MORE MOVER SALES PVT. LTD,AHMEDABAD vs. ITO, WARD-2(1)(4),, AHMEDABAD

आदेश/O R D E R

3. In brief, the grievance of the assessee involved in ground ns. 1 & 2 is that learned CIT(A) has erred in not condoning the delay of 157 days in filing the appeal before the learned First Appellate Authority and thereby confirming an addition of Rs.6,98,050/- made by the Assessing Officer.

4. The brief facts of the case are that, according to the Assessing Officer, he received an information on the basis of data available in Form No.26AS in ITD system that during the year the assessee had received a receipt of SMC- More Mover Sales Pvt Ltd Vs. ITO For AY: 2008-09 2 Rs.17,45,119/- on which tax was deducted and deposited in the Government account by the deductor amounting to Rs.1,90,785/-; but no return of income was filed by the assessee. Armed with this information, the Assessing Officer had issued notice under Section 148 of the Income-tax Act which was served upon the assessee. In response to the notice, it was contended by the assessee that it had not carried out any business and somebody has wrongly used its PAN data by showing deduction of taxes. The Assessing Officer did not make any enquiry. He assumed that the assessee must have done business and, therefore, he estimated gross profit in the alleged receipts on which TDS was deducted at 40% and made an addition of Rs.6,98,050/-. According to the assessee, this assessment order was passed on 20.01.2016 and on receipt of this assessment order assessee filed an application under Section 154 of the Income- tax Act for rectification of this order. Such application was filed on 09.02.2016. When Assessing Officer rejected this application, then the assessee filed an appeal before the learned CIT(A) against the original order and in this way the appeal has become time barred by 157 days. The assessee prayed for condonation of delay in filing the appeal before the learned CIT(A) under Section 249(3) of the Income-tax Act. Learned CIT(A) did not condone the delay and dismissed the appeal being time barred.

5. With the assistance of learned representatives, I have gone through the record carefully. To my mind, the assessee was prevented by plausible reason for not filing the appeal before the learned CIT(A) well in time. After assessment order, there were two remedies available to the assessee – either it should have filed appeal before the learned CIT(A) or it should have pointed out the exact error committed by the Assessing Officer in appreciating the fact. Since, according to the assessee, it had not carried out any business more particularly with Reliance Communications Ltd and somebody has wrongly misused the data, in that situation it was necessary for the assessee to get a SMC- More Mover Sales Pvt Ltd Vs. ITO For AY: 2008-09 3 finding of fact on this issue from the Assessing Officer. A perusal of the assessment order would indicate that the Assessing Officer has treated the information in the data as gospel truth inspite of objections of the assessee. He should have verified it from the Reliance Communications Ltd and ought to have found out as to whether any payment through banking channel was ever made to the assessee on which the alleged TDS was shown. Only thereafter he should have concluded that business was carried out by the assessee. The assessee adopted this course and did not file appeal before the learned CIT(A). On rejection of this application, it filed appeal against the assessment order instead of 154 order passed by the Assessing Officer because the scope in challenging the assessment order in appeal is far more wider than challenging the order passed under Section 154 of the Income-tax Act for rectification of any mistake. Since the assessee has availed one of the courses available to it and this has made its appeal time barred, I am of the view that it is a plausible explanation for condonation of delay. Therefore, I condone the delay of 157 days in filing the appeal before the learned CIT(A).

6. So far as merit of the case is concerned, learned First Appellate Authority has not adjudicated the issue on merits because the appeal was time barred and learned CIT(A) did not condone the delay in filing the appeal. Normally, in such a situation, the matter should be restored to the file of learned First Appellate Authority with the direction to adjudicate it on merits. However, after going through the assessment order, I find that by remitting the issue to the file of the learned CIT(A) it will only give rise to the multiplicity of the litigation. The finding of fact would be required to be recorded exhibiting that the assessee has actually conducted business with Reliance Communications Ltd who has deducted the TDS by using the PAN data of the assessee. If it is established that Reliance Communications Ltd has made payment of Rs.17,45,119/- to the assessee through banking channel on which SMC- More Mover Sales Pvt Ltd Vs. ITO For AY: 2008-09 4 TDS of Rs.1,90,785/- was rightly deducted, only then it is to be assumed that the assessee has undertaken some business and its income deserves to be estimated or determined. Once the assessee took this particular stand, then it should have been investigated by the Assessing Officer; thereafter, he could proceed on the alternative about estimating the income of the assessee in this activity. Without recording any specific findings on the stand of the assessee regarding non-conducting of any business, it is not justifiable at the end of the learned Assessing Officer to straightway go for estimation of income. Therefore, I deem it appropriate to set aside both the impugned orders and restore the issue to the file of the learned Assessing Officer for re-adjudication. It is needless to say that the observations made by me will not impair or injure the case of the Assessing Officer and will not cause any prejudice to the defense or explanations of the assessee.

Order pronounced in the Court on 5th February, 2020 at Ahmedabad.