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Facts
The assessee's income tax return for AY 2019-20 was subjected to scrutiny after a survey under Section 133A revealed excess stock, leading to an addition of Rs. 16,29,112/- for undervaluation of stock and disallowance of bad debts of Rs. 4,36,101/-. The CIT(A) dismissed the assessee's subsequent appeal ex-parte due to non-compliance during the appellate proceedings.
Held
The Tribunal found that the assessee's non-compliance before the CIT(A) was due to the former counsel's failure to appear or inform the assessee of notices, which was deemed a bona fide reason. Therefore, the Tribunal restored the case to the CIT(A) for fresh adjudication on merits, granting the assessee three additional opportunities under Section 250(6).
Key Issues
Whether the CIT(A) erred in passing an ex-parte order despite the assessee's genuine reasons for non-compliance; and the merits of additions related to undervaluation of stock and disallowance of bad debts.
Sections Cited
250, 143(2), 133A, 36(1)(vii), 36(2), 250(6)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI AMARJIT SINGH
O R D E R
PER AMARJIT SINGH, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order u/s 250 of the I.T. Act, 1961 passed by the ld. CIT(A) – 51, Mumbai dated 21.11.2024.
Ground of appeal filed by the assessee are as under:
“1. On facts and circumstances of the case and in law, ld. CIT(A) erred in passing the appeal order ex-parte without considering the adjournment application, bonafide reasons and compelling circumstances that had precluded the appellant to participate in appeal proceeding.
2. On facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the addition of allege under valuation of stock found during survey of Rs. 16,29,112/-.
On facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the disallowance of bad debts u/s 36(1)(vii) r.w.s. 36(2) of Rs. 4,36,101/-”
Nitin Rajendrakumar Daga A.Y. 2019-20 3. Fact in brief is that return of income declaring an income of Rs. 4,72,59,880/- was filed on 30.10.2019. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 28.09.2020. In the case of the assessee survey action u/s 133A of the Act was carried out on 14.02.2019 at the business premises of the assessee at M/s. Mahek Gold, 208-211, Jewel World, Zaveri Bazar, Mumbai-400002. During the course of survey excess stock of 13689.800 grams of gold jewellery was found which was valued by the approved valuer at Rs. 4,17,62,104/-. During the course of survey, the assessee had accepted the discrepancy and disclosed additional income of Rs. 4,17,62,104/-. However, the assessee had offered a sum of Rs. 4,01,32,992/- as per profit and loss account filed. Therefore, the difference of Rs. 16,29,112/- (Rs. 4,17,62,104/- minus Rs. 4,01,32,992/-) was added back to the total income of the assessee. The assessing officer has also disallowed the claim of bad debts of Rs. 4,36,101/- and added to the total income of the assessee.
The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee as the assessee has not made any compliance during the course of appellate proceeding before the First Appellate Authority. During the course of appellate proceedings before us, the ld. Counsel submitted that the ld. CIT(A) has not considered the adjournment application filed by the assessee. The ld. Counsel also filed affidavit signed by the assessee stating that his earlier authorized counsel has neither represented before the First Appellate Authority nor informed the assessee of receiving notices of hearing as notices were communicated on the e- mail of that counsel. The newly appointed counsel of the assessee
Heard both the sides and perused the material on record. Without reiterating the fact as discussed above the assessee could not make compliance before the ld. CIT(A) as his authorized counsel has not made compliance before the First Appellate Authority as discussed. It is also evident from the Form No. 35 that assessee has provided e-mail id of his earlier counsel Mr. Amrit Dhakkad as jainrinadhakad@gmail.com who failed to make compliance before the ld. CIT(A) as discussed supra in this order. Therefore, the assessee has appointed another counsel Mr. Prakash Jhunjhunwala and his new e-mail id info@prakashjhunjhunwala.com incorporated in Form No. 36 filed by the assessee. It is evident from the aforesaid facts and circumstances as discussed that there is bona fide reason due to which the necessary compliance could not be made before the First Appellate Authority, therefore, in order to decide the case of the assessee on merit, we restore the case to the file of the ld. CIT(A) for deciding afresh on merit as contemplated u/s 250(6) of the Act after providing 3 more opportunities to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 07.01.2025.