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Facts
The assessee, engaged in transportation and bottle cleaning, filed an ITR declaring business income and house property loss. The return was selected for limited scrutiny due to large house property loss and high liabilities. The AO issued notices under Section 143(2) and 142(1), questioned details of unsecured loans, and found issues with responses to Section 133(6) notices. Consequently, the AO added unsecured loans under Section 68 and disallowed house property loss.
Held
The Tribunal found that the CIT(A) erred by dismissing the appeal ex-parte without deciding on its merits, despite the assessee having filed written submissions. It also noted that the AO had not provided proper opportunity to the assessee during the assessment proceedings. The Tribunal set aside the CIT(A)'s order and restored the assessment back to the file of the AO with a direction to conduct a de novo assessment after giving the assessee full opportunity to present all relevant documents.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without deciding on its merits, and whether the AO provided proper opportunity to the assessee during assessment proceedings.
Sections Cited
143(2), 142(1), 133(6), 68, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
Shri Pon Manibaskaran, Vs. The Income Tax Officer, Plot No.5, Door No.S1, CHE-W-(105)(1), Solai Krishnan Street, Janaki Nagar, Income Tax Department, Valsarvakkam, Chennai. Chennai – 600 087. [PAN: AGRPB 3969N] (अपीलाथ�/Appellant) (+,थ�/Respondent) अपीलाथ� की ओर से/ Appellant by : None +,थ� की ओर से /Respondent by : Shri Keerthi Narayanan, JCIT सुनवाईकीतारीख/Date of Hearing : 23.12.2024 घोषणाकीतारीख /Date of Pronouncement : 05.02.2025 आदेश / O R D E R PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee, against the order of the Ld. Commissioner of Income Tax (Appeals) / NFAC (hereinafter in short “CIT(A)") dated 30.07.2024 for assessment year 2020-21 (hereinafter in short “AY").
On perusal of the grounds of appeal, assessee is aggrieved by the ex-parte order passed by the Ld.CIT(A)/NFAC.
(AY 2020-21) Pon Manibaskaran 3. Brief facts are that the assessee is engaged in transportation business by the name of Sree Gokul Transport and also into the business of bottle cleaning by the name of Star Bottles. The assessee has filed return of income on 12.01.2021 showing total income of Rs.49,07,540/- by declaring business income and claimed loss from house property. The assessee’s return of income was selected for limited scrutiny and the reason for selection was (1) large value of loss claimed under the head ‘income from house property’ and (2) high liabilities as compared to low income / receipts. Accordingly, the AO issued statutory notices to the assessee u/s.143(2) and 142(1) of the Income Tax Act, 1961 [herein after “Act”] and the assessee is noted to have responded explaining the query raised by the AO. However, the AO was of the opinion that the assessee didn’t file certain details of unsecured loan of Rs.2,69,72,354/- and also that some notices issued u/s.133(6) of the Act to the parties (from whom unsecured loans were received by the assessee) were not responded to or some parties didn’t furnish concrete documents in support of their claims.
Being not satisfied, the AO added the unsecured loan to the tune of Rs.2,44,91,454/- u/s.68 of the Act and also disallowed the house property loss amounting to Rs.2,00,000/-.
(AY 2020-21) Pon Manibaskaran 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), before whom assessee brought to his notice that he was not given proper opportunity by the AO during the assessment proceedings. In this regard, the assessee also brought to his notice certain incidents like the AO issued inter-alia, a show-cause notice on 24.03.2022 directing response from the assessee on or before 25.03.2022 [i.e., one day time to respond to the proposed addition of Rs.2,85,02,226/-]. Likewise, the assessee brought to the notice of Ld.CIT(A) that the AO after a gap of five months had issued notice to the assessee without asking any specific query and instead asked him to submit the additional details if any, which according to the assessee had been already submitted. He also brought to the notice of the Ld.CIT(A) that the AO thereafter sent notices u/s.133(6) of the Act to all the lenders on 07.09.2022 and gave them only five days which included the weekend to respond with various documents including bank statements. And according to assessee, his information was that almost all the lenders had submitted their responses confirming giving loan to assessee and since, only four days was available [including weekend] to submit the bank statements, ITR and capital accounts of the lender, some of them couldn’t produce the same. Thus, according to the assessee, the AO during the assessment proceedings didn’t gave proper opportunity to the assessee for filing the relevant documents before the AO. However, it is noted that the (AY 2020-21) Pon Manibaskaran Ld.CIT(A) finding that the assessee didn’t complied to his four notices, passed ex-parte order qua assessee, dismissing the appeal of the assessee. We do not countenance such an action of the Ld.CIT(A) because the assessee had filed before him the written submission explaining the grounds of appeal. Then it was incumbent upon the Ld..CIT(A) to decide the grounds of appeal as mandated under sub-section 6 of section 250 of the Act. And while adjudicating the grounds, if the Ld.CIT(A) was of the opinion that certain clarification / documents need to be filed for deciding the grounds of appeal, then he has inherent power to do so. In any case, we find that the Ld.CIT(A) has not decided the ground of appeal raised by the assessee on merits as contemplated under sub- section 6 of section 250 of the Act. Therefore, we set aside the impugned order of the Ld.CIT(A).
5. Having done so, we also take judicial notice of the fact that the AO has not given any proper opportunity to the assessee while framing the assessment order. In such a situation, we are of the view that as per the Scheme of the Act, the AO is the primary authority who is empowered by the Act, to examine the facts as well as law before determining the correct taxable income of the tax payer. Relying on the decision of Hon’ble Supreme Court in the case of Tin Box Ltd., vs. CIT reported in 249 ITR 216 (AY 2020-21) Pon Manibaskaran (SC), we restore the assessment back to the file of the AO with a direction to de novo assess the income of the assessee. The assessee is directed to file all relevant documents / detailed written submissions as well as file proof called for by the AO during the first round; and it is made clear that the AO is at liberty to call for any additional documents and frame fresh assessment after hearing the assessee and in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 05th February, 2025 at Chennai.