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Facts
The assessee, engaged in manufacturing and sale of ceramic glazed tiles, filed its return of income. The Assessing Officer (AO) made additions to the income without issuing a specific show cause notice. The CIT(A) dismissed the assessee's appeal ex-parte, citing non-compliance and without considering adjournment applications.
Held
The Tribunal held that the ex-parte dismissal by the CIT(A) without proper opportunity and consideration of adjournment requests violated principles of natural justice. The Tribunal also noted the additional evidence submitted by the assessee.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte without providing a proper opportunity to the assessee and considering additional evidence. Whether the additions made by the AO were justified and proper show cause notices were issued.
Sections Cited
143(1), 143(2), 142(1), 36(1)(va), 43B, 40A(3), 68, 250, 115JB, 234A, 234B, 234D, 271(1)(c)
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI MAKARAND V. MAHADEOKAR
"ी संजय गग", "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम!। ] ] BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं / Year : 2016-17 Airona Tiles Limited The DCIT बनाम/ Ceramic City Circle Himatnagar. v/s. At and Post : Dalpur Presently The DCIT, Kathwada Road Circle-2(1)(1) Sabarkantha – 383 120 (Gujarat) "थायी लेखा सं./PAN: AANCA 3712 D (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Anil N. Shah & Aatish Shah ARs Revenue by : Shri Purshottam Kumar, Sr.DR सुनवाई की तारीख/Date of Hearing : 19 /03/2025 घोषणा की तारीख /Date of Pronouncement: 20 /03/2025 आदेश/O R D E R
PER MAKARAND V. MAHADEOKAR, AM:
This appeal has been preferred by the assessee against the order dated 13.10.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, (NFAC), Delhi [hereinafter referred to as “CIT(A)”], arising out of the assessment order dated 21.12.2018 passed under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] by DCIT/ACIT, Circle Himatnagar [hereinafter referred to as “AO”] for the Assessment Year (AY) 2016-17. Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17 2 Facts of the Case:
The assessee is engaged in the business of manufacturing and sale of ceramic glazed tiles. The assessee filed its return of income on 17.10.2016, declaring a total income of Rs.62,63,380/-. The return was processed under Section 143(1) of the Act. Subsequently, the case was selected for complete scrutiny, and notices under Section 143(2) and 142(1) of the Act were issued and duly served. During the course of the assessment proceedings, the AO made various additions aggregating to Rs.16,36,864/- and assessed the income of the assessee at Rs.79,00,240/- without issuing a specific show cause notice regarding the proposed additions. The additions made by the AO included: - Rs.2,72,124/- under Section 36(1)(va) of the Act on account of delayed deposit of employees' contribution to PF. - Rs.10,100/- under Section 43B of the Act on account of Disallowance of professional tax. - Rs.9,640/- relating to (Prior period expenses) disallowed as they pertained to an earlier year. - Rs.65,000/- under Section 40A(3) of the Act being cash payment exceeding Rs.20,000/- in a day. - Rs.12,80,000/- under Section 68 of the Act as Unexplained cash credit.
2.1. The assessee preferred an appeal before the CIT(A). However, the CIT(A) dismissed the appeal ex-parte, citing non-compliance, without considering the adjournment applications dated 19.09.2022, 21.12.2020, and 31.12.2020, which were duly uploaded by the assessee. Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17
Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal:
1. The impugned order is bad in law, against rule of natural justice and is passed by the Ld. AO without issuing the valid notice(s) Us. 143(2) & 142(1) of the Act and without serving the same on the appellant as required by the law,
2. The Ld. AO has erred in law and on facts in making various additions totalling to Rs. 16,36,864 and thereby assessing the appellant at Rs. 79,00,240 against returned income of Rs. 62,63,380 without issuing any Show Cause Notice for the various additions made by him in complete disregard of rule of natural justice and against the law and case law and the Ld. CIT(A), NFAC has also erred in law and on facts in confirming the same and we pray the Hon'ble Tribunal to delete the said impugned additions,
3. The Ld. CIT (A) NFAC, Delhi has erred in law and on facts in dismissing the appeal ex-parte stating to have disposed off on merits without considering and disposing off an application for adjournment letter dtd. 19.09.22 uploaded vide ack. No. 507697651190922 in response to the notice bearing DIN:ITBA/NFAC/F/APL_1/2022-3/1046171435(1) Dated 04/10/2022 issued Us.250 of the Act in Appeal No:CIT (A), Ahmedabad-2/10317/2018-19 for A.Y. 2016-17 and we pray the Hon'ble Tribunal to held the Order as against the rule of natural justice, bad in law and quash the Order,
The Ld. AO has erred in law and on facts in making the addition of Rs.2,72,124 in respect of the PF Contribution received from the employees considering the same as having not been deposited by the appellant on or before the due date merely based on Point 20(b) of tax audit report in Form 3CD without going into any further details and the Ld. CIT (A), NFAC has erred in law and on facts in confirming the same and we pray the Hon'ble Tribunal to delete the said impugned additions,
5. The Ld. AO has erred in law and on facts in making the addition of Rs.10,100 Us.43B of the Act in respect of the Professional Tax by considering the same as has not been paid before the due date of filing the return of income merely based on Point 26(B)(a) of tax audit report in Form CD without going into any further details by stating that, the assessee did not furnish the copy of challan and the Ld. CIT (A), NFAC has erred in law and on facts in confirming the same and we pray the Hon'ble Tribunal to delete the said impugned additions,
6. The Ld. AO has erred in law and on facts in making the addition of Rs.9,640 considering the same as prior period expenses in respect of the Professional/ Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17 retainer fees paid without considering the fact that, the fees were decided during the year under appeal and the services were also rendered by the recipients during the year and accordingly the expense was incurred during the year under appeal under appeal and the Ld. CIT (A), NFAC has erred in law and on facts in confirming the same without considering various aspects of the claim and we pray the Hon'ble Tribunal to delete the said impugned additions,
7. The Ld. AO has erred in law and on facts in making the addition of Rs.65,000 U/s.40A(3) of the Act without considering the facts proper and without providing sufficient opportunity to reply / explain the impugned payment and the Ld. CIT (A), NFAC has erred in law and on facts in confirming the same without considering various aspects of the claim and we pray the Hon'ble Tribunal to delete the said impugned additions,
The Ld. AO has erred in law and on facts in making the addition of Rs.12,80,000 considering the same as unexplained cash credit in view of provisions of Sec.68 of the Act without considering the facts proper and without providing sufficient opportunity to reply / explain the impugned payment and the Ld. CIT (A), NFAC has erred in law and on facts in confirming the same without considering facts, law and various aspects of the claim and we pray the Hon'ble Tribunal to delete the said impugned additions,
The Ld. AO has erred in law and on facts in issuing notice of demand raising demand of Rs. 1,217 in not giving the working and without specifying/ deciding/ giving the details/ amount of carry forward of MAT Credit U/s.115JB, if any varied by him and we pray to order to determine the same at Rs.18,53,956 as has been shown in Computation / return of income filed.
The Ld. AO has erred in law and on facts in issuing notice of demand raising demand of Rs. 1,217 without giving working thereof and without specifying working of tax, interest, if any charged under various sections of Sec.234A, 234B,234,234D etc. and we pray the Hon'ble Tribunal to delete the said demand,
The Ld.AO have erred in law and on facts in working out the balance tax payable of Rs.1,217 and thereby raising demand for the same and we pray the Hon'ble Tribunal to delete the said demand.
The Ld. AO have erred in law and on facts in initiating penalty proceedings U/s. 271 (1) (c) of the Act for concealment of income and the Ld. CIT (A) , NFAC has erred in law and on facts in confirming the said action of the Ld. AO and we pray the Hon'ble Tribunal to quash the action of initiating of penalty proceedings by the Ld. AO and upheld by the Ld. CIT(A). Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17 5 13. Your appellant craves a leave to add, alter or delete the grounds of appeal wherever the occasion demand.
Condonation of delay 4. The Registry noted a delay in filing this appeal before us. The appeal was filed on 29.12.2023 against the order of CIT(A) dated 13.10.2022, resulting in a delay of 382 days in filing the appeal. The assessee has filed an application for condonation of delay, citing several reasons for the delay. The assessee contended that neither the order of CIT(A) nor any notices were received through email or registered post at its registered address. Further, no real-time alert was provided under Rule 11(2) of the Faceless Appeal Scheme, 2021, which is applicable for electronic delivery of authenticated copies of orders and notices. The assessee also stated that it did not access the order on the department’s portal due to a lack of communication. The assessee further submitted that it was fully dependent on its Authorized Representative (AR) for handling the appeal before CIT(A), Ahmedabad-2. Initially, the appeal was before CIT(A), Ahmedabad-2, and was later transferred to CIT(A), NFAC, Delhi. The director of the company was not well-versed with the complexities of online appeal proceedings and faceless assessment procedures, and no other reliable method was available to track the case progress. The entire proceedings were handled by the AR, who had earlier represented the company at the assessment stage and first appellate stage, but due to changes in circumstances, failed to keep track of the disposal of the appeal. Additionally, the assessee contended that, upon finally gaining knowledge of the disposal of the appeal on 13.12.2023, immediate steps were taken to file the appeal before the Tribunal. The delay was neither deliberate Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17 nor intended to evade proceedings but was caused due to procedural lapses and lack of communication from the faceless appeal process.
4.1. In view of the above facts and in the interest of substantial justice, the assessee prayed for condonation of delay. The learned Departmental Representative (DR) raised no objection to the condonation of delay. Considering the reasons provided by the assessee and in the larger interest of justice, we find the delay to be satisfactorily explained. Accordingly, the delay of 382 days is condoned, and the appeal is admitted for adjudication.
During the course of hearing before us, the AR of the assessee submitted that the CIT(A) erred in dismissing the appeal ex-parte without considering the adjournment applications filed by the assessee. It was contended that the assessee was deprived of a fair opportunity to present its case due to the faceless appeal process and lack of communication regarding the disposal of the appeal. The AR further argued that the additions made by the AO were without proper justification and without issuing a specific show cause notice, violating the principles of natural justice.
5.1. The AR further contended that the assessee has now furnished additional evidence, including payment challans for PF, professional tax, and confirmations for unsecured loans, which directly impact the disputed additions. The AR requested that these documents be admitted as additional evidence under Rule 29 of the Income Tax Rules, 1962 and that the matter be remanded to the CIT(A) for fresh adjudication after considering these evidences. Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17
We have carefully considered the submissions made by both parties and have perused the material on record. The primary grievance of the assessee pertains to the ex-parte dismissal of the appeal by the CIT(A), without affording a proper opportunity to present its case. The assessee has demonstrated that multiple adjournment requests were filed, but they were neither acknowledged nor considered by the CIT(A). The non-consideration of these requests and the consequent disposal of the appeal without hearing the assessee constitutes a violation of the principles of natural justice.
6.1. Furthermore, the assessee has now placed on record additional evidence, including payment challans for PF contributions, professional tax payments, confirmations of unsecured loans, and other relevant financial documents that were not available at the time of assessment or first appellate proceedings. These documents are crucial for the proper adjudication of the issues raised in the appeal. Therefore, we find merit in the assessee’s request to admit such evidence.
6.2. Considering the totality of facts and circumstances, and in the interest of justice, we deem it appropriate to set aside the order of the CIT(A) and restore the matter back to his file for fresh adjudication. The CIT(A) is directed to provide the assessee with a reasonable opportunity to present its case, duly considering the additional evidence now placed on record. The assessee is also directed to ensure compliance with any notices issued by the CIT(A) in the course of fresh proceedings. Airona Tiles Ltd. vs. The DCIT, Circle Himatnagar - Presently The DCIT, Circle-2(1)(1) Asst. Year : 2016-17
The Departmental Representative (DR) has raised no objection to the restoration of the matter to the file of the CIT(A). Accordingly, the appeal filed by the assessee is allowed for statistical purposes.