)
This is a judicial summary of a significant ruling delivered by the Income Tax Appellate Tribunal, Mumbai, concerning the dismissal of an appeal on purely procedural grounds by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The ITAT's ruling reinforces a critical principle: substantive justice must prevail over procedural technicalities, especially within the faceless appeal regime where systemic record migration failures are attributable to the department, not the assessee.
Overview of the Dispute
The assessee company had filed its return of income for Assessment Year 2012-13 declaring total income at Rs. Nil on 29.09.2012. The return was initially processed under Section 143(1) of the Income Tax Act, 1961. The case was thereafter selected for scrutiny, and a notice under Section 143(2) was issued on 06.08.2013, followed by multiple notices under Section 142(1) seeking details and explanations.
The Assessing Officer ultimately completed the assessment under Section 143(3) vide order dated 20.03.2015, making the following significant additions:
Additions Made by the Assessing Officer
1. Addition on Account of Share Capital and Share Premium – Rs. 15,14,650/-
During the relevant year, the assessee had increased its share capital from Rs. 16,66,670/- to Rs. 20,20,000/-, thereby receiving share capital of Rs. 3,53,330/- from its shareholders/directors, along with share premium of Rs. 14,13,320/-. The Assessing Officer noted that the assessee failed to produce confirmations, bank statements and other corroborating documents to establish the creditworthiness of the investors and the genuineness of these transactions. Accordingly, the aggregate amount of Rs. 15,14,650/- was treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
2. Addition on Account of Cash Credit in Bank Account – Rs. 25,00,000/-
The Assessing Officer further observed that the assessee had received Rs. 25,00,000/- in its bank account with Shyamrao Vithal Co-operative Bank Ltd., for which no satisfactory explanation regarding the source was furnished. This amount was also treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
3. Addition on Account of Unexplained Investment – Rs. 1,30,00,000/-
Based on an affidavit furnished by the seller Shri Nirmal G. Doshi, the Assessing Officer observed that the assessee had paid Rs. 3,18,00,000/- towards acquisition of a property at Plot No. D-70, MIDC Industrial Area, Turbhe, Navi Mumbai, whereas the books of account reflected payment of only Rs. 1,88,00,000/-. The differential of Rs. 1,30,00,000/- was accordingly treated as unexplained investment under Section 69 of the Income Tax Act, 1961.
The total income of the assessee was thereby determined at Rs. 1,70,14,650/- by the Assessing Officer.
Proceedings Before CIT(A) and Dismissal on Technical Grounds
Aggrieved by the assessment order, the assessee filed an appeal before the learned CIT(A)-14, Mumbai on 08.04.2015. This appellate proceeding was subsequently migrated to the National Faceless Appeal Centre (NFAC) in accordance with the faceless appeal scheme notified by the CBDT.
During the appellate proceedings before NFAC, the learned CIT(A) observed that Form No. 35 as well as the assessment order were not traceable on the system. Multiple notices were issued to the assessee calling for relevant documents. Eventually, the learned CIT(A) concluded that Form No. 35 was incomplete as it was not accompanied by grounds of appeal and a statement of facts. On this basis, the appeal was dismissed as infructuous vide order dated 16.09.2025 under Section 250 of the Income Tax Act, 1961, without any examination of the issues on merits.