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Facts
The assessee, engaged in hire purchase financing, claimed a business loss of Rs. 2,27,35,989/- on account of bad debts for AY 2018-19. The Assessing Officer disallowed this claim due to non-submission of details, leading to an addition to income. The CIT(A) dismissed the appeal without deciding on merits, stating there was no material to interfere with the AO's order, despite condoning a delay in filing the appeal caused by the Director's health issues.
Held
The ITAT found the assessee's explanation for not submitting details before the AO reasonable and noted that the CIT(A) had not decided the matter on merits. Therefore, the ITAT set aside both the assessment order and the penalty order, restoring the matters to the Assessing Officer for de novo assessment and adjudication with proper opportunity to the assessee.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without adjudicating on merits, and if the disallowance of bad debts and related penalty by the AO was justified given the assessee's circumstances.
Sections Cited
143, 143(3A), 143(3B), 270A, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: SHRI VIMAL KUMAR & SHRI BRAJESH KUMAR SINGH
ORDER PER BRAJESH KUMAR SINGH, AM,
These two appeals by the assessee are directed against the two orders of National Faceless Appeal Centre, Delhi, dated 27.03.2024, arising out of assessment order u/s 143 r.w.s. 143(3A) & 143(3B) of the Act dated 01.03.2021 and penalty order u/s 270A of the Act dated 01.02.2022 both pertaining to Assessment Year 2018-19. Since, both appeals have common issues and therefore they were heard together and are disposed of by this common order.
ITA No.2647/Del/2024 (Quantum Appeal)
Grounds of appeal raised by the assessee in are as under:-
1. That having regard to the facts and circumstances of the case, Ld. CIT(A), NFAC, has erred in law and on facts in not quashing the impugned assessment order passed by Ld. AO and that too without assuming jurisdiction 2. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and facts in confirming the action of Ld.AO in making addition of Rs. 2,27,35,989/- on account of current year assessed income by disallowing written of bad debts on the ground that assessee has failed to produced details of debtors.
3. That having regard to the facts and circumstances of the case Ld.CIT(A) has erred in law and facts in confirming the action of Ld.AO that the double taxation of Income for Rs.62,30,241/- is without jurisdiction. The Ld.CIT(A) ought to have seen the draft assessment order passed by the Ld. AO where no such addition was made.
4. That having regard to the facts and circumstances of the case Ld.CIT(A) has erred in law and facts in confirming the action of Ld. AO that not considered the brought forward losses of past years in computation of current assessment year income is without jurisdiction. The Ld.CIT(A) ought to have seen the draft assessment order passed by the Ld. AO where no such addition was made.”
Brief facts of the case:- The assessee is a company and is engaged in hire purchase financing business and filed its return of income for the AY 2018-19 on 30.09.2018 declaring total income of Rs.NIL. The notice u/s 143(2) of the Act was issued on 28.09.2019, which was served through e-mail of the assessee at registered e-mail id of the assessee.
Further, notice u/s 142(1) were issued on 06.12.2019 and 10.02.2021.
In response, the assessee furnished copy of audited financial, ITR acknowledgment and computation of income on 09.01.2020. This case was selected for limited scrutiny to examine the business loss claimed by the assessee and the Assessing Officer noted that the assessee company was engaged in the business of financing as per RBI guidelines. The Assessing Officer noted that the assessee had claimed a sum of Rs.2,27,35,989/- as claimed of loss on account of bad debts. The Assessing Officer asked the assessee to furnish the details in this regard, which was not submitted by the assessee and the Assessing Officer disallowed the said claim of loss on account of bad debts of Rs.2,27,35,989/- and added to the total income of the assessee.
Aggrieved with the said order, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) noted that there was a delay in filing the appeal.
It was claimed before the ld. CIT(A) that the authorized person and Director of the assessee company got affected from Corona Virus and suffered brain stroke and therefore the appeal could not be filed in time.
However, considering the said explanation, the ld. CIT(A) condoned the delay in filing of the appeal. Further, the ld. CIT(A) in very cryptic order, dismissed the appeal without adjudicating the merits of the case.
Relevant finding of the ld. CIT(A) in concluding part in para-5 is reproduced as below:-
The Grounds of appeal
, the facts and circumstances of the case, the submissions of the assessee and the case laws adduced have been carefully considered. There is no material on record to warrant interference with the order of the AO. Grounds of appeal are accordingly dismissed.”
5. Against the above order, the assessee is in appeal before us.
During the hearing, the ld. Counsel for the assessee submitted that due to health condition of the Director, the necessary details could not be submitted before the Assessing Officer and requested that the matter may be set-aside to the file of the Assessing Officer. In this regard, he filed a written submission, which is reproduced as below:-
The ld. Sr. DR supported the orders of the authorities below.
We have heard both the parties and perused the material available on record. The explanation of the assessee for not furnishing the necessary details before the Assessing Officer is justified and reasonable.
Further, the Ld. CIT(A) has also not decided the matter on merits. In view of the above material facts and in the interest of justice, we set-aside the order of the Ld. CIT(A) and assessment order and restore the matter to the file of the Assessing Officer for de novo passing of the assessment order as per law. Needless to the say the Assessing Officer will give proper opportunity to the assessee and pass the order in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Since, we have already adjudicated the quantum appeal, in for Assessment Year 2018-19 and restored the issue to the file of the AO for de-novo assessment, therefore, the penalty order of the AO and the order of the ld. CIT(A) confirming the penalty order is also set-aside and restored to the file of the AO. The AO is directed to adjudicate the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee.
Finally, both appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 24th March, 2025.