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Facts
The assessee, Pawan Infrahomes P. Ltd., engaged in construction, filed its ITR for AY 2014-15. The AO made three disallowances/additions: 15% of site development expenses, unexplained liabilities under Section 68 for booking cancellations, and delayed deposit of employees' PF contributions under Section 36(1)(va). The CIT(A) upheld these additions ex-parte due to the assessee's non-appearance despite receiving notices.
Held
The Income Tax Appellate Tribunal dismissed the assessee's appeal. The Tribunal noted the assessee's repeated non-appearance at the ITAT level, mirroring the CIT(A)'s ex-parte proceedings, and found no reason to interfere with the well-reasoned order of the CIT(A), which was based on the assessee's failure to substantiate its claims and reliance on judicial precedents.
Key Issues
1. Validity of ex-parte dismissal by CIT(A) and ITAT due to non-appearance. 2. Ad-hoc disallowance of site and site development expenses. 3. Addition under Section 68 for unexplained liabilities from booking cancellations. 4. Disallowance under Section 36(1)(va) for delayed deposit of employees' Provident Fund contributions.
Sections Cited
143(2), 142(1), 143(3), 68, 36(1)(va), 43B, 271(1)(c), 274, 234A, 234B, 234C
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI MAKARAND V.MAHADEOKAR
आदेश/O R D E R आदेश आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 21/03/2025, for the Assessment Year 2014-15, arising out of the assessment order passed by the Assistant Commissioner of Income Tax, Circle-2(1)(2), Vadodara [hereinafter referred to as “Assessing Officer or AO”], under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], dated 28/11/2016.
2.1 The brief background of the case is that the assessee, a company engaged in the business of construction and development of residential projects, filed its return of income for A.Y. 2014-15 on 29/11/2014 declaring total income of Rs. 1,98,56,238/-. The return was processed and subsequently selected for scrutiny. The Assessing Officer issued statutory notices u/s 143(2) and 142(1), in response to which the assessee’s authorised representatives appeared and furnished certain details from time to time. After considering the submissions, the Assessing Officer completed the assessment u/s 143(3) of the Act by making the following additions and disallowances:
(i) A disallowance of Rs. 5,24,054/- being 15% of the site and site development expenses claimed on the ground that such expenses were not fully verifiable and possibility of non- business element could not be ruled out.
(ii) An addition of Rs. 63,13,741/- u/s 68 of the Act on account of unexplained liabilities shown under the head “cancellation of booking”. The Assessing Officer, after calling for details, held that the assessee had failed to satisfactorily establish the identity, genuineness and creditworthiness of the parties from whom the booking advances were received and subsequently shown as payable towards cancellation. It was further noted that the confirmations and supporting documents produced were not reliable and the evidences such as cancellation letters were either not supported by proper corroboration or were found to be non-genuine. Consequently, the entire sum of Rs. 63,13,741/- was brought to tax as unexplained cash credits.
(iii) A disallowance of Rs. 1,07,723/- u/s 36(1)(va) of the Act being employees’ contribution to Provident Fund which had been deposited after the due date prescribed under the relevant law. The Assessing Officer, relying upon the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation, held that employees’ contributions 2.2 After making these additions and disallowances, the Assessing Officer computed the total income of the assessee at Rs.2,68,01,760/- and initiated penalty proceedings u/s 271(1)(c) r.w.s. 274 of the Act for furnishing of inaccurate particulars of income.
2.3 Aggrieved by the said assessment order, the assessee carried the matter in appeal before the Learned CIT(A). The Learned CIT(A), after issuing several notices for hearing through the ITBA portal on various dates between 2018 and 2025, noted that the assessee did not file any submissions or replies to pursue the appeal. The appellate authority, therefore, proceeded ex parte and adjudicated the matter on the basis of the material available on record.
2.4 On the merits of the additions, the Learned CIT(A), proceeding on the basis of the findings recorded by the Assessing Officer, upheld the disallowance of Rs.5,24,054/- out of site and site development expenses on the ground that the assessee had failed to produce supporting bills and vouchers to establish the business purpose of such expenditure. Similarly, the addition of Rs.63,13,741/- u/s 68 was confirmed by observing that despite repeated opportunities, the assessee had not filed confirmations or substantive evidence to establish the genuineness of the liabilities claimed towards cancellation of booking. The disallowance of Rs.1,07,723/- u/s. 36(1)(va) was also sustained by relying on the judgment of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. vs. CIT, wherein it was held that employees’ contributions deposited after the statutory due date are not allowable deductions. Grounds relating to charging of interest u/ss. 234A, 234B and 234C were dismissed as consequential 4 in nature, and the ground against initiation of penalty proceedings u/s 271(1)(c) was held to be premature. The Learned CIT(A), therefore, confirmed the assessment in toto and dismissed the appeal.
2.5 Being further aggrieved, the assessee has come in appeal before us and has raised the following grounds: 1. The Learned Commissioner of Income Tax (Appeals) erred in dismissing the appeal on account of non attendance despite the fact that the notice was not received by the appellant company.
The Learned Commissioner of Income Tax (Appeals) erred in confirming the adhoc disallowance of Rs.5,24,054/- out of site and site development expenses..
3. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.63,13,741/- as unexplained liabilities in the books of accounts on account of cancellation of booking.
4. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.1,07,723/- u/s 36(1)(va) of the Act.
The appellant company craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.
When the appeal was called for hearing on the date fixed, none appeared on behalf of the assessee. Earlier also, on 10/07/2025 and 14/08/2025, the matter was listed for hearing but there was no appearance from the side of the assessee, despite notices being issued through the Departmental Representative as well as by way of RPAD.
3.1 In these circumstances, we proceeded to dispose of the appeal ex parte qua the assessee and on merits, with the assistance of the Learned Departmental Representative. The Learned DR placed reliance on the orders of the Assessing Officer as well as the Learned CIT(A) and supported the findings recorded therein.
3.2 We have carefully considered the material on record. It is observed that the Assessing Officer had made disallowances and additions on account of (i) adhoc disallowance of Rs. 5,24,054/- being 15% of site and site development expenses, (ii) addition of Rs.63,13,741/- u/s 68 on account of unexplained liabilities towards cancellation of booking, and (iii) disallowance of Rs.1,07,723/- u/s 36(1)(va) in respect of delayed deposit of employees’ contribution to Provident Fund. The Assessing Officer, while making the said additions, had referred to the relevant provisions of the Act and judicial precedents and recorded categorical findings that the assessee failed to substantiate its claims by furnishing cogent evidences.
3.3 The Learned CIT(A), after issuing repeated notices to the assessee, proceeded ex parte in view of non-compliance and non- prosecution of the appeal by the assessee. The CIT(A) upheld the additions made by the Assessing Officer by placing reliance on binding judicial precedents, including the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT [2022] 448 ITR 518 (SC) in relation to delayed employees’ contribution under section 36(1)(va), and the consistent legal position on additions under section 68 when the assessee fails to establish identity, genuineness and creditworthiness of creditors.
3.4 Before us also, the assessee has failed to appear and prosecute its appeal, despite repeated opportunities. In the absence of any representation or material to controvert the findings of the lower authorities, we find no reason to interfere with the well-reasoned order
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Court on 9th October, 2025 at Ahmedabad.