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Facts
The assessee-appellant, W G Steel Industries, filed two appeals against orders passed by the Ld. Commissioner of Income-tax (Appeals) for assessment years 2010-11 and 2011-12. The appeals were dismissed by the CIT(A) due to the assessee's non-compliance with notices and failure to appear.
Held
The Tribunal noted that the assessee's counsel provided an undertaking to ensure compliance with future notices. Therefore, the Tribunal set aside the orders of the CIT(A) and restored the matters back to the CIT(A) for a fresh decision after providing the assessee with adequate opportunity of being heard.
Key Issues
Whether the CIT(A) was justified in dismissing the appeals due to the assessee's non-compliance and failure to appear, or if the matter should be remanded for a fresh hearing.
Sections Cited
143(3), 147
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Income Tax Appellate Tribunal, MUMBAI BENCH “H” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. First Appellate Authority] for the assessment year 2010-11 and 2011-12 respectively.
The grounds raised by the assessee in its appeal for AY 2010- 11 and 2011-12 are reproduced as under:
“ GROUND OF APPEAL
FOR ASSESSMENT YEAR 2010-11
1. Ld. CIT(A) erred in confirming addition made by Ld. AO of Rs 7,91,190/- being 12.5% of purchases effected by the appellant from certain parties suspecting geniuses based on informations provide by Sales Tax Department without considering the fact that purchases are duly supported by documentary evidences and recoded in books of accounts and payment made through banking channel.
2. Ld. CIT(A) erred in not considering the fact that Ld. AO erred not providing copies of the statement as recoded by Sales Tax Department and not making available the Suppliers for Cross Examination of the Appellant as requested.
3. Ld. CIT(A) erred in not considering the fact that payments being made through banking channel genuineness of the purchases cannot be rejected based on unverified statements, alleged to be made by Another Department without Ld. AO himself recoding the statement in the Assessment proceedings.
4. Ld. CIT(A) erred in not considering the fact that addition was made in Assessment without rejecting books of accounts of the appellant and considering the fact that Appellant being a trader effected contra sale of the purchase at comparable gross profit rate.
5. Ld. CIT(A) erred in rejecting Appellant's appeal as appellant could not appear in response to hearing notices issued by Ld. CIT(A).
6. Appellant pray that addition made be deleted.
7. Appellant crave your honours leave to add, alter or ament any ground of appeal at the time of hearing or before.” GROUND OF APPEAL FOR ASSESSMENT YEAR 2011-12
1. Ld. CIT(A) erred in confirming addition made by Ld. AO of Rs 20,17,521/-being 12.5% of purchases effected by the appellant from certain parties suspecting geniuses based on informations provide by Sales Tax Department without considering the fact that purchases are duly supported by documentary evidences and recoded in books of accounts and payment made through banking channel.
2. Ld. CIT(A) erred in not considering the fact that Ld. AD erred not providing copies of the statement as recoded by Sales Tax Department and not making available the Suppliers for Cross Examination of the Appellant as requested.
3. Ld. CIT(A) erred in not considering the fact that payments being made through banking channel genuineness of the purchases cannot be rejected based on unverified statements, alleged to be made by Another Department without Ld. AO himself recoding the statement in the Assessment proceedings. 4. Ld. CIT(A) erred in not considering the fact that addition was made in Assessment without rejecting books of accounts of the appellant and considering the fact that Appellant being a trader effected contra sale of the purchase at comparable gross profit rate. 5. Ld. CIT(A) erred in rejecting Appellant's request to condone delay in filling appeal without due consideration. 6. Ld. CIT(A) erred in rejecting Appellant's appeal as appellant could not appear in response to hearing notices issued by Ld. CIT(A). 7. Appellant pray that addition made be deleted. 8. Appellant crave your honours leave to add, alter or ament any ground of appeal at the time of hearing or before.” 2.1 At the outset the Ld. Counsel for the assessee submitted that the assessee could not comply with the various notices issued by the Ld. first appellant authority and therefore, orders have been passed ex-parte qua the assessee. The relevant findings of the Ld. first appellate authority in the A.Y. 2010-11 is reproduced as under: “5.6 On perusal of the above assessment order, and on merits of the case also, it is observed that the Assessing Officer has rightly made the addition of Rs.7,91,190/- on account of bogus purchases made in the detailed assessment order u/s 143(3) r.w.s. 147 of the I.T.Act, 1961 dated 29.02.2016, as the appellant has not substantiated his claim. 5.7 Moreover, considering the non-compliance as detailed above by the appellant, it seems that the appellant is not interested to pursue the appeal. The appellant has not submitted any submissions in the appeal filed. The appeal is also a long pending appeal relating to the A. Y. 2010-11. Therefore, it cannot be kept pending adjudication for indefinite period. If the appellant is not availing the opportunities given, they cannot allege contravention of principles of natural justice as held in the case of P.N. Balasubramaniam (AP) 112 ITR 512. 5.8 It must be mentioned here that recently the Hon'ble High Court of Madras in the case of T.N.Subash Thangam vs Income Tax Officer, Non- Corporate Ward 17(7) reported in 156 Taxmann.com 732 (2023) held that the assessee is duty bound to respond to notices, appear and offer explanation before the AO. In the instant case, inspite of giving sufficient opportunities, the appellant has failed to respond to the notices given and shown non co-operation. 5.9 Therefore, it is held that, in the light of these observations, on merits of the case as well as due to the non-compliance of the appellant and failure on his part to substantiate the claim made in Form 35, during the appellate proceedings also, the appeal of the appellant stands dismissed.”
2. Similarly, in A.Y. 2011-12 Ld. CIT(A) dismissed the appeal whether in as under non compliance on the part of the assessee.
“Furthermore, During appeal proceedings, the appellant was requested repeatedly to fie reply. During the course of appellate proceedings notices were issued in the following manner:
Sl. Hearing Notice Issued on Status No. 1 08/02/2021 Not complied 2 01/11/2022 Not complied 3 28/08/2023 Not complied 4 10/11/2023 Not complied 5 20/11/2023 Not complied However, no submissions were made during the entire appellate proceedings. The appellant during the appellate proceedings did not comply with the notices. The Hon'ble ITAT in 1027/Chandi/2005 for the A.Y. 2002-03 in the case of Mis Chhabra Land and Housing Ltd. After following the decision of Hon'ble Supreme Court in the case of B.N. Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean merely filling of the appeal but effectively pursuing it. Keeping in view of the aforesaid factual position, the appeal filed by the appellant is, therefore, decided on merits. Since, no compliance was received from the part of the appellant and it failed to prove the grounds taken through this appeal Therefore, the total income assessed by the Assessing Officer of Rs. 24,09,350/- is hereby confirmed.”
Before us, the Ld. Counsel for the assessee has filed an affidavit and submitted that notices for hearing before the ld CIT(A) for both the assessment years were forwarded to Mr. Suresh Sharma, an Income-Tax Practitioner(ITP), who was regularly attending income-tax matters on behalf of the assessee firm. However, he failed to comply those notices issued by the Ld. first appellate authority. In the circumstances, the assessee requested for setting aside the order of the Ld. first appellant authority and restores the matter back to him for deciding a fresh.
We have heard rival submission of the parties and perused the relevant material on record. In view of the undertaking by the Ld. counsel appearing on behalf of the assessee that if matter is restore then notices issued by the Ld. first appellant authority shall be duly complied, we set aside the order of the Ld. CIT(A) and restore the matter back for deciding afresh after providing adequate opportunity of being heard the assessee.
In the result, both the appeals are allowed for set aside.
Order pronounced in the open Court on 28/04/2025.