AGNEE GAS AGENCY,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-5(3)(3), AHMEDABAD

ORDER \nPER MAKARAND V. MAHADEOKAR, AM:\nThis appeal is filed by the assessee against the order dated 23.10.2023\npassed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi\n[hereinafter referred to as “CIT(A)"], confirming the ex parte assessment\norder dated 22.12.2019 passed under section 144 of the Income Tax Act, 1961\n[hereinafter referred to as \"the Act\"] by the Income Tax Officer, Ward 5(3)(3),\nThe assessee is a partnership firm engaged in the business of LPG gas\nagency. It filed its return of income for A.Y. 2017–18 on 30.10.2017, declaring\na total income of Rs.4,01,560/-, which was processed under section 143(1) of\nthe Act. The books of account of the assessee were audited under section\n44AB, and the audit report in Form 3CB-3CD was filed on the same date. No\nadverse remarks were made by the auditor. The case was selected for scrutiny\nunder CASS, and notice under section 143(2) of the Act was issued on\n09.08.2018. Subsequently, several notices under section 142(1) of the Act were\nissued; however, in the absence of compliance, the AO proceeded to frame an\nex parte assessment under section 144 of the Act. In the said order dated\n22.12.2019, the AO made the following additions/disallowances:\n• Unexplained unsecured loans - Rs.10,84,600/-\n• Unexplained creditors - Rs.27,98,009/-\n• Ad hoc disallowance of expenses (20%) - Rs.3,71,556/-\n• Addition under section 69A of the Act (8% of demonetized deposits) - Rs.11,84,025/-\n3.

1. In view of the foregoing discussion and considering the procedural\nirregularities in the completion of assessment and appellate proceedings,\ncoupled with the assessee's explanation supported by contemporaneous\nmaterial, we are of the considered opinion that this is a fit case where the\nmatter ought to be remanded to the file of the AO. While the assessee cannot\nbe fully absolved of responsibility for non-compliance, the explanation\noffered appears to be bona fide and merits consideration.\n9.

2. Accordingly, the assessment order passed u/s 144 of the Act and the\nappellate order passed by the Ld. CIT(A) are set aside. The matter is restored\nto the file of the AO with a direction to examine the case afresh, after\nproviding adequate opportunity of being heard to the assessee. The assessee\nis also directed to cooperate in the proceedings and file necessary documents\nand evidence without seeking unnecessary adjournments.\n10. In the result, the appeal of the assessee is allowed for statistical\npurposes.\nOrder pronounced in the Open Court on 26th March, 2025 at Ahmedabad.\n(SUCHITRA KAMBLE)\nJUDICIAL MEMBER\n(MAKARAND V. MAHADEOKAR)\nACCOUNTANT MEMBER\nअहमदाबाद/Ahmedabad, दिनांक/Dated 26/03/2025\nटी.सी. नायर, व.नि. स. / T.C. NAIR, Sr. PS\n Gas Agency vs. ITO\nAsst. Year: 2017-18\n2\nCondonation of Delay\n2. At the outset, it is noted that the appeal before us has been filed with a\ndelay of 259 days. In support of the condonation, the assessee has filed a duly\nsworn affidavit dated 19.03.2025 executed by Shri Ashvin Nanalal Dagla,\npartner of the assessee-firm. It is averred that although the email ID provided\nin Form 35 was ca.pinalshah@gmail.com, subsequent notices under section\n250 and the order of the CIT(A) were issued to different email IDs\n(shinalgangawat@gmail.com and yogendragangawat@yahoo.co.in), due to\nwhich the assessee remained unaware of the disposal of the appeal. The\naffidavit further explains that the assessee came to know about the dismissal\nof appeal only during a routine check of the income tax portal in the last week\nof August 2024, and upon becoming aware, immediately filed the present\nappeal before the Tribunal on 06.09.2024.\n2.

1. Considering the submissions and the affidavit and noting that the\nDepartmental Representative has not raised any serious objection to the\ncondonation, we are satisfied that the delay of 259 days has been explained\nwith bona fide reasons. Accordingly, the delay is condoned.\nFacts of the case:\n3. The assessee is a partnership firm engaged in the business of LPG gas\nagency. It filed its return of income for A.Y. 2017–18 on 30.10.2017, declaring\na total income of Rs.4,01,560/-, which was processed under section 143(1) of\nthe Act. The books of account of the assessee were audited under section\n44AB, and the audit report in Form 3CB-3CD was filed on the same date. No\nadverse remarks were made by the auditor. The case was selected for scrutiny\nunder CASS, and notice under section 143(2) of the Act was issued on\n Gas Agency vs. ITO\nAsst. Year: 2017-18\n3\n09.08.2018. Subsequently, several notices under section 142(1) of the Act were\nissued; however, in the absence of compliance, the AO proceeded to frame an\nex parte assessment under section 144 of the Act. In the said order dated\n22.12.2019, the AO made the following additions/disallowances:\n• Unexplained unsecured loans - Rs.10,84,600/-\n• Unexplained creditors - Rs.27,98,009/-\n• Ad hoc disallowance of expenses (20%) - Rs.3,71,556/-\n• Addition under section 69A of the Act\n(8% of demonetized deposits) - Rs.11,84,025/-\n3.

1. Total assessed income was thus enhanced to Rs.58,39,750/- as against\nreturned income of Rs.4,01,560/-. The AO also initiated penalty proceedings\nunder section 271AAC of the Act and charged interest under sections 234A,\n234B, 234C and 234D of the Act.\n4. The appeal filed before the CIT(A), NFAC was also disposed of ex-\nparte, confirming the additions without considering merits of the case.\n5. Aggrieved by the order of the CIT(A), the assessee has raised the\nfollowing substantive grounds before us:\nThe following grounds are raised against the addition /disallowances made by the Income\nTax Officer, Ward 5(3)(3), Ahmedabad (hereinafter referred to as the Learned A.O.) in\nhis order passed u/s 144 of the Income tax Act 1961 (hereinafter referred to as the Act.)\nfor A.Y. 2017-18 which are without prejudice to one another and in the alternative.\n1. The Id. A.O. has erred in law and on facts while making aggregate additions /\ndisallowances of Rs.54,38,190/- to the total income without realizing the\ncircumstantial facts that the accounts of the appellant is audited u/s 44AB of the\nAct and therefore without giving sufficient opportunity of being heard the Id.\nA.O. has passed the order u/s 144 of the Act, which is against the principle of\nnatural justice and therefore the same is required to be deleted in total.\n2. The Ld. A.O. has erred in law and facts while making addition of\nRs.10,84,600/- on account of unexplained unsecured loans, which is required to\nbe deleted.\n3. The Ld. A.O. has erred in law and facts while making addition of\nRs.27,98,009/- on account of unexplained Creditors, which is required to be\ndeleted.\n4. The Ld. A.O. has erred in law and facts while making addition of\nRs.3,71,556/- on account of various expense on adhoc basis, which is required to\nbe deleted.\n5. The Ld. A.O, has erred in law and facts while making addition of\nRs.11,84,025/- on account of unexplained money u/s 69A of the Act, which is\nrequired to be deleted.\n6. Initiation of Penalty proceedings u/s 271AAC of the Act.\nThe learned A.O. has grossly erred in assuming jurisdiction to initiate penalty\nproceedings in as much as the appellant denies to have any unexplained money\nor cash credit, as addition made by the learned AO which forms the basis of\ninitiation of penalty proceedings are fully untenable both in the eye of law as well\nas on facts of the case. It is therefore prayed that initiation of penalty proceedings\nmay kindly be quashed/cancelled.\n7. Charging of interest u/s 234A, 234B, 234C and 234D of the Act.\nThe appellant denies to pay interest as there being no default as per section 234A,\n234B, 234C & 234D of the Act. The additions/disallowance made by the learned\nA.O. could not be predicted at the time of payment of advance tax. The learned\nA.O. should be directed to delete the said interest for alleged failure u/s.234A,\n234B, 234C & 234D of the Act.\nConsidering the aforesaid grounds the additions / disallowances made by the Ld. A.O.\nare deserves to be deleted. The appellant reserves its right to add, alter or substitute or\nmodify any of the grounds of appeal till the appeal is finally heard and decided.\nThe assessee in the statement of facts submitted that the books of\naccount were duly audited, and no adverse remarks were made. The entire\nevidence and documents were submitted to the authorized representative,\nbut due to a bona fide misunderstanding, the same were not uploaded on the\nIT portal. The assesse in the same statement of facts the assessee contended\nthat cash deposits during the demonetization period were duly accounted in\nthe books, and LPG gas agencies were exempted from the restriction on\naccepting old notes. Thus, applying 8% addition under section 69A is\nunjustified.\n7. Considering the fact that both the lower authorities have passed order\nwithout considering the merit of the case, the Authorized Representative\n(AR) of the assessee submitted that the assessee should be granted one more\nopportunity to present its case before the AO.\n8. The Departmental Representative (DR) however objected to restoring\nthe matter back to the file of AO stating that the assessee is non-compliant.\n9. We have carefully considered the rival submissions and perused the\nmaterial available on record. It is observed that both the assessment order\npassed under section 144 of the Act and the appellate order passed by the Ld.\nCIT(A), NFAC, were concluded ex-parte, primarily on account of the\nassessee's non-compliance with statutory notices. However, the assessee has\nplaced on record material to demonstrate that an adjournment request was\nduly submitted in response to the notice under section 250 of the Act, along\nwith an explanation that relevant documents were under compilation. While\nthe conduct of the assessee in not fully responding to subsequent notices may\nhave contributed to the ex-parte orders, the contemporaneous correspondence\nindicates that the assessee was not entirely negligent and had made attempts\nto engage with the proceedings. Considering the cumulative circumstances,\nincluding the nature of additions, the absence of hearing on merits, and the\nprinciples of natural justice, we are of the view that it would be just and\nproper to provide one more opportunity to the assessee to present its case\nbefore the AO.\n9.

1. In view of the foregoing discussion and considering the procedural\nirregularities in the completion of assessment and appellate proceedings,\ncoupled with the assessee's explanation supported by contemporaneous\nmaterial, we are of the considered opinion that this is a fit case where the\nmatter ought to be remanded to the file of the AO. While the assessee cannot\nbe fully absolved of responsibility for non-compliance, the explanation\noffered appears to be bona fide and merits consideration.\n9.

1. In view of the foregoing discussion and considering the procedural\nirregularities in the completion of assessment and appellate proceedings,\ncoupled with the assessee's explanation supported by contemporaneous\nmaterial, we are of the considered opinion that this is a fit case where the\nmatter ought to be remanded to the file of the AO. While the assessee cannot\nbe fully absolved of responsibility for non-compliance, the explanation\noffered appears to be bona fide and merits consideration.\n9.

2. Accordingly, the assessment order passed u/s 144 of the Act and the\nappellate order passed by the Ld. CIT(A) are set aside. The matter is restored\nto the file of the AO with a direction to examine the case afresh, after\nproviding adequate opportunity of being heard to the assessee. The assessee\nis also directed to cooperate in the proceedings and file necessary documents\nand evidence without seeking unnecessary adjournments.\n10. In the result, the appeal of the assessee is allowed for statistical\npurposes.\nOrder pronounced in the Open Court on 26th March, 2025 at Ahmedabad.\n(SUCHITRA KAMBLE)\nJUDICIAL MEMBER\n(MAKARAND V. MAHADEOKAR)\nACCOUNTANT MEMBER\nअहमदाबाद/Ahmedabad, दिनांक/Dated 26/03/2025\nटी.सी. नायर, व.नि. स. / T.C. NAIR, Sr. PS\n Gas Agency vs. ITO\nAsst. Year: 2017-18\n6\nprinciples of natural justice, we are of the view that it would be just and\nproper to provide one more opportunity to the assessee to present its case\nbefore the AO.\n9.

2. Accordingly, the assessment order passed u/s 144 of the Act and the\nappellate order passed by the Ld. CIT(A) are set aside. The matter is restored\nto the file of the AO with a direction to examine the case afresh, after\nproviding adequate opportunity of being heard to the assessee. The assessee\nis also directed to cooperate in the proceedings and file necessary documents\nand evidence without seeking unnecessary adjournments.\n10. In the result, the appeal of the assessee is allowed for statistical\npurposes.\nOrder pronounced in the Open Court on 26th March, 2025 at Ahmedabad.\n(SUCHITRA KAMBLE)\nJUDICIAL MEMBER\n(MAKARAND V. MAHADEOKAR)\nACCOUNTANT MEMBER\nअहमदाबाद/Ahmedabad, दिनांक/Dated 26/03/2025\nटी.सी. नायर, व.नि. स. / T.C. NAIR, Sr. PS\n Gas Agency vs. ITO\nAsst. Year: 2017-18\n7\nआदेश की प्रतिलिपि अग्रेषित/