Loading judgment…
Facts
The assessee firm did not file a return for AY 2016-17 and AY 2017-18. The case was reopened, and notices were issued, but the assessee claimed they were sent to an old email ID and not received. Consequently, ex-parte assessment orders and CIT(A) orders were passed. The assessee is a partnership firm that converted to a private limited company.
Held
The Tribunal held that the assessee was not afforded a proper opportunity of hearing due to non-receipt of notices, violating principles of natural justice. Additional evidence was admitted, and the matters were remanded back to the Assessing Officer for fresh adjudication.
Key Issues
Whether the ex-parte assessment order and CIT(A) order are valid when the assessee claims non-receipt of statutory notices, leading to a violation of the principles of natural justice. Whether additional evidence should be admitted and the matter remanded for proper adjudication.
Sections Cited
148, 142(1), 144, 147, 144B, 69, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
1. These two appeals are filed by the Assessee against two separate orders, both dated 07.08.2023, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2016-17 & 2017-18 respectively.
Both these appeals are on identical facts and hence identical grounds have been raised by the assessee. We are, therefore, firstly taking up for Assessment Year 2016-17. In this appeal, the assessee has raised the following grounds :-
“1.1 The order passed u/s.250 on 07/08/2023 for A.Y. 2016-17 by NFAC (CIT(A) Delhi upholding the addition of Rs.20,73,10,977/- on account of unexplained contract receipt, unexplained investment in deposit and interest income is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. NFAC (CIT(A) has grievously erred in law and or on facts in not appreciating that the appellant was not allowed sufficient opportunity before upholding the impugned disallowance. The Id. NFAC (CIT(A) has failed to appreciate that the alleged notices & 775/Ahd/2023 Assessment Years: 2016-17 & 2017-18 Natraj Construction Co. vs. ACIT Page 2 of 5 claimed to be issued as per para-5 of the impugned order pertain to the Covid 19 Corona period when even Hon'ble Supreme Court had suo moto directed to exclude this period from 20.02.2020 to February 2022 and as regards the remaining notices, there was sufficient cause. Thus, there was gross violation of the principles of natural justice.
Unexplained contract Receipt Rs.17,00,45,583/-, Unexplained investment in deposits Rs.1,90,22,846/- and interest income of Rs.1,82,42,548/- totaling to addition of Rs.20,73,10,977/-.
1.3 The Ld. CIT (A) has grievously erred in law and on fact by making addition of Rs.20,73,10,977/- on the ground that contract receipt, investment deposit and interest income were not explained and offered in return of income in absence of any reply or appearance of the appellant without appreciating fact that contract receipt, deposits and interest income of old firm Natraj Construction Co. was offered for taxation by the newly converted Pvt Ltd. Company namely NCC Infraspace P ltd. The appellant was not using mail id. of old firm and notices issued in the mail id. of the old firm was not seen by the appellant hence non-compliance took place and no written submission was filed. and as regards notices issued for hearing there was sufficient cause. Thus, there was gross violation of the principles of natural justice hence unwarranted addition of Rs.20,73,10,977/- may be deleted.
2.1 The Ld. NFAC.(CIT(A) has grievously erred in law and on facts in confirming the addition of Rs.20,73,10,977/- without verifying any record or submission made while filling the appeal.
2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC CIT(A) ought not to have upheld the addition of Rs.20,73,10,977/-.
It is, therefore, prayed that the addition of Rs.20,73,10,977/- upheld by the CIT(A) may kindly be deleted.
The assessee firm has not filed the return of income for the Assessment Year (A.Y.) 2016-17. As per the information available, the assessee entered into high value financial transactions during the relevant A.Y. and, therefore, the case of the assessee was reopened and notice under Section 148 of the Income Tax Act, 1961 was issued on 27.03.2021. Notice under Section 142(1) of the Act was issued and served upon the assessee. The assessee did not file any details and hence final show cause notice was issued alongwith notices under Section 142(1) of the Act. Since the assessee has not field any details, the Assessing Officer & 775/Ahd/2023 Assessment Years: 2016-17 & 2017-18 Natraj Construction Co. vs. ACIT Page 3 of 5 passed the assessment under Section 144 read with Section 147 and 144B of the Act. The Assessing Officer made addition of Rs.17,00,45,583/- in respect of contract receipt which remained unexplained and thereby treated as undisclosed income. The Assessing Officer also made addition of Rs.1,90,22,846/- in respect of source of investments in time deposits which remained unexplained and added the same under Section 69 of the Act
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee ex-parte.
The Ld. AR submitted that the assessee is filing additional evidence in respect of audited books, Profit & Loss and of NCC Infraspace Pvt. Ltd. As the assessee is a partnership firm doing business of road construction work mainly of State Government and other Governmental Agencies. The partnership firm was converted into Private Limited Company as on 09.04.2015 and, thereafter, became NCC Infraspace Pvt. Ltd. The return of income for the year under consideration was field by the Private Limited Company considering all the income and expenditure of the partnership firm as well as of Private Limited Company. The assessee filed return of income on 06.05.2021 showing nil income as the entire income of partnership firm was offered for taxation in the return of income of the newly formed converted Company. The turnover of NCC Infraspace Private Limited has been shown at Rs.116,74,93,510/- and TDS claim amounts to Rs.2,01,61,877/-. The assessee has not received any notices under Section 142(1) of the Act as it has been issued on old email id. of the assessee and, therefore, the Assessment Order as well as the order of the CIT(A) both are ex- parte. Therefore, the Ld. AR submitted that the matter may be remanded back to the file of the Assessing Officer for proper adjudication of the evidences on merits.
The Ld. DR relied upon the Assessment Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has not received the statutory notices in respect of his new email id. and the notices were sent to his & 775/Ahd/2023 Assessment Years: 2016-17 & 2017-18 Natraj Construction Co. vs. ACIT Page 4 of 5 old email id. And, therefore, the assessee could not file the relevant documents within the stipulated time before the Assessing Officer. Thus, the evidences filed before us as additional evidence is admitted and the matter is remanded back to the file of the Assessing Officer for proper verification of the evidences and adjudicate the same as per provisions of Income tax Act, 1961 The assessee be given opportunity of hearing by following the principles of natural justice. Thus, for A.Y. 2016-17 filed by the assessee is partly allowed for statistical purpose.
A.Y. 2017-18, the same is also identical and the orders both by the Assessing Officer as well as by the CIT(A) are passed ex-parte. Therefore, for A.Y. 2017-18 filed by the assessee is also remanded back to the file of the Assessing Officer for proper verification of additional evidences which are admitted and adjudicate the same as per provisions of Income Tax Act, 1961. The assessee be given opportunity of hearing by following the principles of natural justice. Thus, for A.Y. 2017-18 is also partly allowed for statistical purpose.
In the result, both the appeals filed by the assessee are partly allowed for statistical purpose.
Order pronounced in the open Court on this 9th January, 2025.