INDIA CONSTRUCTION,DIAMOND HARBOUR vs. ITO, WARD - 25(1), KOLKATA

3. Brief facts of the case are that the assessee is a partnership firm and had filed the return of income showing total income of ₹53,17,130/- and the case was selected for limited scrutiny on the ground of’ high I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. ratio of refund to TDS and low net profit shown by construction contractors and claim of large refund. It was submitted before the Ld. AO that the assessee was in the business of civil contract and labour supply contract and it provided labours and executed civil contracts for various concerns, M/s Patton International Ltd. (‘PIL’), being one of them. The Ld. AO issued notice under section 133(6) to PIL and on verification of the ledger account, noted certain discrepancy on account of undisclosed works contract which was worked out at ₹4,27,15,040/- when compared with the books of account of the assessee. The assessee contended that all payments were received by cheque, but PIL had shown false bills and payments which resulted in some difference. However, the Ld. AO applied the disclosed net profit rate of 2.78% to the undisclosed turnover worked out and the undeclared profit of ₹11,88,673/- was added to the income of the assessee. Further, the details of sundry debtors were also examined and there was a variation of ₹32,97,194/- in the amount to be received from PIL. The assessee’s explanation regarding the debtor showing some false entries/bills and payments was not accepted by the Ld. AO and the sum of ₹32,97,194/- was also added to the income of the assessee and the total income was assessed at ₹98,02,997/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who, vide the impugned order dismissed the appeal on account of non-prosecution as the assessee failed to comply with the notices issued for hearing of the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

4. We have considered the submissions made in the statement of facts, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. DR submitted that despite being granted I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. opportunities, proper compliance was not made before either the Ld. AO or even before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal on account of non-prosecution as despite issuing several notices, neither any written submission was filed not the assessee appeared keen to pursue the appeal and no material/argument had been brought on record by the appellant against the order of the AO and in support of the grounds of appeal taken. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

5. We have heard the rival submissions, gone through the facts of the case and perused the record and the submissions made by the Ld. DR. A perusal of the appellate order shows that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”

6. Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. The Ld. CIT(A) has neither adjudicated various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. order is a self-speaking order which requires no interference. The relevant extract from the order is as under: 6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.

7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.