LITE CON BUILDING PRODUCTS,RAJAVOLU vs. THE INCOME TAX OFFICER, WARD-1(1), RAJAHMUNDRY, RAJAHMUNDRY

The Assessee has raised the following grounds of appeal:

Brief facts of the case are that, assessee is a partnership firm engaged in the business of manufacturing AAC blocks. During the A.Y.2015-16, Assessee obtained term loan of Rs.1,35,00,000/- and cash credit facility of Rs.40,00,000/- from Union Bank of India and Assessee’s partners also introduced capital of Rs.79,34,482/- through cash deposits and bank disbursed term loan of Rs.1,15,88,208/- during the year under consideration. The case of the Assessee was reopened under section 147 of the Income Tax Act, 1961 [hereinafter in short “the Act”] on the basis of information that Assessee made substantial cash deposits in its bank account. Accordingly, notice under section 148(A) of the Act was issued, but Assessee did not file its reply within the given time. Resultantly, Assessing Officer issued notice under section 148 of the Act. Since, the manufacturing activity has not been commenced, the Assessee filed a NIL income return, reflecting all the transactions in the balance sheet. Assessing Officer, after issuing several notices and obtaining bank statements, treated cash deposits and certain credits, totaling to Rs.52,03,000/- as unexplained income and completed the assessment under section 147 r.w.s 144 of the Act.

Aggrieved, by the above order, Assessee preferred an appeal before the Ld.CIT(A). However, while filing the appeal before the Ld. CIT(A), there were 666 days delay, due to which Ld. CIT(A) dismissed the appeal in-limine, without condoning the delay. Still, aggrieved by the above order, assessee is in appeal before the Tribunal.

At the time of hearing, Ld. Authorised Representative, stated that the appeal was dismissed in-limine without adjudicating the issues on merits. Therefore, the appeal of the Assessee maybe set-aside to the file of Ld. AO with a direction to re-examine the issue fresh, after providing reasonable opportunity of being heard to the assessee.

On the other hand, Ld. Departmental Representative, supported the order of the authorities below. He stated that, Ld. CIT(A) rightly dismissed the appeal, since there was considerable delay of 666 days, therefore, he stated that there was no infirmity in the order of the Ld. CIT(A).

We after hearing the rival submissions of the parties and perusing the material available on record, we find that, in the present case of Assessee while passing the order, the Ld. CIT(A) dismissed the appeal on the ground of delay without adjudicating the merits of the case, therefore, in the interest of Justice and fair play, we find it necessary to remit back the issue to the file of Ld. AO and direct the Ld. AO to examine the issue on the merits of the case, after giving reasonable opportunity to the Assessee and after issuing notice to the Assessee. Assessee is also directed to participate in the proceedings before the Ld. AO by filing supporting documents in order to substantiate its claim.

While parting with this order and looking into the conduct of Assessee, we impose cost of Rs.5000/- (Rupees Five Thousand only) from the Assessee, which Assessee shall be deposited in “AP State Legal Services Authority” and copy of the same should be produced before the Ld. AO to prove that cost has been deposited.

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