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Facts
The assessee, engaged in infrastructure development, received an accommodation entry of Rs.2.28 crores from a shell company. The AO disallowed this expenditure and made an addition under Section 69C, as the shell company failed to verify the transaction. The CIT(A) confirmed the assessment ex-parte, leading the assessee to appeal further.
Held
Upholding the principle of natural justice, the Tribunal set aside the ex-parte order of the CIT(A). The matter was restored to the CIT(A) for a de novo hearing, providing the assessee with a fresh opportunity to present their case, conditional on depositing Rs.5,000/- to the Tamil Nadu State Legal Services Authority.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order, and if the assessee should be granted a fresh opportunity to present their case regarding the disallowance for accommodation entries.
Sections Cited
148, 133(6), 69C, 147, 144, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI
the order of the Ld. Commissioner of Income Tax (Appeals)(NFAC)
Delhi [CIT(A)] dated 18.12.2024 for Assessment Year 2015-16.
Brief facts are as under:
The assessee company is engaged in the business of dealing in commodities and goods which are used in infrastructure development as well as rendering services in connection with infra development filed its return of income for AY 2015-16 on 27.09.2015 admitting total income of Rs.1,06,96,360/-. The AO noted that as
per information from DCIT, Central Circle-3(3), Kolkata, during the year under consideration, the assessee had taken accommodation entry from M/s. Bridge & Building Construction Company P. Ltd.
for Rs.2.28 crores, which was a shell company managed by Shri Ajit Kumar Jindal. Therefore, the AO reopened the assessment by issuance of notice dated 13.04.2021 u/s.148 of the Act. Though the assessee submitted its reply, the AO was not convinced with the same. Further, the AO issued notices u/s.133(6) dated 27.4.2023 and 03.05.2023 to M/s. Bridge & Building Construction Company P. Ltd to verify genuineness of transactions with the assessee.
However, no reply has been furnished by M/s. Bridge & Building Construction Company P. Ltd. The AO was of the view that due to non-submission of requisite details by the above mentioned entity, the expenditure claimed by the assessee cannot be accepted.
Hence, AO disallowed Rs.2,28,23,485/- on account of non-genuine expenditure and further made an addition of Rs.4,56,470/-on account of unexplained expenditure u/s 69C of the Act.
On appeal, Assessee challenged the order of assessment u/s 147 r.w.s 144 read with section 144B of the Act before the ld.CIT(A), who proceeded ex-parte and confirmed the order of the AO on merits. Aggrieved by the order of Ld.CIT(A), assessee is in further appeal before us.
Before us, the ld. Counsel for assessee submitted that the CIT(A) has sent the notices which were not received by the assessee, hence the assessee was prevented from appearance on the purported dates. Therefore, he prayed that the assessee may be provided an adequate and proper representation time to file evidence and documents, if any, to substantiate his explanation regarding additions made. The ld.DR stated that the assessee has defaulted in appearing before the appellate authority hence no lenient view is to be taken in this case and prayed for dismissal of appeal.
We have heard both the parties and perused material on record. Though we concur with the submissions of Ld. Sr. DR, however, keeping in mind the principle of natural justice and grant another opportunity of hearing to the assessee. We also find that assessee has not represented before the ld.CIT(A) despite notices for the reasons stated above. Accordingly, the impugned order is set aside and the appeal is restored back to the file of Ld. CIT(A) for denovo appeal hearing after affording proper opportunity of hearing to the assessee subject to cost of Rs.5,000/- which shall be deposited by the assessee within 30 days from the date of receipt of this order to ‘Tamil Nadu State Legal Services Authority’ at Hon’ble High Court of Madras. The proof of the same will be furnished by the Assessee before Ld.CIT(A) whose shall proceed for fresh appeal hearing after affording proper opportunity of hearing to the assessee. The assessee is directed to substantiate its case with all evidence and documents regarding additions made by AOif any, forthwith without any fail, failing which Ld. CIT(A) shall be at liberty to proceed with the appeal proceedings as per law. The ld. AR, who appeared also assured the bench that he will ensure that the assessee will prosecute his case diligently before the ld.CIT(A).
In the result, appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 1st April, 2025