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Before: SMT. P. MADHAVI DEVI
IN THE INCOME TAX A PPELLATE TRIBUNAL HYDERABAD BENCH ‘SMC', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
ITA No. 1610/Hyd/2017 Assessment Year: 2006-07 GJ Trading Pvt. Ltd., vs. Dy. Commissioner of Hyderabad. Income-tax, Circle – 2(3), Hyderabad. PAN – AAACG7620H Appellant Respondent Assessee by: Shri P. Murali Mohana Rao Revenue by: Smt. Esther N. Hanghal Date of hearing: 17/12/2019 Date of pronouncement: 17/12/2019 O R D E R
This is an appeal filed by the assessee against the order of CIT(A) – 9, Hyderabad dated 31/05/2017 for AY 2006-07.
Brief facts of the case are that assessee company, engaged in the business of trading in Iron and Steel Products, filed its return of income for the AY 2006-07 on 29/11/2009 declaring a loss of Rs. 68,66,510/-. Assessment proceedings were completed u/s 144 of the IT Act on 10/07/2009 rejecting the books of account of the assessee and estimated gross profit at 2.5% of the turnover. Out of such profit on sales, bill discount, administrative expenditure and depreciation as per income-tax were allowed and the net income was arrived at.
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2.1 Aggrieved, the assessee preferred an appeal before the CIT(A), who dismissed the appeal and the assessee preferred further appeal before the CIT(A) and thereafter to ITAT. ITAT had remanded the matter back to the AO with a direction to provide one more opportunity to the assessee.
2.2 Accordingly, AO issued notices to the assessee, but, since there was no compliance from the assessee, the AO recomputed the income as done in the earlier proceedings. Aggrieved, the assessee preferred an appeal before the CIT(A) and filed written submissions, but, did not appear before the CIT(A). The CIT(A), therefore, confirmed the order of AO and the assessee is in second appeal before the ITAT.
Before the Tribunal, the assessee has raised the following grounds of appeal: “1. The order of the Commissioner of Income Tax (Appeals)-9, Hyderabad, is erroneous both on facts and in law. 2. The Ld. CIT (A) erred in dismissing the appeal. 3. [he Ld. CIT (A) erred in upholding the assessment made u/s 143(3) r.w.s 251 of the act dated 30.030.2013. 4. The Ld. CIT (A) ought to have provided opportunity of being heard before dismissing the appeal. 5. The Ld. CIT (A) ought to have considered the grounds raised with regard to the estimation of business income and disallowance of long term capital loss.
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The appellant may add or alter or modify of substitute or delete and I or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.
3.1 Further, vide letter dated 27/12/2018, the assessee has raised the following additional grounds of appeal: “7. The Ld. CIT (A) ought to have appreciated that the Assessing officer has estimated gross profit at an abnormal rate of 2.5% which has not been earned by the appellant either in earlier assessment years or in subsequent assessment years. 8. The Ld. CIT (A) ought to appreciate that no estimation of income can be done without rejecting books of accounts. 9. The Ld, CIT (A) erred in appreciating the fact that, mere fall in the Gross Profit Ratio, in the absence of any cogent reasons Could Not be a ground to Reject Audited Accounts and Estimate GP 10. The Ld. CIT (A) erred in appreciating the fact that, merely because gross profit margin is lower in the instant assessment year under appeal vis-a-vis preceding assessment year cannot be a ground of additions 11. The Ld. CIT(A) ought to have appreciated that no other addition of income can be made once the income is assessed on estimation basis. 12. The Ld. CIT(A) erred in upholding that Book results as per the Statement of Profit & Loss shall be considered for computation of total income and thus estimation of income done on ad-hoc basis is unsustainable. 13. The Ld. CIT(A) ought to have appreciated that the books of accounts are prepared and audited as per the Accounting standards Issued by Institute of Chartered Accountants of India by following standards on auditing issued by ICAI 14. Without prejudice to the above, The Ld. CIT (A) erred in confirming the Business Loss arrived by the
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appellant as speculation loss u/s 43(5) without any basis. 15. Without prejudice to the above, The Ld. CIT (A) ought to have appreciated that the appellant has brought forward business loss which shall be rightly allowed to setoff as per the provisions of Income Tax Act,1961 before arriving at final tax liability 16. The Ld. CIT (A) erred in confirming the Long term capital Loss on sale of shares of Rs. 71, 26,863/ - as speculation loss. 17. The Ld. CIT (A) erred in not adjudicating all the grounds taken before him on merits. 18. The Ld. CIT (A) grossly erred in dismissing the appeal only on the ground that there was no compliance from the appellant. 19. The appellant may add or alter or modify of substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”
The ld. counsel for the assessee fairly admitted that the assessee ought to have appeared before the CIT(A), but had filed a detailed written submissions and, though, the CIT(A) has recorded that the assessee has filed detailed written submissions, he has failed to deal with any of the submissions of the assessee. He, therefore, prayed that the assessee be given another opportunity to present its case before the CIT(A).
The ld. DR, on other hand, supported the orders of authorities below and submitted that the assessee had not shown any diligence in pursuing its case either before the AO
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or before the CIT(A) and, therefore, the matter need not be remitted to the file of CIT(A) again.
Having regard to the rival submissions and material on record, I find that this is second round of litigation. As the assessee had not appeared before the AO during the first round of litigation, the ITAT had set aside the issue to the file of the AO for reconsideration. Even for the second time, the assessee has not represented its case properly before the AO. However, I find that the assessee has filed detailed written submissions before the CIT(A) , but, did not appear and explain its case before the CIT(A). Under these circumstances, the CIT(A) has confirmed the order of AO, but, in my opinion, he ought to have, at least, dealt with the submissions of the assessee. However, since the assessment order also is exparte the assessee, in the interest of justice, I remand the issue to the file of AO subject to the payment of Rs. 1,000/- as cost by the assessee to the PM’s Relief Fund on or before 15th January, 2020. The assessee shall cooperate with the AO for early completion of the assessment.
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In the result, appeal of the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 17th December, 2019.
Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER
Hyderabad, dated 17th December, 2019. kv