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Facts
The assessee's ex-parte assessment order under Section 144 of the Income Tax Act resulted in disallowances for expenses, gratuity provision, and provident fund payments. The CIT(A) set aside the assessment order to the AO for fresh adjudication. The assessee appealed the CIT(A)'s order.
Held
The Tribunal upheld the CIT(A)'s decision to set aside the ex-parte assessment order and remand the matter to the AO. The CIT(A) was empowered to do so under Section 251(1)(a) of the Act, as amended. The assessee was directed to appear before the AO for fresh assessment.
Key Issues
Whether the CIT(A) was justified in setting aside the ex-parte assessment order and remanding the matter to the AO for fresh adjudication due to inadequate opportunity provided to the assessee.
Sections Cited
250, 144, 143(3), 142(1), 251(1)(a)
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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI ANIKESH BANERJEE
Instant appeal of the assessee was filed against the order of the Learned Commissioner of Income-tax (Appeals), Pune-11 (*in short, ‘Ld.CIT(A)+, passed under section 250 of the Income-tax Act, 9161 (in short, ‘the Act’), date of order 26-12-2024 for A.Y. 2021-21. The impugned order was emanated from the order Dodhia Chem Tex Private Limited of the Ld. Deputy Commissioner of Income-tax, Central Circle-3, Thane (for brevity the Ld. AO), passed under section 144 of the Act.
The assessee has taken the following grounds of appeal:- The following grounds of appeal are without prejudice to one another. -
1. On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not deleting the following additions: a. Ad-hoc Disallowance of 10% of commission expenses, professions fees, other expenses and purchases at Rs 3,05,10,742/- b. Disallowance of provision for payment of gratuity of Rs 4,28,412/-and c. Disallowance of payments to provident fund of Rs 46,176/- made by the Ld. Assessing Officer in the Assessment Order passed u/s 143(3) r.w.s 144 of the Act dated 17.12.2022 on assumption, presumption, surmises and conjectures.
2. On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in setting aside the assessment order to the office of the Ld. Assessing Officer and not deleting the additions made in the impugned assessment order ignoring the fact that the books of accounts of the appellant company are duly audited.
3. On the facts and in the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in setting aside the assessment order to the office of the Ld. Assessing Officer and not giving decision on merits by deleting the additions made in the impugned assessment order,
4. On the facts and in the circumstances of the appellant company's case and in law, the 1.4. Commissioner of Income Tax (Appeals) erred in setting aside the assessment order to the office of the Ld. Assessing Officer, which was never prayed in the appeal filed in Farm 35 before the Ld. Commissioner of Income Tax (Appeals) and reasonable cause existed for non-compliance before the Assessing Officer.
The appellant craves leave to add to, alter, amend, modify and for delete all or any of the foregoing grounds of appeal.
The appellant prays before the Hon'ble Tribunal to delete the additions made by the AO and set aside by the Ld. CIT (A) and/ or any other relief as the Hon'ble Tribunal may deem fit.”
2. The brief facts of the case are that the assessment was completed ex parte, resulting in the disallowance of expenses amounting to Rs.3,05,10,742/-, disallowance of provision for gratuity amounting to Rs.4,28,412/-, and disallowance of payment towards the Provident Fund amounting to Rs.46,176/-. Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A). Considering the assessee’s submissions and noting that the assessment was completed ex parte under Section 144 of the Act, the Ld. CIT(A) set aside the matter to the file of the Ld. AO for fresh adjudication de novo.Dissatisfied with the appellate order, the assessee has preferred the present appeal before us.
We heard the rival submissions and considered the documents available in the record. We find that the assessment was completed exparte under section 144 and additions were made by making disallowances under different heads. After the amendment to section 251(1)(a) of the Act, the Ld.CIT(A) is empowered to set aside the assessment order for further adjudication to the Ld. AO. The observations of the Ld.CIT(A) at para 5.7 are as follows:- “Findings 5. I have perused the facts of the case. In this case, noticesu/s 142(1) were issued on 05/09/2022 and 04/12/2022. Thereafter, the AO issued a show-cause on 10/12/2022 asking the appellant to file explanation by 13.12.2022. Thus, only 4 days were provided for filing reply. In response to this, the appellant filed an adjournment request dated 13.12.2022. However, the AO proceeded to pass the assessment order u/s 144 of the Act without rejecting the said adjournment request. The appellant has Dodhia Chem Tex Private Limited further submitted that the requisite details could have been filed before the AO, had he provided adequate opportunities. The facts of the case suggests that the AO did not provide adequate opportunities to the appellant especially because only a time of 4 days was given to respond the show- cause notice and an adjournment request was specifically filed vide letter dated 13.12.2022. Further, the AR of the appellant has stated that if a proper opportunity is given, the appellant can file necessary documents and evidences on the issues involved in the appeal.In view of these facts and the proviso to section 251(1)(a) of the Act, the impugned assessment order u/s. 144 of the Act is being set-aside and the matter is referred back to the AO for making a fresh assessment after giving adequate opportunity to the appellant for furnishing explanation.
Since the assessment order is being set aside as per the proviso to section 251(1)(a) of the Act, the other grounds of appeal
raised by the appellant are not required to be adjudicated. 7. The appeal is ALLOWED for statistical purposes.” 4. The Ld. DR fully relied on the order of the Ld. CIT(A).
5. Upon careful consideration, we find that the impugned assessment was completed ex parte, and in view of the assessee’s submissions, the Ld. CIT(A) correctly set aside the matter to the file of the Ld. AO for fresh adjudication de novo by an order dated 26/12/2024.Furthermore, the Ld. CIT(A) is vested with the authority to remand the matter under Section 251(1)(a) of the Act, as amended by the Finance (No.2) Act, 2024, effective from 01.10.2024. The relevant statutory provision reads as follows: “251. (1) In disposing of an appeal, the 7[***] 9[Commissioner (Appeals)] shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or 11annul the assessment 12[***]: [Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment; ]” (Emphasis supplied) In light of the above, the assessee is directed to appear before the Ld. AO for fresh assessment proceedings as per the directions issued by the Ld. CIT(A). We