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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI RAMA KANTA PANDA & SHRI K.NARASIMHA CHARY
आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order(s) passed by the learned Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Shakti Hormann Private Limited (“the assessee”) for the assessment years 2017-18 & 2020-21, assessee preferred these appeals. For the sake of convenience, we dispose of these appeals by this common order, taking the appeal for the assessment year 2020-21 as a lead case.
Briefly stated relevant facts are that the assessee is engaged in the business of manufacturing of steel doors which include fire doors, scientific doors, general purpose doors and special application doors. The assessee produces range of architectural products to cater to a growing demand of high quality customized products for project market. The assessee company filed its return of income for the assessment year 2020- 21 on 14/02/2021 by declaring total income of Rs. 16,95,19,720/-. Later the return of income has been processed by the Centralized Processing Centre (CPC), Bangalore and issued intimation under section 143(1) of the Income Tax Act, 1961 (for short “the Act”) dated 24/12/2021 determining the total income of the assessee at Rs. 18,88,87,210/- while making adjustments to the return of the assessee, namely, disallowance under section 37 of the Act at Rs. 7,37,487/-, Rs. 6,80,389/-, Rs. 69,00,285/-, disallowance under section 40(a)(ia) of the Act at Rs. 24,000/-, disallowance under section 43B of the Act at Rs. 1,00,01,378/- and Rs. 4,22,647/-.
Assessee preferred appeal before the learned CIT(A) and the learned CIT(A) referred to the submissions made by the assessee and also to the decisions of the Hon'ble Apex Court in the case of Checkmate Services P. Ltd., vs. CIT in Civil Appeal No. 2833 of 2016, dated 12/10/2022 and also in the case of Shree Choudhary Transport Company vs. ITO, dated 29/07/2020.
Aggrieved by the same, assessee preferred this appeal. It is submitted by the learned AR that the assessee submitted before the learned CIT(A) that it had already disallowed the alleged disallowances now made by the CPC, Bangalore under section 143(1) of the Act. Learned AR further submitted that without considering such disallowances, the same amounts were again disallowed by the CPC. He submits that the submissions made by the assessee were noticed by the learned CIT(A) in the impugned order, but not considering the same the learned CIT(A) dismissed the appeal. He submits that disallowing the same amounts again leads to double disallowance. He also submits that the impugned order is not a speaking order, without taking cognizance of the submissions of the assessee.
Learned DR vehemently relied upon by the orders of the authorities below. According to him, since the learned CIT(A) relied on the decisions of the Hon’ble Apex Court, no interference at the end of the Tribunal is not warranted. 6. We have gone through the record in the light of the submissions made on either side. The impugned order is not at all a speaking order. What we may say with utmost charity that it is an unsatisfactory exercise of jurisdiction on the part of the first appellate authority. It writ large on the face of the impugned order. The impugned order runs into 87 pages. The grounds of appeal
, order impugned therein and the submissions of the assessee ran upto page No.
12. At page No. 13, the decision making process has started. Learned CIT(A) referred to five of the additions made and stated that in respect of such additions, the judgment in the case of Checkmate Services P. Ltd. (supra) was analysed and reproduced. Such reproduction went upto page No. 45.
7. At page 45, learned CIT(A) referred to the addition of Rs. 24,000/- under section 40(a)(ia) of the Act and also to the submissions of the assessee that while computing the total income such an amount had already been disallowed by the assessee in the computation of total income itself. Learned CIT(A), however, said that the contention of the assessee was not tenable in view of the decision of Hon'ble Supreme Court in the case of Shree Choudhary Transport Company (supra) and reproduced the same, which went upto page No. 86.
8. At page No. 86, at the end of the reproduction of the decision of the Hon’ble Apex Court in the case of Shree Choudhary Transport Company (supra), learned CIT(A) observed that - in view of the above, grounds of appeal were dismissed and the additions made were confirmed. This is the structure of the impugned order.
9. As stated by us in the immediately preceding paragraphs, the order of the first appellate authority does not contain any discussion or reasoning on any of the additions made. It does not say why to brush aside the contention of assessee that all these disallowances now made under section 143(1) of the Act by the CPC were in fact considered and suo motu disallowed by the assessee itself.
10. We have gone through the paper book filed by the assessee. At page No. 350 thereof, we found that in the computation of total income, the assessee had clearly mentioned the inadmissible item of the expenditure and added them to the income. This list contains many entries but includes all the disallowances made by the CPC, Bangalore. When the assessee specifically pleaded that because of the disallowances made by the CPC, there will be double disallowances since the assessee suo motu made such disallowances while computing the total income, the first appellate authority should have considered the same and should have caused verification of truth or otherwise of such contention.
11. The impugned order does not spell out how the ratio of the decisions referred to in the order were applicable to the facts of the case. The assessee is not disputing the nature of such expenditure - whether to be allowed or disallowed. The assessee itself says that such items of expenditure are inadmissible items and while computing the total income, they themselves disallowed the same. But there is no whisper as to the fact in the impugned order.
12. In these circumstances, we accept the contention of the assessee that these disallowances have to be deleted, after verification at the end of the jurisdictional Assessing Officer. We, therefore, set aside the orders of the lower authorities and restore the issue to the file of learned Assessing Officer to verify the suo motu disallowances made by the assessee and if it is found that the assessee itself disallowed such items of expenditure, the fresh disallowance made by the CPC, Bangalore under section 143(1)(a) of the Act are not warranted and shall be deleted. Grounds are accordingly allowed. In the result, this appeal of assessee is allowed.
AY.2017-18: 13. Insofar as this appeal is concerned, there is delay in preferring the same and the learned CIT(A) refused to condone the delay and dismissed the appeal, holding that there is no sufficient cause to condone the delay. Impugned order clearly shows that the assessee pleaded before the first appellate authority that the cause of delay was the intervening period from 15/03/2020 to 06/01/2022 during which period due to Covid Pandemic there was a huge disruption in the day to day activity. It was also pleaded by the assessee that the assessee had difficulties even in retaining the employees or in calling the employees to the office for the work. The relaxation of period of limitation by the Hon'ble Supreme Court is also referred to.
Learned CIT(A), however, was of the opinion that prior to the period of Covid, the assessee could have appealed and there was no petition, seeking condonation of delay in filing the appeal with delay. Learned CIT(A) referred to the decision of the Hon'ble Apex Court in the case of Basawaraj vs. Special Land Acquisition Officer, in Civil Appeal No. 6974 of 2013, judgment dated 22/08/2013 and dismissed the appeal.
It is submitted on behalf of the assessee that assessee was pursuing the remedy of correction of demand before the learned Assessing Officer by filing a rectification request on 07/06/2019 which was ultimately denied by the department. In the meanwhile, the Covid Pandemic intervened and that is the reason why the delay occurred. Though the learned DR vehemently opposed the contention raised by the assessee, there cannot be any denial of the fact that there was rectification request on 07/06/2019 by the assessee and such a fact is evidenced by the computer- generated acknowledgement receipt filed by the assessee.
Having gone though the rectification request and the acknowledgement thereof, we are satisfied that the assessee did not sit idle and has been pursuing the remedy before the authorities, perhaps before a wrong forum. It is not as though the filing of the appeal is an afterthought, at a belated stage. The grievance of the assessee is well expressed by way of a letter requesting correction, submitted on 07/06/2019. Condonation of such delay occurred due to prosecution of the remedy before a wrong forum would not cause any prejudice to the Revenue, but only advance the cause of justice and lead to the decision on merits, instead of throwing a case at the threshold, without testing the same on merits. In these circumstances, we are of the considered opinion that it would be in the interest of justice to condone the delay and restore the appeal to the file of learned CIT(A) for having a view on merits, after affording an opportunity to the assessee of being heard. Accordingly holding so, we restore the appeal to the file of learned CIT(A). In the result, this appeal of assessee is treated as allowed for statistical purposes.
To sum up, appeal for the assessment year 2020-21 is allowed and appeal for the assessment year 2017-18 is treated as allowed for statistical purposes.
Order pronounced in the open court on this the 31st day of May, 2023.