NIHO CONSTRUCTION LTD.,NEW DELHI vs. ITO, WARD- 18(2), NEW DELHI

(A) This appeal by the Assessee is filed against the order of Learned Commissioner of Income Tax (Appeals)-6, Delhi, [“Ld. CIT(A)”, for short], dated 03.10.2017 for Assessment Year 2013-14. The Grounds taken in this appeal of Assessee are as under:

“1. That on the facts and circumstances of the case the Ld. CIT(Appeals) has erred in law while upholding the unjustified, unwarranted, unlawful addition of Rs. 1,09,84,142/- on account of Unexplained Sundry Creditors u/s 68. 2. That on the facts and circumstances of the case the Ld. CIT(Appeals) has erred in law while upholding the unjustified, unwarranted, unlawful addition of Rs. 72,00,977.00 on account of Unverifiable other Expenses.”

Niho Construction Ltd. (B) In this case, the assessment order dated 18.03.2016 was passed by the Assessing Officer u/s 143(3) of the Income Tax Act; wherein income of the assessee was determined at Rs. 2,05,32,630/- as against returned income of Rs. 7,95,810/-. The assessee filed appeal before the Ld. Commissioner of Income Tax (Appeals) [“Ld. CIT(A)”, for short] vide impugned appellate order dated 03.10.2017 the Ld. CIT(A) dismissed the assessee’s appeal. The relevant portion of the order of the CIT(Appeals) is reproduced as under:

3.1.2 In this office the appeal was first fixed for hearing on 22.08.2017 vide notice dated 08.08.2017. However, on 22.08.2017 neither the appellant attended nor did it seek adjournment. The appeal was re-fixed for hearing on 08.09.2017 vide notice dated 24.08.2017. However, on 08.09.2017 neither did the appellant attend nor did it seek adjournment. The appeal was finally fixed for hearing on 21.09.2017 vide notice dated 13.09.2017. On 21.09.2017, Shri J.R. Keswani, AR attended and requested for adjournment stating that the appeal for AY 2012-13 is pending before another CIT(A). Considering the request, the hearing was adjourned to 03.10.2017. However, 03.10.2017, instead of making submissions on merits of the case, the AR again requested for keeping the appeal proceedings in abeyance. His request was considered, but it is not possible to keep the appeal proceedings in abeyance indefinitely, as each assessment year is an independent unit and decisions for earlier years serve as guidance but are not binding. From the above facts, it therefore, appears that appellant is not interested in prosecuting the appeals. In this view, I find support from the following decisions: In the case of Multiplan India (P) Ltd. 38 ITD 320 (ITAT Delhi). (i) In the case of Estate of Late Tukojirao Holkar Vs. CWT; 223 ITR (ii) 480 (MP) where while dismissing the reference made at the instance of the assessee in default, following observation was made in their order: “if the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference.

Niho Construction Ltd. the necessary evidence in respect of the claims made by the appellant even during the assessment proceedings and the appellant had thus failed to provide necessary supporting evidence. In such circumstances the AO was absolutely correct in drawing the conclusion that the genuineness of the transactions/expenses remained unproved. Therefore, I am left with no option but to dismiss the ground of appeal No. 1.”

(C) The present appeal before us has been filed by the assessee against the aforesaid impugned appellate order dated 03.10.2017 of the Ld. CIT(A). During appellate proceedings in Income Tax Appellate Tribunal the assessee filed a brief synopsis, in addition to the paper book containing the following particulars: - S.No. PARTICULARS 1. Index of Paper Book-1 2. Adjournment application to CIT(A) on 03.10.2017 3. Adjournment application dtd. 20.09.2017 filed to CIT(A) on 21.09.17 4. Sundry Creditors – addition Rs. 1,09,84,142/- • Letter to AO Dtd. 11.12.15 • Details of sundry creditors in this year • Ledger A/c of M/s Seema Enterprises • Ledger A/c of M/s Shree Dharma Infrastructure Pvt. Ltd. • Ledger A/c of M/s S.R. Enterprises • Ledger A/c of M/s Shree Krishna Trading Co. • Ledger A/c of M/s Niho Buildwell Pvt. Ltd. • Ledger A/c of M/s Jai Shree Trading Co. • Ledger A/c of M/s Angad Traders • Ledger A/c of M/s H.K. & Sons Pvt. Ltd. • Ledger A/c of M/s Raj & Co. • Ledger A/c of M/s Paras Trading Co. • Ledger A/c of M/s S.K. Trading Co. • Ledger A/c of M/s S.P. Sales Corporation • Ledger A/c of M/s R.P.S. Enterprises • Ledger A/c of M/s Krishna Infracon Pvt. Ltd. • Ledger A/c of M/s Sidhdheshwar Infrabuild Pvt. Ltd. • Ledger A/c of M/s Narmada Trading Co. • Confirmation of Niho Buildwell Trading Co.

Niho Construction Ltd. • Ledger A/c of intt., penalty and rebate (consolidate) • Ledger A/c of Kotak Mahindra Prime Ltd. 8. Audited Financial statement of A/c (D) At the time of hearing before us, the learned Authorized Representative (“Ld. AR”, for short) of the assessee submitted that the Ld. CIT(Appeals) has passed the aforesaid impugned appellate order dated 03.10.2017 without deciding the merits of the grounds of appeal and without deciding the issues in dispute through a speaking order. He further submitted that the order was passed by the Ld. CIT(A) dismissing assessee’s appeal in limine for want of prosecution. He submitted that the Ld. CIT(A) should be directed to pass a fresh appellate order. He submitted that the aforesaid impugned appellate order dated 03.10.2017 of the Ld. CIT(A) should be set aside and the Ld. CIT(A) should be directed to pass a fresh appellate order in accordance with law, on the grounds of appeal, through a speaking order.

(D.1) The Learned Departmental Representative [“Ld. DR, for short] expressed no objection to the request of the Ld. AR of the assessee for setting aside the impugned appellate order dated 03.10.2017 of Ld. CIT(A) and for directing the Ld. CIT(A) to pass a fresh appellate order in accordance with law on the grounds of appeal, through a speaking order deciding the merits of the grounds of appeal.

(D.2) We have heard both the sides, and we have perused the materials on record.

Both sides are in agreement that the Ld. CIT(Appeals) has passed the order in limine, for want of prosecution by the assessee, without deciding merits of various grounds of appeal, and without passing a speaking order on the merits. Both sides are in agreement that the impugned appellate order should be set aside and Ld. CIT(A)

Niho Construction Ltd. should be directed to pass a fresh appellate order on the grounds of appeal through a speaking order. Further, u/s 250(6) of Income Tax Act, the Ld. CIT(Appeals) was duty bound to dispose of assessee’s appeal, stating the points for determination, the decision thereon, and the reasons for the decision. It is not in dispute that the Ld. CIT(Appeals) failed to give his decisions on merits through a speaking order on the various points for determination before him (i.e. on various grounds of appeal).

(D.2.1) In view of the foregoing, and as both sides are in agreement to this, we hereby set aside the aforesaid impugned appellate order dated 03.10.2017 of the Ld. CIT(Appeals) and direct the Ld. CIT(Appeals) to pass a denovo appellate order in accordance with law, after providing a reasonable opportunity of being heard to the assessee, stating the points for determination (i.e. the grounds of appeal), the decision thereon, and the reasons for the decision. This appeal is disposed of in accordance with the foregoing directions.

(E) For statistical purposes the appeal is treated as partly allowed.

(E.1) This order was orally pronounced on 26th October, 2021 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. Now this order in writing is signed today on 27.10.2021.