SURITI TYAGI,NALAGARH vs. CIT (A), SHIMLA

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.