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Facts
The assessee, engaged in interior works, filed a Nil return for AY 2018-19 showing a loss. The AO rejected the books and estimated income. The CIT(A) dismissed the appeal for non-prosecution. The assessee faced financial crisis, disputes with banks, and administrative difficulties, hindering their ability to respond to notices.
Held
The Tribunal, considering the assessee's genuine financial difficulties and administrative challenges that led to non-prosecution, decided to grant one more opportunity. The orders of the lower authorities were set aside, and the issue was remitted to the AO for fresh adjudication.
Key Issues
Whether the assessee should be granted another opportunity to present their case before the authorities, given their genuine financial and administrative difficulties that led to non-prosecution.
Sections Cited
144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 11/10/2024 in respect of the A.Y. 2018-19.
The brief facts of the case are that the assessee is engaged in the business of interior works and for the A.Y. 2018-19 filed Nil return of income and shown a loss of Rs. 1,82,80,191/-. Thereafter the case was selected for complete scrutiny and the AO sought for explanations and not satisfied with the said explanations had rejected the books of accounts and estimated the income by adopting gross profit at 23.31% which was applicable to the earlier assessment year 2017-18. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and raised various grounds on merits. The Ld.CIT(A) had dismissed the appeal for non- prosecution. As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the assessee was in financial crisis and also various disputes arose with the banks and institutions and therefore the assessee was not able to concentrate on the day today activities and therefore they were not able to appear before the Ld.CIT(A) and filed their submissions and prayed one more opportunity to appear before the Ld.CIT(A).
The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the assessment order which was made u/s. 144 of the Act since the assessee had not furnished relevant materials. Thereafter the Ld.CIT(A) also dismissed the appeal for non-prosecution. We have also considered the various problems faced by the assessee which is extracted in the statement of facts in ground nos. (g) and (h) which reads as follows: “[g.] The Appellant submits that, the gross sales of Appellant has been drastically reduced from Rs. 24.79 crores in FY 2017-18 to Rs. 5.70 crores in FY 2018-19 and further reduced to Rs. 0.68 crore in FY 2019-20 and eventually to Rs. 0.32 crore in FY 2020-21. This led to a drastic financial debacle of the Appellant and the bank loans were classified as non-performing assets. The directors of the Appellant Company were in distress to revival of the business and struggling to settle the dispute with the banks and financial institutions. Therefore, the Appellant was not in a position to concentrate on the on- going income tax appeal proceedings and was totally depending on the tax expert who was handling the appeal proceedings and unaware of the non- submission of response to notices issued on various dates as contemplated in the order of the Hon'ble Commissioner of Income Tax [Appeals], National Faceless Appeal Centre(NFAC), Delhi. [h.] The Appellant submits that, the response was not submitted to the enablement of communication window hearing notice dated 15/11/2022, hearing notices dated 05/04/2024, 27/06/2024 and 25/09/2024 for hearing/filing submissions on or before 01/10/2024 due to the various financial disputes arose between various vendors/financial institutions/banks/customers and other administrative difficulties faced by the Appellant and was not at all an intentional as stated in the order of the Hon'ble Commissioner of Income Tax [Appeals], National Faceless Appeal Centre(NFAC), Delhi, dated 11/10/2024.”
We have also considered the submissions made by the Ld.AR that the assessee is having all the documents and undertake to produce the same before the assessing officer at any time. We have considered the said reasons stated by the assessee as a genuine one and in order to adjudicate the issue on merits, we are of the view that one more opportunity should be granted to the assessee to put forth their case before the authorities.
We, therefore set aside the orders of both the authorities and remit the issue to the file of the AO for deciding the issue afresh after hearing the assessee as well as by considering the documents to be filed by the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 26th February, 2025.