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Facts
The assessee filed its return of income and was selected for scrutiny. The Assessing Officer (AO) completed the assessment ex-parte due to non-compliance by the assessee. The CIT(A) also dismissed the assessee's appeal ex-parte. The assessee contended that notices were not properly served, leading to non-compliance.
Held
The Tribunal noted that the assessee was not properly represented before the lower authorities due to issues with notice service. Considering the peculiar facts, the Tribunal restored the matter to the AO for fresh adjudication after providing the assessee with a reasonable opportunity of being heard.
Key Issues
Whether the ex-parte assessment and appellate orders were passed without affording a reasonable opportunity of hearing to the assessee due to non-service of proper notices.
Sections Cited
144, 270A, 271B, 271AAC, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY
This appeal has been preferred by the assessee against order dated 07.02.2024, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
The brief facts of the case are that the assessee filed its return of income for the year under consideration on 31.03.2018, declaring a total income of Rs.1,72,03,780/-. The case of the assessee was selected for complete scrutiny under CASS for verification of “Large turnover shown in ITR but Audit Report (3CD Form) not filed”. The Assessing Officer (AO) issued various statutory notices to the assessee, but there was no compliance from the side of the assessee except filing a write-up on 16.12.2019, without any supporting evidence. In the absence of any supporting evidence, the AO completed the assessment under section 144 of the Income Tax Act, 1961 (hereinafter called “the Act’), assessing the total income of the assessee at Rs.3,24,56,880/- after making various additions.
2.3 The AO also initiated penalty proceedings under sections 270A, 271B and 271AAC of the Act, separately.
Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee by passing an order ex-parte qua the assessee due to reason of non-compliance.
Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1. BECAUSE the Ld. "CIT(A)" was not justified in passing the order dated 07.02.2024 ex-parte without affording reasonable opportunity of being heard to the "appellant" and consequently the impugned order deserves to be set-aside and the matter restored to the "Id. CIT)A)" for passing the order a-fresh after affording due and effective opportunity of being heard to the "appellant".
2. BECAUSE the notices of hearing referred in para 4 of the impugned order were not issued and served on the "appellant" in the manner specified in the Memo of Appeal (Form 35), due to which the concerned notices were not served upon the "appellant" causing non-compliance and consequently, the impugned order passed by ld. "CIT(A)" deserves to be set-aside and matter restored to "CIT(A)" for passing the order a fresh after affording due and effective opportunity of being heard to the "appellant".
3. BECAUSE on a due consideration of the material and information on record, particularly that the Assessing Officer completed the assessment u/s 144 of the 'Act without affording reasonable opportunity of being heard to the assessee, the ld."CIT(A)" should have considered the material available on record by calling for a Remand Report from the Assessing Officer before passing the impugned order and this having not been done, the impugned order deserves to be set aside for passing the order afresh.
4. BECAUSE during the course of assessment proceedings, the "appellant" had furnished all the requisite detailed information and evidences to the Assessing Officer, (the Id. Assessing Officer) was not justified in passing the assessment order u/s 144 of the "Act" and consequently the Id. "CIT(A)" ought to have set aside the assessment order and deleted the additions made therein. WITHOUT PREJUDICE TO THE AFORESAID 5. BECAUSE the Id. "CIT(A)" has grossly erred in confirming the addition of Rs.2,77,37,015/- made by the Assessing Officer on account of profit from the contract business applying a net profit rate @ 8% purely on adhoc basis, as against 4.82% shown in the audited books of account, without rejecting the books of account and without pointing out any defect/ discrepancies in the books of account.
6. BECAUSE without prejudice to ground no.5, the estimation of net profit rate @ 8% of gross turnover by the authorities below is highly excessive and much too high and the same deserves to be reduced to a reasonable rate looking to the past performance of the assessee and the prevailing rate in the similar kind of business.
7. BECAUSE the "CIT(A)" has grossly erred in law and on facts in confirming the addition of Rs.17,93,000/- made by the Assessing Officer, as un-explained money u/s 69A of the "Act" on account of cash deposited in the bank account of the assessee during demonetization period, without pointing out any defect in the audited books of account.
8. BECAUSE the provisions of section 69A get attracted only if the assessee is found to be the owner of money/bullion etc. and in the present case, the assessee not having been found to be owning the sum of money to the tune of Rs.17,93,000/-, the addition made/sustained u/s 69A of the "Act" is liable to be deleted.
9. BECAUSE in any case, the "appellant" has not been found to be the owner of 'money' amounting to Rs.17,93,000/- but the said amount has been found credited in the bank account, consequently the addition of Rs.17,93,000/- made/confirmed under section 69A of the "Act" deserved to be deleted.
10. BECAUSE without prejudice to the grounds taken herein- fore, the Id. "CIT(A)" ought to have appreciated that the cash deposit of Rs.17,93,000/- in the bank account constituted part of the total turnover of Rs.34,67,12,683/- declared in the return of income and on a due consideration of this fact alone, no separate addition to the tune of Rs.17,93,000/-, that too u/s 69A of the "Act", was warranted/called for.
11. BECAUSE the Id. "CIT(A)" has erred in law and on facts in confirming the addition of Rs.27,35,836/- made by the Assessing officer on account of interest on FDRs as shown in the profit and loss account without appreciating that the net profit shown in the profit & loss account, which had been duly declared as the income in the return, already included the said sum of Rs.27,35,836/ and therefore, the separate addition of Rs.27,35,836/- made by the AO deserved to be deleted.
12. BECAUSE without prejudice to the ground no.11, the sum of Rs.27,35,836/-shown in the profit & loss account included interest income of Rs.21,30,660/-on those FDRs which were obtained from the bank for submitting towards earnest deposit/security deposit as per contract with the principals, and therefore, interest to the extent of Rs.21,30,660/- constituted part of the business income and consequently the same could not have been subjected to separate addition.
BECAUSE the sums aggregating Rs.6,05,176/- [the difference between Rs.27,35,836/- (-) Rs.21,30,660/-] represented rent received by the assessee on renting of equipments and as such the said amount of Rs.6,05,176/- represented the income from business and therefore this amount also being part of net profit as per profit & loss account could not have been added separately, hence the same deserves to be deleted.
BECAUSE "CIT(A)" has also erred in law and on facts in confirming the addition of Rs.1,91,032/-on account of rent merely on the basis of entries shown in Form 26AS whereas as per material on record, the gross amount of rent of Rs.2,72,903/- was part of overall sum of Rs.6,05,176/- received as rent on renting equipment and therefore the addition of Rs.1,91,032/- (being 70% of Rs.2,72,903/-) has resulted in double addition, hence liable to be deleted.
BECAUSE on the facts and in the circumstances, the addition of Rs.1,91,032/-sustained by "CIT(A)" has resulted in double addition.
BECAUSE the order appealed against is contrary to facts, law and principles of natural justice. 17. The appellant craves leave, to add, delete or modify any of the grounds at the time of arguing the appeal.
During the course of hearing before us, the Ld. Authorized Representative for the assessee (Ld. A.R.) invited our attention to the duly signed and sworn in affidavits of the Director of the assessee-Company, Shri Shakeel Haider and Chartered Accountant, Shri Jayant Pandey wherein they have affirmed that the assessee-Company had appointed Chartered Accountant, Shri Jayant Pandey as an Auditor as well as for representing before Assessing Officer on behalf of the assessee- Company for the Assessment year 2017-18 and that on account of remuneration issues, in place of Shri Jayant Pandey, Shri Prashant Kapsey, Advocate was engaged to represent the assessee-Company in the income tax assessment and appellate proceedings for assessment year 2017-18 and that the email id of Shri Jayant Pandey (cajayantpandey@rediffmail.com), which was registered on e-filing portal, on which the communications relating to the assessee-Company were sent by the Department, continued to be so registered. However, the notices sent by the Department were never brought to the knowledge of the assessee-Company by Shri Jayant Pandey, which led to non- compliance during assessment as well as first appellate proceedings. The Ld. A.R. submitted that in view of the above facts, the assessee could not be represented before the lower authorities. He prayed that the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of hearing to the assessee.
The Ld. D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R.
We have heard both the parties and have also perused the material on record. Looking into the peculiar facts of this case, we are of the considered view that the assessee deserves an opportunity to present its case and, therefore, we restore this file to the Office of the AO with the direction to provide an opportunity to the assessee to present its. We also caution the assessee to fully comply with the directions of the AO in the set- aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 22/05/2025.