SHRI TULSIBHAI BHAGWANBHAI PATEL,SURAT vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -3(3), SURAT

Assessee by Shri Aswin K Parekh - C.A Revenue by Ms. Anupama Singla – Sr.DR Date of hearing 07.10.2021 Date of pronouncement 07.10.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the orders of ld. Commissioner of Income tax (Appeals)-3, Surat dated 23.08.2017 for the assessment year (AY) 1996-97.The assessee raised the following grounds of appeal: “I. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs.11,24,900/- on account of disallowance of Labour charges at 20% u/s 40A(2)(b) of the Act without appreciation the evidences in the form of detailed chart of wages paid to family members and other and accompanied by the evidences in the form of comparative bills of labour, job charges received from the principal. Number of diamonds and Shri Tulsibhai B Patel (A.Y 96-97) wages per carat. The addition of Rs.11,24,900/- should therefore be deleted. II. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs.1,70,000/- u/s 68 of the Act without appreciating the evidences of agriculture income of (HUF) of appellant copy of 7/12 of agriculture land, bills of agriculture income, copy of Income-tax return, balance sheet, capital account and confirmation of (HUF). The addition of Rs.1,70,000/- should therefore be deleted.”

2. Brief facts of the case are that original assessment proceedings under section 143(3) was completed on 26.03.1999 determining total income at Rs.13,8,130/- by making major addition under section 40A(2)(b) of Rs.11,24,900/- and under section 68 of the Act of Rs.1,70,000/-. The assessee preferred an appeal before the ld.CIT(A). The ld.CIT(A) on the issue of addition under section 40(2)(b) of the Act, restricted the disallowance to 10% of labour charges payment to related parties on account of diamond cutting and polishing against 20% disallowance made by the AO and regarding twisting and warping charges, the ld.CIT(A) upheld the disallowance made by the AO at the rate of 20% of the said charges. Thus, the ld .CIT(A) partly allowed the appeal of the assessee vide order dated 23.02.2001. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before the Tribunal. The Tribunal restored both the additions back to the file of the AO, consequently, the assessment proceedings under section 144 r.w.s 254 of the Act was completed on 29.01.2016 determining the total income at Rs.13,10,730/- by making addition under section 40A(2)(b) of the Act of Rs.11,24,900/- and under section 68 of the Act of Rs.1,70,000/-.

Shri Tulsibhai B Patel (A.Y 96-97) 3. On further appeal before the ld. CIT(A), the addition was upheld. The ld. CIT(A) upheld the addition in an ex parte order. Thus, further aggrieved, the assessee has filed present appeal before this Tribunal.

that the Ld. CIT(A) erred in passing ex parte order and not adjudicated the grounds of appeal on merit. The Ld. AR for the assessee further submits that without going into the controversy whether the ld. CIT(A) violated the principle of natural justice in not granting adequate opportunity, the assessee seeks one more opportunity for filing all evidences and explanation against the grounds raised by the assessee before Ld. CIT(A). The Ld. AR submits that he has a good case on merit and will succeeds if one more opportunity is given and the appeal is decided on merit by the Ld. CIT(A).The ld. AR further submits that he undertakes on behalf of the assessee to co-operate and not to default and attending proceedings before the Ld. CIT(A). Though, the ld. AR for the assessee filed various documents, however, no other submissions was made on such documents.

5. The ld. Sr. DR for the Revenue submits that the assessee was given three opportunities as recorded in page 3 of the order passed by the ld.CIT(A). The assessee failed to comply with the notice issued by the ld.CIT(A). The ld.CIT(A) left with no option, except to proceed to decide the issue and in absence of any evidence or explanation affirm the action of AO.