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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
1. The assessee has filed the appeal against the order of National Faceless Appeal Centre (NFAC), Delhi / CIT(A) passed u/s 250 of the Act. The assessee has raised the following grounds of appeal:
Ground No. 1 On the facts and in the circumstances of the case and in law, the learned Assessing Officer failed to accept that Ragmet Engineering Pvt Ltd., Mumbai. - 2 - there are various reasons for the discrepancies between the assessee ledger and creditors ledger and they cannot be considered as the bogus purchases alone. The appellant prays that the addition made on these account of Rs. 21,17,834/- may please be deleted
Ground No. 2
On the facts and in the circumstances of the case and in law, the Learned Assessing Officer erred in making additions amounting to Rs43,19,297/- on the basis of reply not received from the creditors These creditors did not reply because they were aggrieved by the assessee however the same cannot be treated as the bogus purchases The appellant prays that the same may please be deleted.
Ground No. 3
Without prejudice to the above and in alternative and on the facts and in the circumstances of the case and in law, the Learned Assessing Officer ought to have considered the request of the appellant and limit the quantum of addition to the extent of the gross profit ratio. The appellant prays that full quantum of addition may please be deleted and plea of the appellant may please be accepted.
Ground No.4
On the facts and in the circumstances of the case and in law, the Ld. AO erred in charging interest u/s 234A, 234B and 234C. The appellant prays that the same may please be deleted.
Ragmet Engineering Pvt Ltd., Mumbai. - 3 -
The brief facts of the case that the assessee company is engaged in the business of projects and shutdown works in the field of refineries, petrochemicals, fertilizers, chemical plants and other process industries. The assessee has filed the return of income for the A.Y 2016-17 on 07.10.2016 disclosing total loss of Rs.45,66,057/- and the return of income was processed u/s 143(1) of the Act. Subsequently the case was selected under the CASS and the reasons for scrutiny are as under:
Large increase in sundry creditors and reduction in business income as compared to preceding year (Sundry Creditors in Balance Sheet and Business Income in Part- B-TI of ITR) 2. Opening WDV of current year is greater than closing WDV of previous year (Schedule DPM and DOA of ROI) 3 Large increase in sundry creditors with respect to Turnover as compared to preceding year (Sundry Creditors in Balance Sheet and Turnover in P&L A/c of ITR) 4 Large share premium received during the year (verify applicability of Sec 56(2)(viib) (PartA- BS of ITR) 5 Lower amount disallowed u/s 40(a)(ia) in ITR (Part- A-OI) in comparison to audit report (Form 3CD) 6 Large current liability in comparison to total asset in Balance Sheet (Part A-BS of ITR).
Ragmet Engineering Pvt Ltd., Mumbai. - 4 -
Subsequently, the AO has issued notice u/s 142(1) of the Act calling for the various details. In compliance to notice, the assessee has submitted the details on 27.11.2018 and 14.12.2018 in Tapal and also online. The AO found that the assessee has made bogus purchases from the parties and called for the confirmations and additional information. Since the assessee could not substantiate the genuineness of the transactions, the A.O. made addition of bogus purchases of Rs.64,37,131/- and determined the total income of Rs.18,71,070/-and passed the order u/s 143(3) of the Act dated 24.12.2018.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal.
Ragmet Engineering Pvt Ltd., Mumbai. - 5 -
At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer overlooking the submissions made in the assessment proceedings. Further the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities. Contra, the Ld. DR supported the order of the CIT(A).
We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld.CIT(A) has issued the notices of hearing referred at Page 3 Para 4 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds Ragmet Engineering Pvt Ltd., Mumbai. - 6 - of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the appeal and we allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21.04.2023.