Loading judgment…
Facts
The assessee declared income of Rs. 31.76 Lacs, but debited license fees of Rs. 36.47 Crores against a turnover of Rs. 46.36 Crores. The AO restricted license fees to 0.49% of turnover and disallowed the rest, also estimating presumptive profit. The CIT(A) confirmed the assessment but deleted the business income addition.
Held
The Tribunal restored the appeals to the AO for de novo adjudication, setting aside the impugned order. This decision was made considering the principles of natural justice and the possibility of communication gaps during the faceless regime, affording the assessee another opportunity to present its case.
Key Issues
Whether the assessee was entitled to claim the entire license fee debited, or if a restriction was justified. Whether principles of natural justice require an opportunity for de novo adjudication.
Sections Cited
143(3), 37(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH CHANDIGARH.
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2018-2019) Suriti Tyagi ACIT Circle बनाम/ Laxmi Niwas, VPO Kirpalpur Shimla. Vs. Teh. Nalagarh, Solan (HP) – 174101 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ADSPT-4430-E (अपीलाथ�/Appellant) : (��थ� / Respondent) & आयकरअपीलसं./ (िनधा�रणवष� / Assessment Year: 2018-2019) ACIT Circle Suriti Tyagi बनाम/ Shimla Laxmi Niwas, VPO Kirpalpur Vs. Teh. Nalagarh, Solan (HP) – 174101 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ADSPT-4430-E (अपीलाथ�/Appellant) : (��थ� / Respondent) Assessee by : Sh. Rajiv Sood (CA) - Ld. AR Revenue by : Smt. Kusum Bansal (CIT) & Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DRs सुनवाईकीतारीख/Date of Hearing : 08-04-2025 घोषणाकीतारीख /Date of Pronouncement : 21-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid cross-appeals for Assessment Year (AY) 2018-19 arises out of an order of Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [CIT(A)], dated 16-02-2024 in the matter of an assessment framed by Ld. Assessing Officer (AO) u/s 143(3) of the Act on 03-09-2021. Having heard rival submissions and upon perusal of case records, the appeals are adjudicated as under. The registry has noted delay of 91 days in assessee’s appeal which stand condoned.
The assessee declared income of Rs.31.76 Lacs. The assessee debited license fees of Rs.36.47 Crores against turnover of Rs.46.36 Crores which was almost 78% of turnover. The purchases were Rs.18.63 Crores. In AY 2017-18, the assessee claimed license fee of 0.49% of turnover. The assessee was required to justify the same. The assessee filed ledger extracts and copy of paid challans only. However, the working of license fees was not furnished. Accordingly, Ld. AO restricted the license fees to the extent of 0.49% of the turnover and disallowed the remaining payment of Rs.36.25 Crores u/s 37(1). The Ld. AO also estimated presumptive profit of 5% on turnover which came to Rs.2.31 Crores. The income of the assessee was thus determined at Rs.38.55 Crores. The Ld. CIT(A) substantially confirmed the assessment for want of any representation from the assessee. The Ld. CIT(A) deleted separate addition of estimation of business income since the same would amount to double addition. The said adjudication has led to cross-appeals before us. The Ld. AR filed affidavit of the assessee and pleaded for another opportunity of hearing before lower authorities which has been opposed by revenue.
Keeping in mind the principles of natural justice and considering the possibility of communication gaps during faceless regime, we deem it fit to afford another opportunity of hearing to the assessee to substantiate its case before Ld. AO. Accordingly, the impugned order is set aside and the assessment is restored back to the file of Ld. AO for de novo adjudication after affording reasonable opportunity of hearing to the assessee. The assessee is directed to plead and prove its case forthwith.
Both the appeals stand allowed for statistical purposes. Order pronounced on 21-04-2025.