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Facts
Assessee, Prathama Constructions, engaged in hotel and construction, filed ROI for AY 2016-17. During limited scrutiny, the AO disallowed depreciation of Rs. 31,98,658/- on Work-in-Progress (WIP) as it was claimed for the first time this year despite the building being shown in the previous year's depreciation schedule without claim. The assessment was completed under Section 143(3), and the assessee's subsequent appeal to the NFAC was dismissed ex-parte.
Held
The Tribunal condoned a 278-day delay in filing the appeal, noting the reason for delay and the lack of objection from the Sr. D.R. It restored the assessee's appeal to the National Faceless Appeal Centre (NFAC) to be heard on merits, granting the assessee another opportunity, while also cautioning strict compliance with NFAC notices.
Key Issues
Ex-parte dismissal of appeal by NFAC; Condonation of delay in filing appeal; Disallowance of depreciation on Work-in-Progress.
Sections Cited
142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2016-17 Prathama Constructions v. The ITO-2(2) F-120, Ganj Plaza Lucknow 42, Masjid Lane Hazratganj, Lucknow TAN/PAN:AAKFP8300L (Appellant) (Respondent) Appellant by: None Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 23 04 2025 Date of pronouncement: 25 04 2025 O R D E R
This appeal has been preferred by the assessee against order dated 25.03.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2016-17.
2. The brief facts of the case are that the assessee was engaged in the business of running Hotel and construction work. The assessee filed its return of income for the year under consideration on 30.07.2016, declaring a total income of Rs.7,56,030/-. The case of the assessee was selected for limited scrutiny under CASS. During the year under consideration, the assessee had shown total turnover at Rs.1,62,62,825/- and income from business at Rs.7,56,030/-. The assessee had also claimed depreciation amounting to Rs.45,86,296/-. The assessee, Page 2 of 5 vide notice under section 142(1) of the Income Tax Act, 1961 (hereinafter called “the Act’) was requested to furnish the documentary evidence in support of details of construction Work- in-Progress (WIP) shown in the Schedule. The Assessing Officer (AO) noticed that in the Depreciation Schedule for the year ending 31.03.2015, the assessee had shown value of building at Rs.2,63,37,349/- and had not claimed any depreciation thereon, whereas for the year ending 31.03.2016 i.e. Assessment Year 2016-17, depreciation of Rs.31,98,658/- was claimed by the assessee and this was the first year in which depreciation had been claimed and the same was also shown as construction WIP for the year under consideration. The AO required the assessee to explain the same. After considering the submissions of the assessee, the claim of depreciation of Rs.31,98,658/- was disallowed by the AO and added to the income of the assessee. The AO completed the assessment under section 143(3) of the Act, computing the income of the assessee as under:
Income as per P&L account : Rs.7,56,030/- Addition on a/c of depreciation : Rs.31,98,658/- Total income (rounded off) : Rs.39,54,690/-
3. Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. The case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee by passing an order ex-parte qua the assessee for the reason of non- compliance of the assessee.
4. Now, the assessee has approached this Tribunal challenging the order of the NFAC by raising the following grounds of appeal:
1. Because documentary evidences were submitted to the learned Assessing Officer.
2. Because grounds taken by the learned Assessing Officer are not Sustainable in the eyes of law.
3. Being the learned AO has erred in law and on facts in completing the assessment at an income of Rs.39,54,690/- against disclosed income of Rs.7,56,030/-. 4. Because the assessment order in question is based on irrelevant material and has been passed without considering the relevant material and evidences as were available on record and the same is not liable to be sustained. 5. Because the learned Assessing Officer has erred in completing the assessment at an income of Rs.39,54,690/- against disclosed income of Rs.7,56,030/-. 5. None was present for the assessee when the appeal was called out for hearing. However, an application seeking adjournment was placed before me citing the reason that the Counsel of the assessee was not well. However, looking into the
6. During the course of hearing, it was brought to my notice that there was a delay of 278 days in filing the appeal before the Tribunal. An application dated 27.02.2025 had been filed by the partner of the assessee-firm, supported by an Affidavit, stating therein that the person who was looking after the income tax matters of the assessee-firm did not inform the partners about the passing of the order by the NFAC and also the requirement for filing of appeal before the Tribunal on time. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned.
7. The Ld. Sr. D.R. had no objection to the delay being condoned.
8. In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
9. The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the NFAC.
10. I have heard the Ld. Sr. D.R. and have also perused the material on record. It is evident that the appeal of the assessee Page 5 of 5 was dismissed by the NFAC by passing an order ex-parte qua the assessee. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, I restore this file to the Office of the NFAC with the direction to hear the appeal on merits. I also caution the Assessee to fully comply with the notices and directions of the NFAC in the set-aside proceedings when called upon to do so, failing which, the NFAC would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.
11. In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 25/04/2025.
Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:25/04/2025 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order
Assistant Registrar/DDO
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER Assessment Year: 2016-17 Prathama Constructions v. The ITO-2(2) F-120, Ganj Plaza Lucknow 42, Masjid Lane Hazratganj, Lucknow TAN/PAN:AAKFP8300L (Appellant) (Respondent) Appellant by: None Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 23 04 2025 Date of pronouncement: 25 04 2025 O R D E R
This appeal has been preferred by the assessee against order dated 25.03.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2016-17.
The brief facts of the case are that the assessee was engaged in the business of running Hotel and construction work. The assessee filed its return of income for the year under consideration on 30.07.2016, declaring a total income of Rs.7,56,030/-. The case of the assessee was selected for limited scrutiny under CASS. During the year under consideration, the assessee had shown total turnover at Rs.1,62,62,825/- and income from business at Rs.7,56,030/-. The assessee had also claimed depreciation amounting to Rs.45,86,296/-. The assessee, Page 2 of 5 vide notice under section 142(1) of the Income Tax Act, 1961 (hereinafter called “the Act’) was requested to furnish the documentary evidence in support of details of construction Work- in-Progress (WIP) shown in the Schedule. The Assessing Officer (AO) noticed that in the Depreciation Schedule for the year ending 31.03.2015, the assessee had shown value of building at Rs.2,63,37,349/- and had not claimed any depreciation thereon, whereas for the year ending 31.03.2016 i.e. Assessment Year 2016-17, depreciation of Rs.31,98,658/- was claimed by the assessee and this was the first year in which depreciation had been claimed and the same was also shown as construction WIP for the year under consideration. The AO required the assessee to explain the same. After considering the submissions of the assessee, the claim of depreciation of Rs.31,98,658/- was disallowed by the AO and added to the income of the assessee. The AO completed the assessment under section 143(3) of the Act, computing the income of the assessee as under:
Income as per P&L account : Rs.7,56,030/- Addition on a/c of depreciation : Rs.31,98,658/- Total income (rounded off) : Rs.39,54,690/-
Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. The case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee by passing an order ex-parte qua the assessee for the reason of non- compliance of the assessee.
Now, the assessee has approached this Tribunal challenging the order of the NFAC by raising the following grounds of appeal:
Because documentary evidences were submitted to the learned Assessing Officer.
2. Because grounds taken by the learned Assessing Officer are not Sustainable in the eyes of law.
3. Being the learned AO has erred in law and on facts in completing the assessment at an income of Rs.39,54,690/- against disclosed income of Rs.7,56,030/-. 4. Because the assessment order in question is based on irrelevant material and has been passed without considering the relevant material and evidences as were available on record and the same is not liable to be sustained. 5. Because the learned Assessing Officer has erred in completing the assessment at an income of Rs.39,54,690/- against disclosed income of Rs.7,56,030/-. 5. None was present for the assessee when the appeal was called out for hearing. However, an application seeking adjournment was placed before me citing the reason that the Counsel of the assessee was not well. However, looking into the
During the course of hearing, it was brought to my notice that there was a delay of 278 days in filing the appeal before the Tribunal. An application dated 27.02.2025 had been filed by the partner of the assessee-firm, supported by an Affidavit, stating therein that the person who was looking after the income tax matters of the assessee-firm did not inform the partners about the passing of the order by the NFAC and also the requirement for filing of appeal before the Tribunal on time. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned.
The Ld. Sr. D.R. had no objection to the delay being condoned.
In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the NFAC.
I have heard the Ld. Sr. D.R. and have also perused the material on record. It is evident that the appeal of the assessee Page 5 of 5 was dismissed by the NFAC by passing an order ex-parte qua the assessee. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, I restore this file to the Office of the NFAC with the direction to hear the appeal on merits. I also caution the Assessee to fully comply with the notices and directions of the NFAC in the set-aside proceedings when called upon to do so, failing which, the NFAC would be at complete liberty to pass the order in accordance with law, based on 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 25/04/2025.