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Facts
The assessee company failed to file its income tax return for AY 2013-14. The Assessing Officer (AO) added an amount of Rs. 3,36,53,433/- to the assessee's total income after reopening the case under Section 148. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal.
Held
The Tribunal held that the AO's action of estimating income based on TDS documents without proper verification of expenses was arbitrary and against accounting principles. The addition was deleted, and the appeal was allowed. The credit for TDS was also directed to be verified and given.
Key Issues
Whether the addition made by the AO was justified without proper verification of expenses and adherence to accounting principles. Whether the CIT(A) erred in deleting the addition.
Sections Cited
148, 194C, 194(1)(b), 139, 145, 271B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: These are the appeals preferred by the revenue against the separate orders of Commissioner of Income Tax (Appeals), -NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 18.12.2023 for AY 2013-14 & 2014-15 respectively. Issues are common in both the appeals, hence taken up together for disposal by taking AY 2013-14 as a lead case.
& 2539/Kol/2024 Assessment Years: 2013-14 & 2014-15 M/s Pratik International Infratech Pvt. Ltd.
It appears from the report of the registry that the appeal has been filed after a delay of 285 days. At the time of hearing the counsel of the assessee explained the reason for delay in filing the appeal. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the submission made by the A.R. and the judicial pronouncement that a case should be decided on merit not on technical issue, the delay is hereby condoned.
Brief facts of the case of the assessee are that the assessee company for AY 2013-14 did not file return of income. The case of the assessee was reopened by issuing notice u/s 148 of the Act, in response to the notice, the assessee did not file return of income. As per information received it is seen that the assessee company M/s Pratik International Infratech Pvt. Ltd. has deposited cash to the tune to Rs. 1,00,000/- in its account and has received contract receipt u/s 194C of the Act amounting to Rs. 40,38,62,339/- and received rent u/s 194(1)(b) of the Act amounting to Rs. 1,68,05,576/- but did not file return of income. The assessee submitted reply in response to the notice and also submit response to the show cause notice with supporting evidence and documents but the AO added the entire amount of Rs. 3,36,53,433/- in the total income of the assessee.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed.
Being aggrieved and dissatisfied the revenue preferred an appeal before us.
The Ld. D.R challenges the impugned order on the following grounds:
The Ld. CIT(A), NFAC, erred in law in deleting the addition of Rs.3.36,53,433/ made by the AO, merely based on the audited financials only and without proper verification of expenses claimed by the assessee.
2. The Ld. CIT(A), NFAC, erred in law in ignoring the necessity of verification of the expenses claimed by assesseе with supporting evidence balls/vouchers/invoices/confirmation parties. such from as the relevant.
& 2539/Kol/2024 Assessment Years: 2013-14 & 2014-15 M/s Pratik International Infratech Pvt. Ltd. 3. The Ld. CIT(A), NFAC, erred in law in ignoring the fact that the assessee failed to show any valid reason for non-filing of return u/s 139 as well as return u/s 148 of the Act. 4. The Ld. CIT(A), NFAC, erred in law in ignoring the fact the assessee not claimed the of TDS credit of Rs. 84,13,362/- in a valid ITR. 5. The revenue craves to add, modify, delete any of aforesaid grounds of appeal
6. Contrary to that the Ld. AR supports the impugned order by submitting that the assessee had suffered heavy loss of Rs. 26.72 crores and also due to acute liquidity issue not only return had not been filed but also there had been occurred default in regard to TDS. The Ld. A.R further submits that vide communication presented to the AO, it had been conveyed that due to some technical glitches in the IT portal the electronic filing could not be achieved. The Ld. A.R further submits that the assessee filed manual copy of return, audited report , tax audit report, form 26AS, bank account details, ledger account of the expenses etc. The Ld. Counsel further submits that without rejection of books no estimation of profit would be lawful. He supported the order passed by the Ld. CIT(A).
7. Upon hearing the submission of the counsel of the respective parties, we have perused the order passed by the Ld. CIT(A) and find that the assessee did not file return of income for the Ay 2013-14 in normal course due to heavy loss and other liquidated problems income tax return have not been filed. It further appears to us that at present all operations of the companies are fully closed. It is pertinent to mention here that hard copy of income tax return had been filed on e-mail to the jurisdictional AO, paper return physically with JAO and online income tax return copy to the AO of NFAC, Delhi. In spite of that the AO has held that return had not been filed and passed an ex-parte order.
8. We have gone through the order passed by the Ld. CIT(A) and the relevant portion of the impugned order is reproduced herein below:
“7.2.3 According to the AO the appellant furnished reply to the show-cause notice but did not enclose the supporting documents. During the appellant proceedings, in his written submissions, the appellant submitted that the documents could not be submitted before the AO as his software was not compatible. The appellant further mentioned that such technical problem was intimated and discussed with the AO physically. The appellant also enclosed the audited financials. I have gone through the order of the AO and submissions of the appellant. I & 2539/Kol/2024 Assessment Years: 2013-14 & 2014-15 M/s Pratik International Infratech Pvt. Ltd. noticed that the audited financials was before the AO and he failed to take cognizance of the same. The appellant also furnished that return was not filed due to heavy losses during the year. I hold that the action of the AO by estimating the income of the appellant on the basis on TDS documents are not according to the accounting principles and is against the provisions of the law. Instead of calling all the vouchers and documents, the Ld. AO should have test checked the same before rejecting the books of the appellant. In his order, the Ld. AO even failed to invoke section 145 of the Act, 1961 to reject the books. Had been the AO having any doubt he could have referred the case for special audit, but the same was not done. The addition made by the AO is arbitrary and ad-hoc. The Ld. AO also initiated penalty u/s 271B of the Act, 1961 despite the fact that the audit report of the appellant is bearing date of 31.08.2013. The appellant produced all the documents in the appellant proceedings which show that he was very co- operative and furnished all the information which was possible in those circumstances. Keeping in view of this, the addition made by the AO is deleted and grounds of the appellant are allowed. 7.3 Ground of Appeal
No. 4 of the appellant pertains to non-granting of credit of TDS of Rs.84,13,362/- while computing the tax of the appellant. The AO is directed to verify the claim of the appellant and give credit accordingly. This ground of the appeal is allowed.
8. In the result, the appeal filed by the appellant is allowed.”
9. Going over the above discussion as well as extracts of the case, we do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed.
Issue involved in this appeal in for AY 2014-15 are similar to one as decided by us in AY 2013-14. Since we have decided the similar issue in for AY 2013-14 in favour of the revenue, therefore our findings/decisions in the above AY 2013-14 would, mutatis mutandis, apply to this appeal as well. Consequently, the both appeal of the revenue are here by dismissed.
In the result, both the appeals of the revenue are dismissed.
Order is pronounced in the open court on 2nd July, 2025