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Facts
The AO had information that the assessee was a beneficiary of accommodation entries from M/s Inter Globe Finance Ltd. amounting to Rs. 50,00,000/-. The AO added Rs. 3,50,00,000/- to the assessee's income on account of unexplained credit entries.
Held
The Tribunal held that the assessee failed to respond to notices and participate in appellate proceedings, leading to an ex-parte order by the Ld. CIT(A). However, considering the affidavit filed by the assessee, the interest of justice demands an opportunity for the assessee to present their case.
Key Issues
Whether the assessee should be granted an opportunity to present their case before the Ld. CIT(A) despite previous non-compliance, and if the order passed by the Ld. CIT(A) on merit or on procedural grounds.
Sections Cited
142(1), 143(3), 147, 144B, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeals) - NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 22.01.2025 for AY 2018-19.
Brief facts of the case of the assessee is that the AO had information that the assessee was beneficiary of accommodation entry from M/s Inter Globe Finance Ltd. amounting to Rs. 50,00,000/- pertaining to assessment year 2018-19. The assessee was Assessment Year: 2018-19 M/s Vedika Credit Capital ltd. specifically asked vide notice u/s 142(1) dated 16.11.2022, to submit computation of income, brief note about the business activities, bank statement, copy of assessment order u/s 143(3) / 147 / 144 of the Act for the last 3 preceding years, copy of financial statements, party sales and purchase, copy of GST return, interest income received during the year, details of all receipts, details of TDS claim, details of cash deposited along with source thereof, details of all transactions entered with M/s Interglobe Finance Ltd. along with confirmed ledger. From the copy of ledger provided by the assessee, it was noticed by AO that during the year under consideration repayment of loans/interest to M/s Intraglobe Finance Ltd. was Rs. 30.29,882/- and total interest due to be paid to Intraglobe Finance Ltd. was of Rs. 50,19,661/-. AO further observed from the assessee’s ledger in the books of M/s Interglobe Finance ltd. that the assessee was in receipt of credit entries totalling to Rs. 3,50,00,000/-. The creditworthiness and genuineness of the above transactions remained unexplained, hence the same was proposed to be added to taxable income u/s 68 of the Act. Since the assessee failed to furnish complete details/ information as required vide statutory notices issued by the AO n various dates during the assessment proceedings the following additions were made by the AO in the order passed u/s 147 r.w.s 144B based on the information available on record.
Rs. 3,50,00,000/- on account of unexplained credit entries u/s 68 of the Act.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed as there was non- compliance on behalf of the assessee to establish the grounds of appeal raised..
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
The ld. A.R instead of challenging the impugned order on merit has only prayed by filing an Affidavit that the assessee has to give an opportunity to place its case before the Ld. CIT(A) as the order passed by the Ld. CIT(A) not on merit rather the Ld. CIT(A) confirmed the order when the assessee failed to submit evidences in support of grounds raised.
Contrary to that the Ld. D.R supports the impugned order.
Assessment Year: 2018-19 M/s Vedika Credit Capital ltd.
Upon hearing the submission of the counsel of the respective parties, we have perused the order of the Ld. CIT(A) and find that the assessee has not responded to any of the above notices despite proper service of notice of hearing. The Ld. CIT(A) has held that the consistent failure to respond during the appellate proceedings reflects lack of diligence and disregard in the appellate process. The Ld. CIT(A) has further held that this non-compliance reinforces the AO’s finding as the assessee did not utilize the appellate forum to counter or refute the observation made in the assessment order . There is no denying to this fact that the assessee did not file any evidence nor participate in the appellate proceeding and the order passed by the Ld. CIT(A) in absence of submission and the documents of the assessee. The Ld. AR has filed following Affidavit which is as under:
Keeping in view, the order passed by the Ld. CIT(A) and considering the affidavit filed by the assessee, interest of justice demands to afford an opportunity to the assessee Assessment Year: 2018-19 M/s Vedika Credit Capital ltd. to place its case before the Ld. CIT(A), as a result of which the order passed by the Ld. CIT(A) is hereby set aside and appeal of the assessee is remitted back to the file of Ld. CIT(A) for fresh adjudication after hearing the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 22nd July, 2025