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Facts
The assessee company filed its return of income for A.Y. 2021-22. The Assessing Officer made significant additions for alleged unexplained purchases and payments. The CIT(A) partly allowed the assessee's appeal.
Held
The Tribunal condoned the delay in filing the appeal due to the ill health of the assessee's accountant and directed the matter to be remanded back to the Assessing Officer for proper adjudication, ensuring the assessee is given an opportunity of hearing.
Key Issues
Whether the additions made by the Assessing Officer for alleged unexplained purchases, payments, and liabilities are justified, and if the assessee was provided with adequate opportunity to be heard.
Sections Cited
37, 69, 69C, 115BBE, 143(2), 142(1), 145, 68
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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Ms. Annapurna Gupta & Ms. Suchitra Kamble
आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:-
These two appeals are filed against the order dated 28- 03-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2021-22.
The grounds of appeal
s are as under:- filed by assessee
1. The learned Commissioner of Income Tax (Appeals), NFAC. Delhi has erred in passing an Ex Parte order without providing reasonable opportunity of being heard to the appellant. Hence the same being against the principles of natural justice and equity requires to be quashed.
2. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of the Assessing Officer in completing the assessment making huge addition without granting reasonable time to comply with the show cause notices issued by him to the appellant. Hence in the interest of natural justice and equity the assessment so made requires to be cancelled.
3. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of the Assessing Officer in making addition of Rs.159,11,47,972 u/s.37 of the Act treating the purchases from four parties non filers-suppliers namely 1.Mohmmad Yunus Nagori Prop of Arihant Silver and Gold-Rs.52,18,75,700- 2. Prakashkumar Vrajlal Soni/Vishnu Gold-Rs. 4,96,00,040, 3.Mathuranand Akrura Pradhan/Hema Jewellers-Rs.73,78,21,574 and 4. Dharmendra Kanyalal Bhagat- Rs.28,18,50658/- as alleged unexplained expenditure 4. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of the Assessing Officer in making addition of Rs. 19,04,35,450/- treating the payments to Shri Neel
Vijaykumar Khalas for the purchases as alleged unexplained expenditure u/s.69C of the IT Act, 1961 and in taxing the same applying the provisions of Sec. 115BBE of the Act.
The Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming the action of the Assessing Officer in making additions for purchases and payments made for purchases etc. u/s. 69 and 37 of the I.T. Act, 1961 as alleged unexplained purchases, expenditures liabilities without rejecting the audited books of accounts u/s.145 of the Act and without pointing out any specific mistake therein.
Without prejudice to the above and in the alternative, the Commissioner of Income tax (Appeals), NFAC, Delhi has erred in confirming action of the Assessing officer in computing the total income without granting setoff and carried forward of losses as claimed by the appellant in the return of income filed.
7. Appellant prays that the delay in filing of appeal may kindly be condoned
The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.”
filed by revenue “1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 16,58,71,338/- made u/s 68 of the Act on account of cash credits.
2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.82,10,000/- made u/s. 68 of the Act on account of short term borrowing as non-existent liability.
"The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary".
4. "It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored".”
3. The assessee is a company and filed return of income for assessment year 2020-21 on 15-02-2022 admitting a total income of Rs. nil after adjusting the carry forward business loss of Rs. 1,05,215/-. The return of income was processed on 21-06-2022 and selected for complete scrutiny in respect of business purchase. Relevant notices u/s. 143(2), 142(1) along with questionnaire was issued and show cause notice was issued on 15-12- 2022. The assessee furnished partial details and evidences as mentioned by the Assessing Officer in the assessment order. On page 6 of this assessment order, the Assessing Officer observed that the assessee has furnished the confirmation of the ledgers, copies of details relevant to the supplies. The Assessing Officer observed that the assessee has not furnished the details relevant to trade payable liability which was arrived at and existed from which year as well as the reason for the liability existence till the relevant assessment year. The Assessing Officer further observed that the assessee has not explained the identity of one trade payable party namely; Mahima Enterprises with the PAN No. and that also with the relevant party namely M/s. HHEC of India. After verifying the documents, the Assessing Officer held that the unexisted liability is maintained by the assessee every year as a cushion to neutralize some other stock in the balance sheet and thus the amounts can be in the shadow of sundry payable which was treated as unproved liability credited into the books of accounts which is utilized for every year to equalize the unaccounted purchase/unaccounted stock. Thus, the Assessing Officer made the addition to Rs. 16,58,71,338/- u/s. 68 of the act. The Assessing Officer related to short term borrowing made addition u/s. 68 amounting to Rs. 82,10,000/- thereby holding that the relevant unproved/unexisted liability which was credited into the accounts in the form of the short term borrowings must be added to the income of the assessee. The Assessing Officer further made addition of Rs. 159,11,47,972/- in respect of the corresponding purchases and the expenditure claimed thereon and further held that the assessee has not proved the genuineness of the purchases by providing necessary, cogent evidences like copy of bills, bank statement highlighting the evidences for the payments and hence added back the said to the total income u/s. 37 of the Act. The Assessing Officer further made addition of Rs. 19,04,35,450/- in respect of payment made by the assessee to Shri Neel Vijay Kumar and treated the same as unexplained expenditure u/s. 69C thereby observing that the assessee has not given the details related to the sales during the year under consideration.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A) and CIT(A) partly allowed the appeal of the assessee.
5. We are first taking the assessee’s appeal as the assessee submitted before us that there is a delay of 109 days in filing the present appeal for which the assessee has filed the detailed affidavit stating thereon that the assessee company is engaging part time accountant for writing books and accounts and making compliance to income tax and other allied laws. Due to the said accountant’s ill health he was not attending the case regularly and assessee company and its director was not aware of appellate proceedings/hearings/notices issued by the CIT(A) and could not appear and represent the case properly before the ld. CIT(A). Therefore, the CIT(A) has passed ex-parte order. In fact before the Tribunal also, the assessee was not able to take cognizance of the ex-parte order within the stipulated period and thus filed belated appeal before the Tribunal. The ld. A.R. submitted that the delay may be condoned and the matter may be remanded back to the file of Assessing Officer and the Assessing Officer also has not taken cognizance of the relevant materials filed before him. As mentioned in para 3 page 4 of the assessment order, the assessee has submitted the details subsequently but all the details were not taken into account by the Assessing Officer.
6. The ld. D.R. submitted that the assessee was given ample opportunity to file the relevant documents before the Assessing Officer as well as before the CIT(A) and therefore the Assessing Officer as well as CIT(A) has passed proper order.
We have heard both the parties and perused all the relevant materials available on record. The delay in filing the present appeal has been explained in detail in the affidavit by the director of the company and hence the delay appears genuine. Thus, the delay in filing present appeal is condoned. Beside this, the assessee(director of the company) has explained why the assessee was not been able to represent his case properly before the CIT(A) as well as before the Assessing Officer due to the ill health of his part time accountant. It appears that the relevant documents were before the Assessing Officer but the Assessing Officer has not taken cognizance of the said evidences and therefore it will be appropriate to remand back this matter to the file of the Assessing Officer for proper adjudication of the issues in the light of the evidences produced by the assessee before the Assessing Officer. The Assessing Officer is directed to take cognizance of the same and adjudicate as per Income Tax Act, 1961. The assessee be given opportunity of hearing by following principles of natural justice. is the appeal filed by the Revenue and the same is also related to A.Y. 2021-22 in respect of the same assessment order which was challenged by the assessee. The said appeal filed by the assessee is already remanded back. Hence, the appeal of the Revenue is also partly allowed for statistical purposes.
In the result, both the appeals are partly allowed for statistical purposes. Order pronounced in the open court on 09-01-2025 Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 09/01/2025 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