KESAR INFRA,VAPI vs. ITO, WARD-7, VAPI

The background facts leading to present appeal are such that the assessee-firm filed its return of income of AY 2023-24 declaring a total income of Rs. 1,21,00,740/-. The case of assessee was selected for scrutiny assessment and the Ld. AO issued notices u/s 143(2)/142(1) which were partly complied with by the assessee. Ultimately, the Ld. AO completed assessment u/s 143(3) after making an aggregate disallowance of Rs. 42,59,114/- out of various expenses claimed by assessee as deduction in computing business income. Aggrieved, the assessee carried matter in first- appeal whereupon the Ld. CIT(A) passed ex-parte order due to non- representation by assessee and upheld AO’s order with the result that the assessee did not get any relief. Still aggrieved, the assessee has come in present appeal before us.

The assessee has raised various grounds of appeal in Form No. 36. However, during hearing, the learned Representatives confined their submissions to following Ground No. 6 only:

Ld. AR thereafter drew us to the assessment-order and demonstrated that the Ld. AO has made impugned disallowance of Rs. 42,59,114/- on ad hoc basis of 10% of multiple expenses aggregating to Rs. 4,25,91,140/- claimed by assessee in P&L A/c. However, the assessee is having all relevant details and documents of the expenses and ready to make an effective representation before Ld. AO. Therefore, it would be better to remand this matter to the file of Ld. AO to enable a meritorious verification of assessee’s documents and thereafter determining correct taxable income in accordance with law. Ld. AR acknowledged that the assessee shall definitely make a proper and effective representation before Ld. AO.

The Ld. DR for revenue, though not opposing the prayer of the assessee for restoration, submitted that while restoring the matter, appropriate directions may be issued to ensure strict compliance by the assessee.

Considering the above submissions of parties; having regard to the principle of natural justice and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of Ld. AO, we restore this matter to the file of Ld. AO for adjudication afresh, at the risk and responsibility of assessee. The Ld. AO shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by Ld. AO without seeking unnecessary adjournments failing which the Ld. AO shall be at liberty to proceed in accordance with law. Ground No. 6 is allowed accordingly.

Since we have remanded this matter to the file of Ld. AO for a fresh adjudication, no further adjudication of other grounds raised in Form No. 36 is required from us at this stage.

In result, this appeal is allowed for statistical purposes.