NEETA GOENKA, RAIPUR,RAIPUR vs. ITO-1(2), RAIPUR, RAIPUR

Vide three grounds of appeal, the assessee has challenged the taxability of Rs.15,02,808/- under section 68 of the Act and Gross Profit (GP) addition of Rs.52,17,829/- after rejecting the books of accounts under section 145(3) of the Act.

The relevant facts giving rise to this appeal are that the assessee deals in steel products. She filed her Income Tax Return (‘ITR’) of the relevant year on 13.01.2021 declaring income of Rs.9,18,810/-. The case was picked up for scrutiny, the Ld. Assessing Officer (‘AO’), analyzing the Balance Sheet of the assessee, inferred that the assessee had received unsecured loan of Rs.15,02,808/- during the relevant period; therefore, he show-caused the assessee to explain the said credit in accordance with the provision of section 68 of the Act. Dissatisfied with the explanation of the assessee, the Ld. AO taxed the said credit of Rs.15,02,808/- under section 68 r.w.s. 115BBE of the Act. Further, the Ld. AO, noting that the assessee had not only maintained the stock register but also had not furnished the quantitative details in the audit report submitted along with ITR and non-claim of any fright, loading and unloading expenses in the Profit & Loss Account, doubted the genuineness of the books of accounts maintained by the assessee. Further, the Ld. AO also took cognizance of the fact that the entire purchases made during the relevant year had been sold out during the relevant year and the value of purchase price was higher than the sale price resulting into gross loss on the net sale effected by the assessee. Since, the books of account along with corroborative evidences were not produced before the Ld. AO though the same were specifically asked by the Ld. AO; therefore, the Ld. AO doubted the genuineness of the books of accounts, if any maintained. The Ld. AO also doubted the claim of miniscule salary expenses of Rs.85,000/- against the sale of Rs.104,35,65,992/-. Considering these facts, the Ld. AO rejected the books of accounts of the assessee by invoking the provisions of section 145(3) of the Act. After rejecting the books of accounts, the Ld. AO applied Gross Profit (‘GP’) rate of 0.5% of the sales, which resulted addition of Rs.15,17,829/- on this score. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal due to non-prosecution (para 5, 5.1 and 6 of the impugned order).

Before us, Shri Sunil Kumar Agrawal, CA, Ld. Authorized Representative (‘AR’) of the assessee submitted that the Ld. CIT(A) had decided the appeal ex- parte due to non-prosecution. Further, he drew our attention to the fact that the Ld. CIT(A) had not decided the appeal on merit with detailed justification for agreeing with the Ld. AO’s finding. Non-compliance on the part of the assessee was the sole reason for dismissal of the appeal, the Ld. Counsel submitted. He prayed for remanding the case back to the file of Ld. CIT(A) for fresh adjudication.

We heard Shri Ch. Rajeswara Reddy, Ld. Sr. DR who argued the case vehemently and prayed for dismissal of the appeal. The Ld. Sr. DR, drawing our attention to various paras of order of the CIT(A), submitted that the reasonable opportunities of being heard had been provided to the appellant assessee by the CIT(A). However, the appellant assessee did not ensure any compliance before him for the reasons best known to the assessee. Hence, he prayed for dismissal of the appeal. On our specific query, he reluctantly admitted for remanding the case back to the file of the Ld. CIT(A) for afresh/denovo adjudication.

We have heard both parties and have perused the material available on the record. We have taken note of the fact that the Ld. CIT(A) has not decided the appeal after hearing the assessee and discussing the issues in detail and his reasons for agreeing with the assessment order though he/she, as per provisions of section 250(6) of the Act, is obliged to dispose of the appeal in writing with well- reasoned order on each point of determination arisen for his consideration. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues arisen from the assessment order, whether or not such issues have been raised by the assessee before him/her. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, the CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merit. Reliance is placed on the decision of the Hon'ble Bombay High Court in case of Prem Kumar Arjun Das Luthra HUF, (2017) 291 CTR 614 (Bom.).

We have taken note of the fact that the assessee has not made any compliance before the Ld. CIT(A). Even in such facts and circumstances, the Ld. CIT(A) cannot dispose the appeal ex-parte due to non-prosecution as he/she has no option except to decide the case on merit with detailed reasoning, which has not been done in this case. Keeping in view the facts of the case, we, without offering any comment on merit of the case, find the impugned order deem fit to set aside and remand the matter back to the file of the Ld. CIT(A) for deciding the case afresh/denovo, in accordance with the law, after affording reasonable opportunity of being heard to the assessee. We, therefore, order accordingly. Needless to say that the appellant assessee has to cooperate in remitted appellate proceedings.

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

The Pr. CIT, Raipur (C.G.) 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड" फाईल / Guard file.