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Facts
The assessee filed its return declaring Nil income and a loss. The case was selected for scrutiny assessment, and notices under Section 143(2) and subsequently Section 144 were issued due to non-response from the assessee. The Assessing Officer made a best judgment assessment, assessing income at Rs.1,11,68,26,340/-. The assessee appealed to the CIT(A), who partly allowed the appeal.
Held
The Tribunal noted that the CIT(A) did not provide a clear finding and had directed the Assessing Officer to verify certain claims. The Tribunal found that the revision of demand by the CIT(A) was also stated to be incorrect, and no rectification order was produced. Consequently, the Tribunal set aside the impugned order and restored the grounds of appeal to the CIT(A) for a decision by speaking order.
Key Issues
Whether the assessment proceedings were conducted without proper notice and jurisdiction, and whether the CIT(A) provided a clear and lawful finding on the grounds of appeal.
Sections Cited
143(2), 144, 68, 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 20.02.2023, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
“1. Because on the facts and in the circumstances the Id CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the Ex-Party Order of Assessment Dt. 10.12.2019 without appreciating the facts and circumstances of the case and in misreading the averments contained in the Statement of Facts [Form No. 35] before it. There is NO admission by the assessee that Notice of hearings were actually received by the assessee. Only an alternative reasoning was put across as to why the notices could not reach the assessee. Hence the conduct of assessment proceedings without the mandatory service of Notices is wholly illegal and patently without jurisdiction. The Department is prayed to adduce evidence/strict proof of service of Notices of assessment/hearings over the assessee, pertinently the jurisdictional Notice under Section 143(2) of the Act as also Notice under Section 144 of the Income Tax Act.
Because on the facts and in the circumstances the ld CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the Ex-Party Order of Assessment Dt. 10.12.2019 in failing to appreciate that there was no specific notice over assessee, as mandated under the Faceless Appeal Scheme proceedings intimating conduct of appellate proceedings under such Faceless scheme of Assessment and hence the order Impugned Order of CIT(A) deserves to be set-aside and quashed.
3. Because on the facts and in the circumstances the ld CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the Ex-Party Order of Assessment Dt. 10.12.2019 without calling for the Remand Report in the matter as the proceedings were conducted in an Ex-Parte manner.
4. Because on the facts and in the circumstances the Id CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the Ex-Party Order of Assessment Dt. 10.12.2019 and in confirming an addition based on NO material and purely on conjecture resulting in an ad hoc disallowance of 10 percent of expenses claimed under the head consumption of stores and spares, power and fuel, repairs to machinery, salary and wages, sales promotion and travelling expenses aggregating to Rs.61,22,754/-. The books of account maintained by the assessee have been duly audited and have not been rejected by the Assessing Officer before making the impugned ad-hoc disallowance. The same is illegal and bad in law.
5. Because on the facts and in the circumstances the Id CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the Ex-Party Order of Assessment Dt. 10.12.2019 and in confirming an addition under Section 68/69A of the I T Act 1961 which provision of law is mutually exclusive to each-other and cannot be invoked simultaneously; hence the addition made by AO is unsustainable under law. Further, the Ld. CIT(A) has not lawfully appreciated the fact that the addition made by AO for Rs.5,15,09,000/- in the hands of appellant, is part of the disclosed turnover and that the same has already been offered for taxation and any addition on that count would result in double taxation.
6. Because on the facts and in the circumstances the ld CIT(A) - COMMISSIONER OF INCOME TAX (APPEAL) has erred on facts and in law in confirming the order of AO to treat cash deposits made by assessee in its bank account as income from other sources and bring it to tax under Section 115BBE, whereas the fact of the matter is that cash deposited by the assessee for Rs.5,15,09,000/- is out of the available cash in hand as per books of accounts maintained by the assessee company, accordingly, question of any addition/ disallowance applying provisions of Sec. 68/69A of the Act do not arise in the case. It must be stated that the assessee company has a proven business record and has registered substantial turnover, accordingly taxing the business receipts (cash deposits arising out of business) as income from other sources is wholly illegal and bad in law.
Page 3 of 5 7. Because of the order passed by the ld. CIT(A) – Commissioner of Income Tax (Appeal) is not based on the facts of the case but is rather based on assumptions, presumptions, surmises and conjunctures and is vitiated in law as no due and proper hearing was afforded in the case before deciding the matter. 8. The humble assessee prays for leave to be permitted to add, amend or substitute all or any of the above mentioned grounds of appeal
.”
2. The facts giving rise to the present appeal are that in this case, the assessee is a limited company and filed its return of income declaring total income at Nil and claimed current year loss of Rs.117,29,49,093/- for the year under consideration on 29.10.2017. The case was taken up for scrutiny assessment. Accordingly, a notice u/s 143(2) of the Income Tax Act, 1961 (“Act”, for short) was issued on 14.09.2018 which was duly served upon the assessee but there was no response to the notice by the assessee. Therefore, the Assessing Officer issued notice u/s 144 of the Act, again there was no response to the assessee. The Assessing Officer proceeded to make best judgment assessment thereby he assessed income at Rs.1,11,68,26,340/- u/s 144 of the Act. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.
At the time of hearing, no one attended the proceedings on behalf of the assessee. The appeal was taken up for hearing in the absence of the assessee and is being disposed off on the basis of the material available on record. It is seen from the records that the multiple opportunities were given to the assessee. On the last date of hearing, Ms. Gurneet Kaur, Ld. Counsel for the assessee had appeared on behalf of the assessee and sought adjournment. However, the appeal was fixed wrongly on 15.05.2025 and therefore, adjourned. Today no one has appeared
The Ld. Departmental Representative (DR) supported the orders of the lower authorities.
Heard, the Ld. Departmental Representative and perused the material available on record. Vide letter dated 27.11.2024, the assessee had requested for adjournment on the ground that it is contemplating settling the appeal its tax disputes under Direct Taxes Vivad se Vishwas Act, 2024. On 02.04.2025, the request for adjournment was sought on behalf of the Revenue on the ground that the factual report from the Assessing Officer which was still awaited. No report is filed on behalf of the Revenue.
We find that the Ld. CIT(A) has not given clear finding about the grounds of the assessee. The relevant content of the impugned order is reproduced as under: - “8.1 On this matter, the claim made by the appellant prima facie seems correct. In the facts of the case, the addition of Rs.5,15,09,000/- made u/s 68/69A r.w.s. 115BBE of the Act is not allowed to be set-off against the losses shown by the appellant and hence needs to be taxed accordingly. However, the addition of Rs.61,22,754/- being 10% of the expenses is allowed to be set-off against the losses of the year under consideration. Further, when the addition of Rs.5,1509,000/- is made u/s 68/69A r.w.s. 115BBE of the Act and is taxed separately at special rate, the loss of the appellant for the year cannot be again reduced by that amount, as it will amount to double addition, by reduction of loss as well as being taxed separately. Accordingly, the Assessing Officer is directed to verify the claim of the appellant and take necessary as per the provisions of the Income Tax Act, 1961.”
From the above findings, it is not clear that the Ld. CIT(A) stating that the demand of Rs.114,73,58,896/- was not correct. It is stated that the rectification was carried out subsequently Page 5 of 5 and the demand has been revised to Rs.5,91,15,903/- which is also stated to be incorrect. Neither the assessee nor the Revenue has brought to our notice any rectification order on the basis of such rectification order claimed to have been passed. We, therefore, set aside the impugned order and restore the grounds of the appeal to the Ld. CIT(A) who will decide the appeal by way of speaking order. Grounds raised in this appeal are allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 11/06/2025.