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Facts
The assessee filed its return of income for AY 2017-18 declaring NIL income. The case was selected for scrutiny under CASS. The assessment was completed under Section 143(3) at a total income of Rs. 96,32,128/-. The assessee's appeal to the CIT(A) was dismissed.
Held
The Tribunal condoned the delay in filing the appeal due to counsel's non-communication. The Tribunal noted the assessee's failure to comply with lower authorities despite multiple opportunities and imposed a cost of Rs. 5,000/- on the assessee. The appeal was allowed for statistical purposes, remanding the matter to the Assessing Officer for fresh adjudication after providing an opportunity to the assessee.
Key Issues
Whether the assessee's non-compliance before lower authorities warrants a penalty, and if the matter should be remanded for fresh consideration with an opportunity to the assessee.
Sections Cited
143(3), 56, VI-A, 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the Assessee against order of National Faceless Appeal Centre (NFAC) [hereinafter referred as ‘CIT(A)’] dated 10.02.2024 for the Assessment Year (A.Y.) 2017-18 in the proceedings under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Assessment Year: 2017-18 Shri Sardar Patel Co-operative Credit Society Ltd vs ITO Page 2 of 5 2. There was delay of 248 days in filing of this appeal. The assessee has filed an affidavit explaining the reason for delay. Shri Arvindbhai Somabhai Patel, Chairman of the Co-operative Society has explained that the delay was due to omission and non-communication on the part of his counsel. It is explained that the Society had assigned the matter to one Shri Kamal Modi, Chartered Accountant, Vadodara for filing the appeal before the Ld. CIT(A) and the phone number and the e-mail id. of Shri Kamal Modi was mentioned in the Form No.35 for communication. The Society was under the impression that the counsel will take necessary steps in the Income-tax matter of the Society. However, the said counsel had neither complied to the notices of the ld. CIT(A) nor forwarded the communication received by him to the Society. The order of the NFAC was passed ex-parte which was also not communicated to the assessee. Thereafter, the assessee has assigned the matter to another Chartered Accountant and filed the present appeal and in the process there was delay of 248 days. It has been submitted that the delay was not intentional. Considering the explanation of the assessee, the delay in filing the appeal is condoned.
The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2017-18 on 14.03.2018 declaring income of Rs. Nil. The case was selected for scrutiny under CASS to examine low income in comparison to high advance/investment and large deduction under Chapter VI-A of the Act. In the course of assessment, no compliance was made before the Assessing Officer. The assessment was completed under Section 143(3) of the Act on 04.11.2019 at a total income of Rs.96,32,128/-.
Assessment Year: 2017-18 Shri Sardar Patel Co-operative Credit Society Ltd vs ITO Page 3 of 5 4. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now, the assessee is in second appeal before us. The following grounds have been taken by the assessee: -
1. The Ld. CIT (Appeals), National Faceless Appeal Centre (NFAC) erred in law and in facts in passing the order without giving proper opportunity of being heard and thus, the order so passed is prayed toa be set aside.
The Ld. CIT(A), NFAC has erred in law and in facts in confirming the action of the Ld. AO, in making an addition of Rs 96,32,128/- being interest income earned by the appellant by treating the same as income earned from other sources u/s. 56 of the IT. Act. The impugned addition of Rs.96,32,128/- being bad in law and in facts is prayed to be deleted.
3. Without prejudice to ground no.2, the Ld. CIT(A), NFAC ought to have directed the Ld. A.O. to allow expenses incurred against the interest income earned during the year under consideration. Thus, the impugned addition being bad in law and in facts is prayed to be deleted.
Appellant craves liberty to add, alter, amend substitute or withdraw any of the ground(s) of appeal hereinabove contained.”
Shri Hemant Suthar, Ld. AR of the assessee submitted that no compliance could be made by the assessee either before the Assessing Officer or before the Ld. CIT(A). It was submitted that the Assessing Officer had made addition of Rs.96,32,128/- on account of deduction claimed under Chapter VI-A of the Act and expenses under various heads. The Ld. AR explained that the deduction claimed under Chapter VI-A of the Act was on account of deduction under Section 80P of the Act which was allowed by the Revenue in the past years as well. The Ld. AR, therefore, requested that the assessee may be allowed another Assessment Year: 2017-18 Shri Sardar Patel Co-operative Credit Society Ltd vs ITO Page 4 of 5 opportunity to produce the required evidences and details by setting aside the matter to the file of the Assessing Officer.
Per contra, Shri B.P. Srivastava, the Ld. Sr. DR had no objection if the matter was set aside to the file of the Assessing Officer.
We have considered the request of the assessee. It is found that the Assessing Officer had allowed as many as seven opportunities to the assessee but no compliance was made on any of the occasion. Before the CIT(A) also, no compliance was made by the assessee in spite of four opportunities provided by him. The assessee cannot escape by merely blaming the counsel for non-compliance. When there was no compliance before the Assessing Officer, the assessee should have been vigilant to ensure that compliance is made in the course of appeal proceeding. In the absence of any reasonable explanation for non-compliance before the lower authorities, we deem it appropriate to impose a cost of Rs.5,000/- (Rupees Five Thousand only) on the assessee which should be paid to the Prime Minister’s National Relief Fund within a period of 15 days of receipt of this order. Subject to the payment of cost, the Assessing Officer is directed to allow another opportunity to the assessee to explain the deduction claimed under Chapter-VIA of the Act as well as other issues on which the case was selected for scrutiny. It is found that in the assessment order of the Assessing Officer has not given any break- up of the disallowance of Rs.96,32,128/-, as to how much pertained to disallowance of deduction under Chapter VI-A of the Act and what was the quantum of various expenses disallowed. The Assessing Officer is also directed to allow proper opportunity of being heard to the assessee in the course of set aside proceedings. At the same time, the assessee is also directed to comply to the notices of the Assessing Officer and Assessment Year: 2017-18 Shri Sardar Patel Co-operative Credit Society Ltd vs ITO Page 5 of 5 produce the required details and clarifications, failing which the Assessing Officer will be free to complete the assessment on the basis of materials available on record.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on this 6th August, 2025.