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Facts
The assessee filed appeals against orders for assessment years 2013-14 and 2014-15, with a delay of 107 days, which was condoned. The appeals involved identical facts and common issues regarding additions made by the Assessing Officer (AO) and confirmed partially by the CIT(A).
Held
The Tribunal held that the primary legal ground regarding the limitation of the assessment order was dismissed. However, on the merits of the addition of professional fees, the Tribunal found the AO's order to be cryptic and the CIT(A)'s decision to be ad-hoc. Therefore, in the interest of natural justice, the matter was set aside and remitted back to the AO for fresh adjudication.
Key Issues
Whether the assessment orders were barred by limitation, and whether the addition of professional fees was justified and properly adjudicated by the lower authorities.
Sections Cited
147, 148, 143(3), 153(2), 140A, 144
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S.R. RAGHUNATHA, HON’BLE
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
These appeals by the assessee are filed against two different orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2013-14 & 2014-15, both dated 05.04.2024.
At the outset, we find that there is a delay of 107 days in appeals filed by the assessee, for which petitions for condonation of :-2-: ITA. No:2456 & 2457/Chny/2024 delay along with reasons for delay have been filed. After considering the petitions filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeals on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeals and admit appeals filed by the assessee for adjudication.
Since facts are identical and issues are common, for the sake of convenience we dispose off these appeals by this consolidated order. The grounds raised by assessees in both the appeals are identically worded and facts and circumstances are exactly identical and hence, will take the grounds and facts from AY 2013-14. The assessee has raised the following grounds:-
1. The order of the Commissioner of Income Tax(Appeals), NFA in so Far as it is against the assessee is contrary to law, erroneous and unsustainable on the facts of the case.
2. The CIT(A), NFAC ought to have seen that the order u/s.143(3) r.w.s.147 dated 24.9.2021 is barred by limitation and hence the proceedings are ab initio void in law.
3. The CITA), NFAC ought to have seen that as per Proviso to Sec. 153(2), the assessment order ought to have been passed within 12 months from the end of financial year in which notice u/s. 148 was issued, i.e., 31.3.2021 and considering the Notification no.38/2021 extending the time limit till 30.6.2021, the order dt.24.9.2021 is barred by limitation.
4. The CIT(A), NFAC ought to have appreciated that the assessee had paid the taxes u/s.140A on the retuned income and return could not be filed within time due to portal glitches and hence confirming the part of addition :-3-: ITA. No:2456 & 2457/Chny/2024 without due regard to the income returned is unjust and unsustainable on the facts of case.
5. The CIT(A), NFAC erred in confirming the addition to the extent of Rs.22,14,400 as unaccounted fees collected from patients.
6. The CIT(A), NFAC failed to appreciate that the estimate of addition was totally arbitrary and without considering the fact that the fees charged from patients had been duly returned by assessee and there was no scope for further estimate of the fees received by assessee.
7. The CIT(A), NFAC was not justified in disregarding the fact that fees charged by assessee on new patients was Rs.400/- in the first visit and no fees is charged for review visits and Rs.250/ - is charged on old patients and no fees for review and considering this, the estimate was unjustified and needs to be deleted.
8. The CIT(A), NFAC failed to appreciate that assessee had given complete justification for the income returned, whereas, the estimate made of the fees received is devoid of any reason and hence is liable to be deleted.
9. The CIT(A), NFAC, in any event, ought to have considered the contentions of assessee on merits in the proper perspective and deleted the addition.
10. The CIT(A), NFAC, in any view of the matter, ought to have seen that the order of the assessing officer was barred by limitation and the addition made cannot be sustained and hence the income returned is to be accepted.
4. The first issue raised by the assessee on legal ground is that, the order of the CIT(A), NFAC is barred by limitation. The Ld.AR stated that the notice u/s.148 of the Income Tax Act, 1961 (hereinafter the ‘Act’) was issued by the AO on 19.02.2020. Hence, the due date for completing the assessment was 31.03.2021. However, the AO passed the order on 24.09.2021. The assessee’s contention was that the order should have been passed before 30.06.2021. Therefore, the order passed by the AO is barred by limitation. When this was confronted to Ld.DR, he stated that as :-4-: ITA. No:2456 & 2457/Chny/2024 per the Notification No.S.O. 966(E) [No.10/2021/F.No.370142/35 /2020-TPL], dated 27.02.2021, the assessee falls under the category (A)(b)(ii) and hence, the due date was extended up to 30.09.2021 and hence, the order passed by the AO is within the prescribed time.
4.1 We have gone through the notification and are of the view that the order of AO is within the prescribed due date. Hence, the legal ground raised by the assessee in both the assessment years stand dismissed.
In respect of next issue on merits, the Ld.AR stated that the order u/s.147 of the Act was passed by the AO without the participation of the assessee by adding the entire amount of professional fees as per the seized material found in search proceedings of the Apollo Main Hospitals, Chennai. However the order has been passed by the AO shown as passed u/s.143(3) r.w.s. 147 of the Act. On appeal with the Ld.CIT(A), considering the submissions of the assessee, the addition has been restricted to 50% and thereby confirming the addition of balance 50% stating that the order passed by the AO was cryptic and non-submission of complete details by the appellant before the AO. Since the order
:-5-: ITA. No:2456 & 2457/Chny/2024 passed by the AO is cryptic, the Ld.AR prayed for remitting the issue back to the AO for fresh assessment.
The Ld.DR fairly agreed for the same.
We have heard rival submissions and perused the material on record. Admittedly, the AO has passed an order in a cryptic manner and the AO has specifically mentioned that assessee has not responded by stating as below:- “Assessee did not reply to the any of the notices nor filed any Return of income in response to the notices sent. Hence the consultation fees collected / received from M/s. Apollo Hospitals during the Asst. Year 2013- 14 is added to his returned income as below:”
However, the order was passed u/s.143(3) r.w.s. 147 of the Act instead of passing the order u/s.144 as ex-parte order, since there was no participation by the assessee in the assessment proceedings. We note that the Ld.CIT(A) also without getting into the entire details of the submissions made by the assessee given relief on adhoc basis by deleting 50% of the additions made. Therefore, in the interest of natural justice, we are of the considered opinion that the assessee should be given one more opportunity and hence, we set aside the order of the Ld.CIT(A) and remit the issue back to the file of the AO for fresh adjudication. Needless to say that the :-6-: ITA. No:2456 & 2457/Chny/2024 assessee should be vigilant and provide the required details as and when called for.
Similar are the facts in assessment year 2014-15, hence taking a consistent view, we set aside the order of CIT(A) for the assessment year 2014-15 also and restore the matter back to the file of AO with similar directions.
In the result, the appeals filed by the assessee are partly- allowed for statistical purposes.