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Facts
The assessee, a partnership firm engaged in manpower services, filed its return for AY 2020-21. The AO made a large addition of Rs. 77,47,69,606/- as unexplained expenditure. The assessee's appeal to the CIT(A) was dismissed without considering additional evidence, citing non-compliance with the AO.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal without properly considering the additional evidence and without a remand report, thus violating principles of natural justice. The assessment order and the CIT(A)'s order were set aside.
Key Issues
Whether the CIT(A) correctly dismissed the appeal without considering additional evidence and the principles of natural justice. Whether the AO's assessment order was justified.
Sections Cited
143(3), 69C, 115BBE, 234A, 234B, 234C, 234D, 271AAC(1)
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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Ms. Annapurna Gupta & Shri TR Senthil Kumar
आदेश/ORDER PER : TR SENTHIL KUMAR , JUDICIAL MEMBER:-
This appeal is filed by the assessee as against the appellate order dated 12-03-2024 passed by the Commissioner of Income Tax, (Appeals), National Faceless Appeal Centre, Delhi arising out of the assessment order passed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) relating to the assessment year 2020-21.
Brief facts of the case, the appellant is a partnership firm engaged in the business of providing manpower services as per requirements of the customers at their cost and place of posting. For the assessment year 2020-21, assessee filed its return of income on 11-02-2022 declaring total income of Rs. 33,46,040/-. The return was taken for scrutiny assessment, for the reason, the assessee had made substantial purchase from suppliers either non-filers or had filed non-business ITR or reflected a substantially lower turnover in the respective ITR. The Assessing Officer issued various notices which were partly complied by the assessee. A final show cause notice issued on 07-12-2022 seeking compliance by 12-12-2022. The assessee sought adjournment till 24-12-2022 on the ground that so many details are to be furnished which are not readily available. However, the ld. Assessing Officer granted time upto 15-12-2022 as the assessment is time getting barring. The assessee sought permission by resorting to the grievance portal on 25-12-2022 to upload reply dated 21-12-2022 with acknowledgement no. 10169740. However, in the meantime time, the Assessing Officer passed the impugned assessment order on 27-12-2022 making huge addition of Rs. 77,47,69,606/- as unexplained expenditure u/s. 69C of the Act and demanded tax thereon.
3. Aggrieved against the same, the assessee filed an appeal before ld. CIT(A) and filed additional evidences under Rule 46A of the Income Tax Rules, 1962. However, the additional evidences were not taken on record by the ld. CIT(A) on the ground that the assessee has failed to file all these evidences before the Assessing Officer, in response to the show cause notice issued. Thus, the ld. CIT(A) neither calling for remand report nor entertained the additional evidences filed by the assessee and dismissed the appeal filed by the assessee observing that the purchases made by the assessee were not genuine.
Aggrieved against the appellate order, the assessee is in appeal before us raising following grounds of appeal:-
“1. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in making addition of purchases/expenses of Rs. 77,47,69,606/-u/s. 69C of the Act.
2. The Ld. CIT(A) has erred in law and on facts of the case in disposing off the appeal in haste without waiting for the remand report called from the Ld. ΛΟ.
The Ld. CIT(A) has erred in law and on facts of the case in brushing aside the additional evidences filed by the Ld. AO solely on account of non-availability of remand report of the Ld. AO. The Ld. CIT(A) ought to have independently verified the additional evidences placed on record and provide his findings on the same.
4. The Ld. CIT(A) has erred in law and on facts of the case in upholding action of the Ld. AO in invoking provisions of Section 115BBE of the Act.
Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
6. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act.
The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 271AAC(1) of the Act.
The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
5. Heard Ld. Sr. counsel Mr. Tushar Hemani appearing for the assessee and Mr. V Nandakumar appearing for the Revenue. The Revenue could not dispute that the assessee unable to upload the details before the Assessing Officer before 15-12-2022. Further, the grievance petition filed by the assessee was also not redressed by the Income Tax Department but the A.O. completed the assessment which is a gross violation of principles of natural justice by making high pitched assessment order. When the same materials or evidences filed by assessee before the ld. CIT(A), without assigning proper reasons Ld. CIT(A) rejected the additional evidences. The ld. CIT(A) neither looked into the additional evidences nor sought for a remand report from the Assessing Officer which is also against the principles of natural justice. Therefore, to meet the ends of justice, we deem it fit to set aside the matter back to the file of Jurisdictional Assessing Officer to look into the additional evidences filed by the assessee by giving proper opportunity of hearing to the assessee and then pass fresh assessment order in accordance with law. Needles to say, the assessee should co-operate with the Jurisdictional Assessing Officer by producing all necessary materials/details and evidences in the de-novo proceedings.
In the result, the orders passed by the lower authorities are hereby set aside and the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 06-02-2025 Sd/- Sd/- (ANNAPURNA GUPTA) (TR SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 06/02/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद