L AND W CONSTRUCTIONS PRIVATE LIMITED,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME TAX, TDS CIRCLE 2(1), BENGALURU, BENGALURU

The facts in brief are that the assessee, a private company, is engaged in the business of real estate. From the Tax Audit Report for the year under consideration, it was noticed that the assessee has incurred expenditure without deducting tax at source. The nature of expenses incurred without deducting tax are as under: - Fee for professional services to Walker C and Handiok & Co LLP for sum of Rs. 26,00,000/- - Provision for Project Expenses for sum of Rs. 131,67,64,095/-, names of the payee were not applicable. 2.1 In the return filed for the year, the assessee suo-moto made disallowances of 30% of impugned expenses as per the provision of section 40(a)(i) of the Act. Consequently, the proceedings under section 201(1) of the Act were initiated. The assessee during proceedings under section 201(1) of the Act made detailed submission in which it was contended the expenses were booked on provision basis applying the percentage completion method of the projects. Therefore, the payees were not identifiable at the time of booking of provisions. The assessee further claimed that the impugned provision was reversed on the first day of subsequent year and expenses were booked on actual invoice basis issued by the payees on which tax was duly deducted and deposited into a revenue account.

The aggrieved assessee preferred an appeal before the learned CIT(A) who dismissed the assessee’s appeal without going into merit of the case for the reason that the assessee has not appeared or filed response to hearing notices issued during the appeal proceeding. The assessee also failed to make submission and furnish evidences in support of grounds of appeal.

Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

The learned AR before us filed a paper book running from pages 1 to 223, compilation of case laws running from pages 1 to 102. The learned AR among various other contentions before us submitted that during the appellate proceeding required details and submission could not furnished and this lapse has occurred because the employee responsible for monitoring the registered email address had been inactive, resulting in a failure to track and communicate the receipt of the notices.

On the other hand, the learned DR supported the order of the authorities below and submitted that despite adequate opportunities having been provided, the assessee failed to appear before the learned CIT(A) or furnish any details/submissions in support of its claim. Therefore, the learned CIT(A) was justified in disposing of the appeal on the basis of materials available on record. The learned DR, however, left the issue to the discretion of the Bench.

We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the learned CIT(A) has dismissed the appeal of the assessee ex parte without adjudicating the issues raised by the assessee on merits. The assessee before us submitted that due to inadvertent lapse on the part of the employee responsible for monitoring the registered email address, the notices issued during the appellate proceedings could not be properly tracked and attended. Consequently, the assessee could not place the necessary submissions and supporting evidences before the learned CIT(A). Considering the totality of facts and circumstances of the case, we are of the considered view that the assessee should be afforded one more opportunity to represent its case on merits. In our opinion, substantial justice should prevail over technical considerations. Therefore, in the interest of justice and fair play, we deem it appropriate to restore the entire issue back to the file of the learned CIT(A) for fresh adjudication on merits in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes.

At the outset, we note that the facts involved and ground raised by the assessee in its appeal for the AY 2019-20 are identical to the facts involved and issue raised by the assessee in its appeal in ITA No. 826/Bang/2026 for the assessment year 2018-19. Therefore, the findings given in ITA No. 826/Bang/2026 shall also be applicable for the assessment year 2019-20. The appeal of the assessee for the A.Y. 2018- 19 has been decided by us vide paragraph No. 7 of this order wherein we have remanded back the issue to file of the learned CIT(A) for fresh consideration on merit. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2018-19 shall also be applied for the assessment year 2019-20. Hence, the ground of appeal filed by the assessee for A.Y. 2019-20 is hereby allowed for statistical purposes and matter is restored to the file of the learned CIT(A) for fresh consideration on merit. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.

In the combined results, both the appeals of the assessee are allowed for statistical purposes.