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Facts
The assessee company engaged in manufacturing aluminum sections declared a loss for AY 2016-17. During assessment, unsecured loans aggregating Rs. 1,33,70,000/- from three individuals were treated as unexplained by the Assessing Officer.
Held
The CIT(A) dismissed the appeal due to the assessee's non-appearance despite multiple notices. However, the Tribunal, considering the possibility of substantial evidence and the interest of justice, restored the matter to the AO for de-novo consideration but directed the assessee to pay a cost of Rs. 5,000/-.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution, and whether the additions made under Section 68 for unexplained loans were justified.
Sections Cited
147, 143(3), 133(6), 142(1), 68, 271(1)(C)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2016-17) Active Alluminium Pvt. Ltd., Vs. Assistant Commissioner of B-84, Second Floor, Income Tax, Austvinayak Complex, Dariyapur, Circle-1(1)(1), Gujarat-380004 Ahmedabad [PAN No.AANCA3600L] (Appellant) .. (Respondent) Appellant by : Shri Divyang Shah, A.R. Respondent by: Shri Kalpesh Rupavatia, Sr. DR 01.05.2025 Date of Hearing Date of Pronouncement 18.06.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-2, Lucknow vide order dated 20.06.2024 passed for A.Y. 2016-17.
The Assessee has taken the following grounds of appeal:-
“1. Whether the CIT(A) erred in law and in the facts of the case of the appellant while passing order u/s 150 of the Act? 2. Whether the CIT(A) erred in law and in the facts of the case in confirming the order of the AO in confirming addition of Rs.1,33,70,000/- being unexplained investment u/s 68 of the Act?”
Active Alluminium Pvt. Ltd. vs. ACIT Asst.Year –2016-17 - 2– 3. At the outset, we observe that the appeal is time barred by 49 days. The delay of 49 days is condoned on due consideration of facts and owing to smallness of delay causing no perceptible prejudice to other side.
The brief facts of the case are that the assessee filed its return of income for A.Y. 2016-17 on 28.07.2016, declaring a loss of Rs. 49,34,147/-. The assessee, engaged in the business of manufacturing aluminum sections, declared a gross profit of Rs. 2,53,295/- and a net loss of Rs. 93,50,424/- on a turnover of Rs. 1,16,06,952/- for the year under consideration. During the assessment, the Assessing Officer observed that the assessee had shown unsecured loans aggregating Rs. 1,33,70,000/- from three individuals, all of whom were Directors or related parties. Firstly, a loan of Rs. 57,60,000/- from Ms. Kokilaben Ravindrakumar Patel could not be substantiated with credible documentation, and her reported income over the past years did not support her capacity to lend such an amount. The Assessing Officer observed that no response was received from her despite notices issued under section 133(6). Similarly, a loan of Rs. 23,00,000/- from Shri Bharatkumar Ramdas Patel was also treated as unexplained by the Assessing Officer, as his income details and financial documents failed to justify his ability to extend such a loan. Finally, a sum of Rs. 53,10,000/- was shown as a loan from Shri Satishbhai Baldevbhai Patel, but his low income and immediate transfers from his account before advancing the funds raised serious doubts about the genuineness and creditworthiness of the transaction. The Assessing Officer was of the view that in all three cases, the assessee failed to produce adequate evidence to prove the genuineness of transactions and the creditworthiness of the lenders, despite being given sufficient time and multiple notices under section 142(1) of the Act. Accordingly, the Assessing Officer held that the loans amounting to Rs. 1,33,70,000/- were unexplained credits under section 68 of the Act and treated them as income of the assessee for the relevant year.
In appeal, CIT(Appeals) noted that despite issuance of several notices of hearing, none appeared on behalf of the assessee. Accordingly, the appeal of the assessee was dismissed with the following observations:
“6. Decision: 6.1 The appeal was filed by the assessee on 21/01/2019 in appeal no: CIT (A). Ahmedabad1/10457/2018-19 against the order u/s 143(3), Mumbai of the IT Act, 1961. In connection to the appeal, opportunities were provided to the assessee to substantiate his grounds of appeal on following dates:
Sr. Notice issued u/s. 250 letter Hearing notice issued on Hearing fixed on No. 1 ITBA/APL/S/APL_1/2019- 26/06/2019 09/07/2019 20/1016515973(1) 2 ITBA/APL/S/APL_1/2019- 13/08/2019 19/08/2019 20/1017386370(1) 3 ITBA/APL/S/APL_1/2019- 06/09/2019 12/09/2019 20/1017805828(1) 4 ITBA/APL/S/APL_1/2019- 18/10/2019 13/11/2019 20/1019090917(1) 5 ITBA/APL/S/APL_1/2019- 12/02/2020 12/03/2020 20/1025039966(1) 6 ITBA/NFAC/F/APL_1/2020- 18/01/2021 25/01/2021 21/1029866502(1) 7 ITBA/NFAC/F/APL_1/2024- 11/06/2024 11/06/2024 24/1065545253(1) Against all these notices there was no response from the assessee, as has been brought out above, it is evident that the appellant is not interested in filing any details during the appellate proceedings and avail the opportunity under the principle of natural justice. In response to the notices issued, even adjournment was not sought. In such situation, the only conclusion which can be drawn is that the appellant is not interested in pursuing the appeal. 6.2 It has been held by the Hon'ble Supreme Court in the case of B.N. Bhattacharjee and Another (118 ITR 461) that appeal does not mean merely filing of memo of appeal but also pursuing it effectively. In cases where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non-prosecution as held by the Hon'ble Bombay High Court in the case of M/s Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the issue, the Hon'ble High Court of Bombay has referred to the observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was observed: "Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses..." 6.3 This appeal has been filed by the appellant claiming that the action of the Assessing Officer is not supported by facts and laws and that it is unjust. In such a situation, it is for the appellant to furnish submissions with relevant evidence(s), case laws, if any, to support the claim. The burden of proof is always on the person who makes the claim. In this case, it is the appellant who has made the claim by filing the appeal. Thus, in cases where a particular receipt is sought to be taxed as income, the initial onus is on the Assessing Officer to prove that it is taxable. Where, however, the assessee claims exemption, the burden is on the assessee to prove it to be exempt. In his petition assesse has raised 4 different grounds upon which Ground NO-1 and 2 talks about SECTION 68 OF THE ACT ADDITION OF RS. 1,33,70,000/-. Ground 2 and 4 are not separate ground which is talk about the grounds of appeal are independent from one other and without prejudice to one other and crave to add new grounds of appeal during the course of hearing and ground No.3 initiating penalty proceedings U/s. 271(1)(C) of the Act. Core of the issued of grounds which was already discussed in this order as in lack of any fallow up made by applicant to discharge his duty to respond against burden of proof his appeal can't be accepted. Same is the position in case of all allowances, deductions, claims or loss, etc. Since an appeal is nothing but the claim of the appellant that he has been unduly unjustifiably taxed, it is for the appellant to prove its case. The appellant has not availed any opportunity to do so. From the conduct of the appellant as per the facts noted above, it is clear that the appellant does not wish to pursue the appeal. Even otherwise on the merits of it also, I do not see any reason to differ with the findings of the AO since no attempt has been made by the assessee to discharge its onus. Hence, respectfully following the above mentioned judicial pronouncements and in view of the facts of the case, the appeal is hereby dismissed. In my considered view, the findings of the AO in the assessment order are self- speaking and do not require any interference. Hence the appeal is liable to be dismissed.
7. In the end result, the appeal is DISMISSED.”
Active Alluminium Pvt. Ltd. vs. ACIT Asst.Year –2016-17 - 5– 6. Before us, the Counsel for the assessee submitted that the assessee has substantial evidence to prove the genuineness of the transaction and the creditworthiness of the lenders. The Counsel for the assessee drew our attention to the Paper-Book filed before us and submitted that if given an opportunity of hearing, the assessee would be able to demonstrate the genuineness of the transaction. On going through the facts placed on record, and the quantum of additions made, in the interest of justice, the matter is hereby restored to the file of the Assessing Officer, for de-novo consideration. However, looking at the history of non-compliance, the assessee is directed to pay a cost of Rs. 5,000/- to be deposited with the Prime Minister Relief Fund.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 18/06/2025
Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 18/06/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,