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Facts
The assessee company, engaged in infrastructure development, filed its return for AY 2017-18 showing a total loss. The AO completed the assessment at a high income by making several additions, including treating cash deposits as unexplained, disallowing interest on TDS and bank loans, and adding income due to mismatch with Form 26AS. The CIT(A)/NFAC dismissed the assessee's appeal on the ground of non-prosecution without deciding on merits.
Held
The Tribunal held that the CIT(A)/NFAC erred in dismissing the appeal on the ground of non-prosecution without adjudicating the issues on merits. Considering the assessee's prayer for another opportunity and in the interest of justice, the Tribunal decided to remit the entire issues back to the CIT(A)/NFAC for fresh adjudication.
Key Issues
Whether the CIT(A)/NFAC was justified in dismissing the appeal for non-prosecution without deciding the merits? Should the assessee be granted another opportunity for adjudication by the CIT(A)/NFAC?
Sections Cited
143(3), 68, 37(1), 270A, 234B, 234D, 139(5), 143(2), 142(1), 154, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of assessee is directed against the order of ld. CIT(A)/NFAC dated 08.08.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1067449124(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2018-19. The assessee has raised the following grounds of appeal:
The impugned assessment order u/s 143(3) of the Act dated 29.12.2019 is passed in haste overlooking the material available on record adopting a superficial approach and therefore, the same is liable to be set aside as void.
2.1 The ld. CIT(A) NFAC fell in serious error in dismissing the appeal on the ground of non-prosecution WITHOUT deciding the appeal on merits considering the grounds of appeal taken and the submissions made in the Statement of facts.
Nandi Engineering Limited, Bangalore Page 2 of 6 2.2 The ld. CIT(A) ought to have given an opportunity of hearing through Video conference which is a condition precedent for a valid order even if the appeal was to be dismissed on the ground of non- prosecution.
The ld. AO erred in treating cash deposits of Rs.81,60,000/- made in bank account as unexplained cash credits u/s 68 of the Act.
The ld. AO erred in disallowing interest paid on TDS amounting to Rs.3,39,174/- u/s 37(1) on the ground that the same is penal in nature.
5. The ld. AO erred in disallowing interest paid to banks amounting to Rs.4,37,39,158/-.
The ld. AO erred in making addition of Rs.2,60,843/- on the ground that there is mismatch between income declared in the return of income and income as per Form no.26AS.
7. The ld. AO erred in initiating penalty proceedings u/s 270A of the Act alleging under reporting of income.
The ld. AO erred in levying interest u/s 234B & u/s 234D of the Act.
9. The appellant craves leave to add or delete or modify or revise any ground at the time of hearing before the Hon’ble Tribunal.
The brief facts of the case are that the assessee is a company engaged in the business of infrastructure development, engineer & construction activities. The original return of income for the Assessment Year 2017-18 was filed on 25.10.2017 declaring a total loss of (-) Rs.2,04,99,023/-. The said return of income was revised u/ s 139(5) of the Act on the same day i.e. on 25.10.2017 wherein the total loss was revised & reduced to (-)Rs.1,57,67,820/- since it was noticed by the assessee that income from other sources amounting to Rs.47,31,203/- was omitted to be considered in the computation of income by inadvertence. Thereafter, the case was selected for complete scrutiny and accordingly notices u/s 143(2) as well as 142(1) of the Act was issued along with the questionnaire requesting the assessee to furnish relevant details/documents in support of the claims. During the course of Nandi Engineering Limited, Bangalore Page 3 of 6 assessment proceedings, in response to said notices the assessee had time to time submitted the details as called for. The AO completed the assessment on a total Assessed income of Rs.3,20,00,152/- as against the total loss of(-)Rs.1,57,67,820/- declared in the revised return of income by making the following additions/ disallowances:
St. Particulars Amount No. (in Rs.) (i) Cash deposits in bank account treated 81,60,000/- as unexplained cash credits u/ s 68 r.w.s115BBE of the Act (ii) Interest on TDS disallowed treating it as 3,39,174/- penal in nature (iii) Disallowance of Interest paid to bank 4,37,39,158/- (iv) Mismatch in the income as per ITR and 2,60,843/- Form No.26AS Total 5,24,99,175/- Rectification u/s 154.
2.1 The ld. AO thereafter issued notice u/s 154 of the Act dated, 02-02-2024 communicating that there was a prima facie mistake apparent from the record in the assessment order since the income of Rs.47,31,203/- declared under the head 'Other sources’ was omitted to be included in the total income assessed in the ‘Computation sheet’. In response, the assessee filed letter dated 14-02-2024 and did not object to the rectification of the said mistake relating to the income of Rs.47,31,203/- declared under the head 'Other sources'. Further, the assessee also requested for rectification of other mistakes that have crept into the assessment order by oversight since brought forward business loss and unabsorbed depreciation was not set-off in the impugned assessment order before determining the total income assessed.
Nandi Engineering Limited, Bangalore Page 4 of 6 However, the AO passed the rectification order u/ s 154 r.w.s 143(3) dated 30-03-2024 rectifying the said mistake of non- inclusion of the said income of Rs.47,31,203/- as above-mentioned but the AO remained noticeably silent as to why he was not acting upon the rectification application of the assessee relating to set off of brought forward business loss and unabsorbed depreciation before determining the total income.
CIT(A) Proceedings. 3. Aggrieved by the assessment completed u/s 143(3) of the Act, the assessee filed an appeal before the ld. CIT(A) /NFAC.
4. The ld. CIT(A)/NFAC dismissed the Appeal on the ground that the Assessee has not made a single submission/document to counter the findings of the AO and substantiate its stand. Further, the ld. CIT(A)/NFAC held that the fact of non compliance on the part of the assessee clearly reveals that the assessee through its repetitive non compliances has shown complete lack of interest in pursuing the appeal and accordingly, in the absence of any reasonable, cogent and valid evidences, advance by the assessee, the ld. CIT(A)/NFAC unable to interfere with the action of AO.
Aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
6. Before us, the ld. AR of the assessee submitted that the assessee could not represent its case before the ld. CIT(A)/NFAC as there was a lapse on the part of the accountant working with the assessee who was entrusted with the work of coordinating with the Tax Consultant appearing before the ld. CIT(A)/NFAC and the Notices from the ld. CIT(A)/NFAC received in the email nandi@nicelimited.com omitted to be forwarded to the Tax Nandi Engineering Limited, Bangalore Page 5 of 6 consultant. Further the ld.AR of the assessee submitted that the ld. CIT(A)/NFAC has also not decided the Grounds of appeal on merits.
The Ld. DR on the other hand supported the order of the authority below.
8. We have heard the rival submissions and perused the materials available on record. A perusal of the fact of the case shows that assessee could not represent its case before the ld. CIT(A)/NFAC at all as a result of which the ld. CIT(A)/NFAC has dismissed the appeal of the assessee by observing that in the absence of any reasonable, cogent and valid evidences advanced by the assessee in the instant appeal, he is unable to interfere with the action of AO and accordingly dismissed the appeal of the assessee. On perusal of the order of ld. CIT(A)/NFAC, it is found that the ld. CIT(A)/NFAC has also not adjudicated the issues on merits. As per the provision contained in section 250(6) of the Act, the order of the ld. CIT(A)/NFAC disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. During the course of hearing, the ld. Counsel for the assessee requested that the assessee may be provided one more opportunity to represent its case before the ld. CIT(A)/NFAC. In view of the above, considering the prayer of the ld. A.R. of the assessee, as well as in the interest of justice and fair play, we deem it fit to remit the entire issues involved in the present appeal to the file of ld. CIT(A)/NFAC for fresh adjudication in accordance with law after granting reasonable opportunity of being heard to the assessee. The assessee is also directed to produce all the necessary documents/ evidences/ information in support of its claim and shall not seek unnecessary adjournments. In case of further default on the part of the
In the result, appeal filed by the assessee is partly allowed for statistical purposes.