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Income Tax Appellate Tribunal, ALLAHABAD BENCH, ALLAHABAD.
Before: SH. UDAYAN DAS GUPTA & NIKHIL CHOUDHARY
ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order of the Ld. CIT (A), NFAC, dated 01/06/2022, passed u/s 250 of the Act 61, which has emanated from the order of the ITO, Ambedkar Nagar, passed u/s 144 of the Act 61, dated 30/03/2015. 2. Condonation of delay:
It is pointed out by the registry that the appeal is belated by 692 days. That assessee has filed an application for condonation of delay, on the ground that the appeal for the year before the first appellate authority has been manually filed in Form No. 35 alongwith necessary enclosure through his appointed advocate Mr. R.C. Tripathi, ( a copy of manual Form 35 alongwith grounds of appeal has been filed before us) it is stated by the assessee in the condonation application that the appeal was fixed for hearing on 17.04.2018 where the assessee has physically filed his written submissions alongwith supporting documentary evidences, before the concern ld. CIT(A), Lucknow. 2.1 The first appellate authority called for remand report from the AO on the basis of such written submissions filed by the assessee. Thereafter, the appeal was migrated to the NFAC as per notification No. 76/2020 dated 25.09.2020. Subsequently notices issued from the NFAC has never been received by the assessee. The e-mail ID mentioned in the Income Tax profile in the name of taxadvocate84@gmail.com and madvocate17@gmail.com where that of his earlier tax consultant Mr. Mohd. Ashim Ansari and Mr. Mohd. Ahmad Sheikh, who used to look after the tax matter of the assessee. 2.2 It is seen from the appellate order that notices have been issued in the ITBA portal from the office of the first appellate authority and also in the e-mail ID i.e. available in the portal. But unfortunately, the assessee never received any of the notices and he was never intimated by his counsel Mr. Mohd. Ashim Ansari and Mr. Mohd. Ahmad Sheikh, regarding the appellate proceedings pending before the department which has to be conducted in the faceless manner through the ITBA portal. He further stated that in the month of May 2024, he contacted his new counsel Mr. R.C. Tripathi, advocate to look into the pending status of the appeal before the ld. CIT(A). At this point of time, he came to learn that the appeal that has been pending before the first appellate authority has been disposed of by dismissing the appeal for non-prosecution. At that period of time, the assessee with the help of new counsel prepared the appeal memorandum in form no. 36 and has immediately filed the appeal after payment of Govt. Fees by on 22.06.2024 which is belated by 692 days. 2.3 The assessee has filed detailed application for condonation of delay in form of an affidavit and ultimately relied upon the judgment of Hon’ble Apex Court in the case of Collector Land Acquisition Vs. MST Katiji, reported in 167 ITR 471 (SC) to make a prayer that the assessee was under the belief that appeal will be disposed of by the ld. CIT(A) after physical hearing and he had no idea regarding faceless proceedings, and as such, he was not at all aware of the existence of the appeal order in the Income Tax portal. As such, he humbly prayed that the delay was not intentional and there was no willful neglect on his part and he has not gained anything by filing this appeal belatedly. He prayed that the delay may please be condoned and the appeal may be admitted to be heard on merits. 2.4 Considering the condonation application, and the contents of the affidavit we find that the assessee has stated sufficient cause for filing the appeal belated by 692 days and we find that in absence of any willful or intentional neglect on the part of the assessee, we admit this appeal for hearing on merits.
The grounds of appeal
preferred by the assessee in Form 36 are as follows: “1. BECAUSE the appellant has already filed his written submission dated 17.04.2018 before the then Id. CIT(A) on which remand report was called for from the Id. Assessing Officer which he failed to do so, without referring to the submissions made by the appellant an ex-parte appellate order has been affirming the order passed by Id. Assessing Officer by applying the order passed by Hon’ble ITAT in the case of CIT Vs Multiplan India Pvt. Ltd. reported in [1991] 38 ITD 320 (Del).
2. BECAUSE after closure of business in the assessment year 2012-13 due to heavy losses, the appellant had no income liable for taxation, thereafter, he was not filing any return and the e-mail address as also the mobile number belongs to his tax consultant at that time and no information was received regarding the notice having been issued electronically were not at in his knowledge owing to which to compliance could be made by him.
3. BECAUSE the appellant was completely unaware that his appeal has been migrated from the office of Id. CIT(A), Ambedkar Nagar to NFAC, Delhi, due to which no response could be filed by him during appellate proceedings.
4. BECAUSE the last notice issued by the Id. CIT(A) as per e-portal was dated 10.03.2022, however, the impugned appellate order was passed ex- parte after two and half months without considering the written submissions and information on records, is wholly erroneous and bad as the appellant was prevented from reasonable opportunity of being heard before passing of the said order. WITHOUT PREJUDICE TO THE AFORESAID 5. BECAUSE books of account maintained by the appellant were duly audited and no adverse report having been given by the auditors, the Id. Assessing Officer has erred on facts as well as in law in applying provisions of section 145(3) and rejecting books of account and estimating turnover of Rs.9,00,00,000/- (as against disclosed turnover of Rs.6,79,26,750/-) and applying GP Rate of 0.50% thereby working out profit of Rs.3,53,236/- as against disclosed loss of Rs.1,59,80,157/- during the year.
6. BECAUSE estimation of G.P' Rate of 0.50% by the Id. Assessing Officer on the basis of 3rd parties is wholly erroneous as the G.P. rate of the appellant itself was 0.22 % and due to increase in cost of goods purchased, there occurred loss during the year which is duly supported by books of account and other records which are maintained by the appellant.
7. BECAUSE the Id. Assessing Officer has erred in presuming closing stock of Rs.1,57,31,919/- as against nil stock, even the appellant has closed down his business after the month of September, 2012, and adding the same to the returned income of the appellant.
8. BECAUSE there occurred typographical at the end of the staff instead mentioning the ‘net loss’ he has mentioned “closing stock” which has been considered to be, alleged closing stock of Rs. 1,57,31,919/- of the appellant and added the same to the disclosed income of the appellant during the year.
9. BECAUSE the Id. Assessing Officer has erred in considering one sided response made by the third party, without confronting the appellant, and treating the amount receivable from the sundry debtors aggregating to Rs.35,68,121/- as allegedly to be bogus and disallowing the same, as the sundry debtors were duly supported by sales made during the year which has been accepted by him.
BECAUSE the Id. Assessing Officer on the basis of information provided by M/s Murarka Textiles alleging cash payment made by them aggregating to Rs.7,08,000/- on different dates which are not recorded in the books of account maintained by the appellant, addition of the same is wholly erroneous as the appellant has no control on the books of the third party, as also the entries recorded by them on their own whims.
BECAUSE the addition of Rs.1,85,000/- made by the Id. Assessing Officer is wholly erroneous as there is as such no violation of provisions of section 40A(3) of the Act.
BECAUSE there being dispute between the appellant and M/s Murarka Textiles Pvt. Ltd. relating to bouncing of cheque of Rs.90,00,000/- and the case under section 138 of Negotiable Instrument is pending in the court at Ambedkar, on the basis of their confirmation which has been prepared as per their stand, has been accepted by the Id. Assessing Officer and the information placed by the appellant has been erroneously disbelieved by making an addition of Rs.31,01,000/- being the alleged difference in the closing balances as per appellant’s books of account and the creditor.
13. BECAUSE, without prejudice the aforesaid ground nos. 5 to 12 above, after having rejected books of account and computing the income of the appellant on the basis of estimated turnover and gross profit, no further addition could have been made by the Id. Assessing Officer, accordingly entire addition made up as under; i) Undisclosed Closing Stock 1,57,31,919/- ii) Bogus Debtors 35,68,121/- iii) Cash payment made out of books 7,08,000/- iv) 1,85,000 Cash payment in contravention of section 4oA(3) v) Undisclosed creditors 31,01,000/-. based on those books of account are liable to be deleted. 14. BECAUSE order appealed against, is contrary to facts, law and principles of natural justice.”
The brief facts of the case are that the assessee is a trader of yarn and filed his return declaring total income of Rs. Nil and claiming losses for the current year which has been carried forward amounting to Rs.1,60,76,921/-. In course of scrutiny assessment, the case was represented by Mr. Mohd. Ashim Ansari and Mr. Mohd. Ahmad Sheikh, Advocate and books of account including cash book, ledger were produced for examination and the same has been examined on test check basis. The assessee Mr. Rohit Kumar proprietor of the concern also appeared before the AO and his statement has been recorded on oath. Finally, the assessment has been completed on a total income of Rs.75,70,360/-, by making addition on various grounds relating to closing stock, bogus debtors, addition on account of cash payment u/s 40A(3) and discrepancy of sundry creditor a/c etc.
The matter was carried before the ld. CIT(A). and the ld. CIT(A) has dismissed the appeal for non-appearance of the assessee. In course of appellate proceedings, it is seen from the appellate order that notice has been issued on four separate dates through the ITBA portal and also through e-mail ID as available in the portal. In absence of any response from the assessee, the appeal has been dismissed without adjudication on merits.
Before the tribunal the ld. AR of the assessee submitted that the case has been heard physically before the appeal was transferred to faceless proceedings and in course of physical hearing, written submissions alongwith documentary evidences were furnished before the ld. CIT(A), Luknow and on the basis of such submissions he has called for a remand report from the AO but unfortunately neither of the submissions and documentary evidences which were physically filed in course of physical hearing, has never been uploaded in the portal by the office of the ld. CIT(A), Lucknow.
6.1 Even, the remand report supposed to have been furnished by the jurisdictional AO has never been taken on record and not considered while disposing of this appeal ex parte. As such, he prays that the assessee may be granted a fresh opportunity of hearing before the ld. CIT(A) to put forth his argument and to look into the merits of the case on the basis of remand report which might have been furnished by the AO. Moreover, the notice uploaded in the ITBA portal has remained unseen by the assessee.
The ld. DR has also agreed that proper opportunity has not been allowed to the assessee and remand report if any existing in the file of the jurisdictional AO has also not been considered.
We have heard the rival submissions and considered the materials on record. We find that the assessee has not been aware of the appellate proceedings that was existing in the portal and we also note that the copy of the remand report if any has not been discussed by the first appellate authority while dismissing the appeal. As such, in the interest of justice, we set aside the matter back to the file of the ld. CIT(A) to provide an opportunity to the assessee to present his case alongwith all documentary evidences and call for the remand report from the AO concerned and thereafter to dispose of the grounds contained in Form No. 35 on the merits of the case after allowing proper opportunity of hearing to the assessee. The assessee is also directed to furnish all his written submissions alongwith necessary documentary evidences and supporting books of account to substantiate his case and shall cooperate in the fresh proceedings for proper disposal of the matter. 8.1 Since, we have remanded the matter back to the ld. CIT(A), the grounds on merits are not adjudicated by us.
In the result, the appeal of the assessee bearing is allowed for statistical purposes.