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Income Tax Appellate Tribunal, PUNE BENCH, ‘A’ PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
These two are cross appeals arise out of the order dated 21-02-2023 passed by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi in relation to the assessment year 2015-16.
The assessee’s appeal is time barred by about 48 days. The assessee has filed an affidavit stating the reasons which led to the late filing. We are satisfied with the same. Therefore, the delay is condoned and the instant appeal is admitted for disposal on merits.
Briefly stated, the facts of the case are that the assessee filed its return declaring total loss of Rs.2,66,18,369/-. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee had accepted unsecured loan of Rs.1,56,51,399/- from its Director, namely, Mr. Nandkumar Z. Gaikwad who had not filed his return of income. Further, the AO observed that net profit ratio of the assessee declined from loss of -3.23% to -25.70% from the preceding year. In the absence of the assessee participating in the assessment proceedings, the AO framed the assessment u/s.143(3) r.w.s.144 of the Act disallowing the claim of loss at Rs.2.66 crore and made an addition of Rs.1.56 crore. The ld. CIT(A) accepted the assessee’s claim regarding the loss incurred during the year but refused the assessee’s claim on the genuineness of the unsecured loan. That is how, both the sides have come up in appeal before the Tribunal.
We have heard the rival submissions and gone through the relevant material on record. It is seen that the assessee did not participate in the assessment proceedings which led to the passing of the ex parte order u/s.144 of the Act. The AO, while disallowing the loss, has gone with the net profit ratio without making any reference to the gross profit ratio of the assessee for the current year and the preceding year. The ld. CIT(A) has equally not advanced any sustainable reason to overturn the rejection of books of account, which were, in fact, not produced before the AO. Similarly, on the second issue of making addition u/s.68 of the Act, he simply relied on the fact that the director had not filed his return of income.
When the assessee tried to furnish certain additional evidence before the ld. CIT(A), the same were not accepted. Thereafter, the ld. CIT(A) took cognizance of the same. This shows that right from the assessment stage, the case has not proceeded on the canons of established law. In our considered opinion, the ends of justice would meet adequately if the impugned order is set-aside and the matter is remitted to the file of AO. We order accordingly. The AO is directed to frame the assessment afresh after allowing reasonable opportunity of hearing to the assessee.
In the result, both the appeals are allowed for statistical purposes. Order pronounced in the Open Court on 11th September, 2023.