PRAKASH CONSTRUCTION,GHAZIPUR vs. INCOME TAX OFFICER, GHAZIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.02/VNS/2025 Assessment Year: 2017-18 Prakash Constructon v. Income Tax Officer Vedpurva Ward 3(5) Ghazipur (U.P) Ghazipur TAN/PAN:AARFP1001H (Applicant) (Respondent) Applicant by: Shri O. P. Shukla, Advocate Respondent by: Shri Deepak Yadav, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 07.10.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.

2.0 The brief facts of the case are that during the year under consideration, the assessee was a partnership firm engaged in Civil Construction works with Government Departments. The assessee had filed its return of income for the year under consideration on 16.11.2017 declaring a total income of Rs.6,120/-. The case of the assessee was selected for Complete Scrutiny under Computer-Aided Scrutiny Selection (CASS). The Assessing Officer (AO) issued statutory notices along with questionnaire to the assessee, requiring the assessee to furnish the details of transactions entered into by the assessee during

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the year under consideration. However, there was no response from the side of the assessee. The AO, therefore, proceeded to complete the assessment on the basis of Best Judgment Assessment on the basis of material available on record.

2.1 It was noticed by the AO that during the year under consideration, the assessee, on the gross receipts of Rs.6,02,04,102/- had disclosed Net Profit of 0.01% and claimed refund of Rs.13,74,970/-. The AO further noticed that during the year under consideration, there were credits of Rs.7,26,22,761/- in its Bank Account No.35594565168 maintained with State Bank of India and if the gross receipts of Rs.6,02,04,102/- disclosed by the assessee was considered from that account, an amount of Rs.1,24,22,761/- still remained unsubstantiated out of total credits of Rs.7,26,22,761/-. Since there was no response from the side of the assessee, the AO treated the unsubstantiated deposits of Rs.1,24,18,659/- as undisclosed contract receipts/turnover of the assessee for the year under consideration and applied net profit rate of 8%, which came to Rs.9,93,492/- and added the same to the total income of the assessee.

2.2 The AO further held that since N.P. rate of 8% on total suppressed receipts/turnover has been applied for working out extra profit addition, it would be necessary to disallow suitable

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portion of expenses claimed to avoid double relief of already debited under the head “Purchase and Direct Expenses” of Rs.5,58,51,020/-. As per AO, since the expenses claimed were not open for verification in absence of books of accounts, bills/vouchers, he disallowed 4% of Rs.5,58,51,020/- under the head “Purchase and Direct Expenses”, which came to Rs.22,34,040/- and added the same to the total income of the assessee.

2.3 The AO completed the assessment under section 144 of the Act, computing the income of the assessee as under:

Income returned Rs.6,120.00

Addition on account of extra profit Rs.9,93,492.00

Addition on account of disallowance Rs.22,34,040.00 under the head “Purchase & Direct Expenses”

Addition of interest not disclosed Rs.35,770.00

Total income (rounded off) Rs.32,69,420.00

2.4 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee by passing an order ex-parte qua the assessee and confirmed the order of the AO.

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2.5 Now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

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b. Judgment of Hon'ble Supreme Court in case of Brij Bhusan Lal Parduman Kumar Vs CIT (1978) 115 ITR 524. c. Judgment of Hon'ble Supreme Court in case of Padma Sundra Rao Vs State of Tamilnadu (2002) 255 ITR 147, 4. Because the Ld. Commissioner of Income Tax(A) (NFAC) was not justify to confirmed the addition of Rs 35870.00 of interest received from bank. 5. Because the Ld. Commissioner of Income Tax(A) (NFAC) was not justify to make the addition by applying the 8% of profit rate on contract receipts and again make addition by applying the 4% rate on purchases and direct expenses which is the violation of judgment of Hon'ble Supreme Court. 6. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case. 7. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted. 3.0 During the course of hearing, the Ld. Authorized Representative for the Assessee (Ld. A.R.) submitted that there was a delay of 28 days in filing the appeal before the Tribunal and the assessee has filed an application dated 01.01.2025 for condonation of delay, stating therein that the assessee was not aware about the order of the NFAC uploaded in its portal and the assessee had come to know about passing of the order by the NFAC only when the assessee received a call from the Income Tax Department for deposit of Tax. It was further submitted that

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since assessee’s Counsel was unwell during the relevant period, he contacted a new Counsel and got the appeal filed before the Tribunal. The prayer of the Counsel of the assessee was that the delay be condoned and the appeal be heard on merits.

4.0 The Ld. Sr. D.R. opposed the condonation of delay.

5.0 In view of the prayer made by the Counsel of the assessee, I condone the delay in filing of the appeal and admit the appeal for hearing.

6.0 The Ld. A.R. submitted before me that the NFAC has passed an order ex-parte qua the assessee, arbitrarily upholding the order passed by the AO. The Ld. A.R. further submitted that the AO had not allowed adequate opportunity of being heard to the assessee and had passed the impugned assessment order under section 144 of the Act, without bringing on record any material in support of the addition which was made on the basis of presumption and surmises only. The Ld. A.R., therefore, prayed that, in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of the transactions entered into by the assessee, before the AO.

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7.0 The Ld. Sr. D.R. objected to the restoration of appeal to the file of the Assessing Officer and submitted that the appeal of the assessee be dismissed.

8.0 I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one more opportunity to present its case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the assessee to present its case along with necessary evidences in support of the transactions entered into by the assessee during the year under consideration. I also caution the assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.

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

Order pronounced in the open Court on 21/08/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:21/08/2026 JJ:

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