ANKIT METAL & POWER LTD.,KOLKATA vs. ACIT, CEN. CIR. 3(2), KOLKATA

This appeal by the assessee is directed against the order dated 09.01.2024 passed by the CIT(A)-21, Kolkata [in short CIT(A)] under section 250 of the Income-tax Act, 1961.

Brief facts of the case are that the assessee was subjected to reassessment proceedings under section 147 of the Income-tax Act, 1961 ("the Act") pursuant to information gathered during search and seizure operations conducted under section 132 of the Act in the case of one Sanjeev Kejriwal and his group entities. During the course of such proceedings, it was revealed that Mr. Kejriwal was engaged in providing accommodation entries through various concerns including: M/s Rajputana General Commercial Corporation Pvt. Ltd., M/s Arvind Trading Company, and M/s Shri Krishna Trading Company. In his sworn statement, Mr. Kejriwal admitted that these entities were non- Ankit Metal & Power Ltd genuine concerns under his control and were engaged solely in issuing bogus entries for commission ranging from 0.25% to 0.5%. The assessing authority examined the bank statements and other records of these concerns and concluded that no real business was being carried out by them. Based on the financial analysis, the AO observed that during the Financial Year 2014-15 (relevant to A.Y. 2015-16), the assessee, M/s Ankit Metal & Power Ltd., had taken accommodation entries to the extent of Rs.14,78,903 from the above-mentioned group companies. Further, based on suspicious bogus billing transactions involving other entities like M/s Rani Sati Metal Industries, M/S Rani Sati Industries Ltd., and M/S TIF Casting Ltd. amounting to Rs.1,10,00,000/- notice under section 148 was issued to the assessee. Subsequently, notices under sections 143(2) and 142(1) were issued, seeking explanation and supporting evidence regarding the source and nature of the alleged credits. The assessee submitted certain replies but raised preliminary objections against reopening under section 147 without providing substantive documentary evidence to support its contentions. The Assessing Officer, not being satisfied with the explanation, treated Rs.1,24,78,903 (Rs.14,78,903 + Rs.1,10,00,000) as unexplained cash credit under section 68 and passed the assessment order under section 143(3) read with section 147 of the Act, determining the total income at Rs.1,60,11,87,083.

Aggrieved by the above, the assessee filed an appeal before the ld. CIT(A). However, despite notices issued on seven consecutive occasions, the assessee failed to represent the case. Consequently, the CIT(A) dismissed the appeal ex parte, confirming the order of the Assessing Officer.

On the other hand, the learned DR submitted that since the assessee had consistently failed to comply with notices before the ld. CIT(A) and has also remained unrepresented before the Tribunal, the appeal deserves to be dismissed.

We have heard the learned DR and carefully gone through the records. It is evident that the ld. CIT(A) passed an ex parte order due to the assessee's non-appearance. However, considering the large quantum of addition and the principle of natural justice, we are of the view that the assessee deserves one final opportunity to substantiate its case before the ld. CIT(A). In terms of the above the impugned order of the ld. CIT(A) is hereby set aside, and the matter is restored to the file of the ld. CIT(A) with a direction to decide the appeal afresh after giving adequate opportunity to the assessee to present its case. The assessee is also directed to ensure compliance with the notices issued by the CIT(A) and cooperate with the proceedings without fail. We also observe that there is a delay of 37 days in filing the present appeal before the Tribunal. The assessee has filed a condonation petition, which we have considered. In the interest of justice, the delay of 37 days in filing the appeal is condoned.