ARJUN KUMAR SHUKLA, PROP. SANJAY AIRCONDITIONING SERVICES,LUCKNOW vs. INCOME TAX OFFICER, 6(1), LUCKNOW, LUCKNOW

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ITA 598/LKW/2026Status: DisposedITAT Lucknow28 October 2026AY 2018-194 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, after hearing both parties and perusing the records, found that the assessee was granted multiple opportunities, with the CIT(A) granting adjournments on two occasions. The assessee contended that the mistake was due to wrong accounting classification/booking by the accountant. Considering the totality of facts and the material, the Tribunal deemed it proper and in the interest of justice to set aside the impugned ex-parte order and restore the matter to the file of the AO for framing the assessment afresh, de novo. The AO is directed to provide a reasonable and effective opportunity to the assessee, verify whether the excess claim was attributable to a bona fide and inadvertent mistake in accounting classification or recording, and consider the relevant books of account, documentary evidence, and explanations. The assessee is directed to cooperate and furnish all requisite details. The grounds raised are allowed for statistical purposes. The appeal is allowed for statistical purposes.

What were the facts?

The assessee, Arjun Kumar Shukla, proprietor of Sanjay Airconditioning Services, filed an appeal against the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19. The assessee's case was selected for scrutiny regarding excess Provident Fund contributions. The Assessing Officer (AO) issued notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961. Despite adjournments, the assessee failed to furnish required details and evidence. Consequently, the AO disallowed expenses of Rs. 30,29,567/-, assessing total income at Rs. 41,53,627/-. The assessee appealed to the CIT(A), but no representation was made, leading to an ex-parte dismissal of the appeal. The assessee is now before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the Ld. CIT(Appeals) failed to appreciate that the excess expenditure under the EPF head was due to wrong accounting classification/booking by the accountant, and not an excess claim of expenditure in substance (Question of fact and law, relying on principles of natural justice and proper accounting). 2. Whether the Ld. CIT(A) erred in confirming the AO's order without considering the assessee's reply, documentary evidence, explanations, and submissions regarding actual EPF payments and accounting errors (Question of fact and law, concerning procedural fairness and evidence appreciation). 3. Whether the Ld. CIT(A) erred in confirming the assessment order by not considering the delay in reply due to COVID-19 and the nature of the business involving casual labor (Question of fact and law, regarding reasonable cause for delay and business exigencies). 4. Whether the Ld. CIT(Appeals)'s order was passed in violation of the principles of natural justice, without adequate opportunity of being heard (Question of law, concerning procedural fairness). Assessee's Contentions: The excess expenditure under EPF was due to wrong accounting classification/booking by the accountant, not an actual excess claim. The assessee was not provided an adequate opportunity to explain its case. The delay in reply was due to COVID-19. The matter should be remanded back in the interest of justice. Revenue's Contentions: The Ld. Departmental Representative opposed the assessee's submissions and supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW

Before: SHRI KUL BHARAT

For Appellant: Ms. Gurneet Kaur, Advocate
For Respondent: Dr. Preeti Singh, Addl. CIT (DR)

PER KUL BHARAT, VICE PRESIDENT.:

This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 07.04.2026 pertaining to the assessment year 2018-19. The assessee has raised the following grounds of appeal: - “1. Because on the facts and in the circumstance of the case, the order of Ld. CIT(Appeals) has failed to appreciate that the appellant had specifically raised the contention that excess expenditure under EPF head was due to wrong accounting classification/booking by the accountant and that there was no excess claim of expenditure in substance. 2. Because on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in confirming the order of Ao without considering the reply filed by assessee, documentary evidences, explanations and submissions furnished by the appellant regarding actual EPF payments and accounting errors, thereby confirming the addition without proper verification.

ITA No.598/LKW/2026 Page 2 of 4 3. Because on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in confirming the order of assessment as the Ld. CIT(A) has not considered the fact that the delay in reply is due to this Covid19 as major of the staff is working from home. The salary is the major part of business and some time we heir casual labour to support our business, around 40 percent of our sale is from supplying AC services which required labour and manpower supply. 4. Because on the facts and in the circumstance of the case, the order of Ld. CIT(Appeals) has been passed in absolute violation of the principles of Natural Justice, without providing adequate opportunity of being heard and therefore deserves to be declared a nullity 5. The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.” 2. The facts giving rise to the present appeal are that in this case, the case of the assessee was selected for complete scrutiny to examine the issue of excess contributions to the Provident Fund, Superannuation Fund or Gratuity Fund. In the course of the assessment proceedings, the Assessing Officer (“AO”, for short) issued statutory notices under the Income Tax Act, 1961 (“Act”, for short), including a notice dated 28.09.2019 u/s 143(2) of the Act and notices dated 10.02.2020 and 12.10.2020 u/s 142(1) of the Act. The assessee sought adjournments, which were granted by the AO. However, the assessee failed to furnish the relevant details and supporting documentary evidence in response to the aforesaid notices. In the absence of the requisite evidence, the AO disallowed the expenses claimed by the assessee amounting to Rs.30,29,567/- and assessed the total income at Rs.41,53,627/-. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A) also, there was no representation on behalf of the assessee. Therefore, the appeal of the assessee was dismissed ex-parte and finding of the AO was affirmed. Now, the assessee is in appeal before this Tribunal.

3.

Apropos to the grounds of appeal, the Ld. Counsel for the assessee submitted that there was a mistake on the part of the

ITA No.598/LKW/2026 Page 3 of 4 accounting in classification of the due to the wrong accounting classification/booking by the accountant. The Ld. Counsel submitted that the assessee was not provided opportunity to the explain its case. The Ld. Counsel further submitted that in the interest of justice, the matter may be remanded back.

4.

On the other hand, the Ld. Departmental Representative (DR) opposed the submissions and supported the orders of the lower authorities.

5.

I have heard the Ld. Representatives of the parties and perused the material available on records. I find that the assessee was given multiple opportunities, it is evident from the record that the Ld. CIT(A) granted adjournments of only one week each on two occasions. The contention of the assessee is that the mistake was due to the wrong accounting classification/booking by the accountant. Considering the totality of the facts and the material placed before me, I deem it proper and in the interest of justice to set aside the impugned ex parte order and restore the matter to the file of the AO for framing the assessment afresh, de novo, in accordance with law, after providing reasonable and effective opportunity to the assessee. The AO would verify whether the excess claim made by the assessee was attributable to a bona fide and inadvertent mistake in the accounting classification or recording of entries by the accountant. The AO would consider the relevant books of account, supporting documentary evidence and explanation furnished by the assessee and thereafter pass a reasoned and speaking order in accordance with law. The assessee is also directed to cooperate in the assessment proceedings and furnish all requisite details and supporting evidence as may be called for by the AO. The grounds raised in this appeal are allowed for statistical purposes.

ITA No.598/LKW/2026 Page 4 of 4 6. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 28/10/2026.

Sd/- [कुल भारत] [KUL BHARAT] उपाध्यक्ष/VICE PRESIDENT DATED: 28/10/2026 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent VIJAY 3. CIT Digitally signed by VIJAY PAL 4. DR PAL SINGH 5. Guard File Date: 2026.10.28 SINGH 16:40:00 +05'30' By order Sr. Private Secretary

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