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Facts
The assessee, engaged in consultancy services, filed an income tax return for Rs. 35,07,650/-. The case was selected for scrutiny due to significantly high commission expenses of Rs. 1,24,60,701/- and low net profit, raising suspicion of bogus payments. Despite multiple notices, the assessee failed to provide information or evidence, leading the Assessing Officer to make an ex-parte addition of the disputed commission expenses and initiate penalty proceedings. The CIT(A) dismissed the assessee's appeal, refusing to admit additional evidence due to non-participation in assessment proceedings.
Held
The Tribunal observed that both lower authorities passed ex-parte orders without considering the assessee's additional evidence. To ensure natural justice, the Tribunal decided to restore the matter to the Assessing Officer, granting the assessee another opportunity to submit arguments and evidence, provided they cooperate and avoid frivolous adjournments. The Tribunal clarified that this restoration does not imply any reflection on the merits of the case, which the AO shall adjudicate independently.
Key Issues
Whether the CIT(A) was justified in rejecting the application for admitting additional evidence under Rule 46A and confirming the ex-parte addition of commission expenses of Rs. 1,24,60,701/- by the AO due to the assessee's non-participation in assessment proceedings.
Sections Cited
143(3), 144B, 270A, 144
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No.1461/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2020-21 Ajay Kumar cuke Assessment Unit ITD (NFAC), Jaipur. F-31, Das & Yadav Co. Vs. Panchwati Circle, Rajapark, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AVCPK6066B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Kumar Sharma, C.A. jktLo dh vksj ls@ Revenue by : Mrs. Swapnil Parihar, JCIT- DR a lquokbZ dh rkjh[k@ Date of Hearing : 19/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 03/04/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This appeal is filed by the assessee against the order of the Ld. CIT(A), National Faceless Appeal Centre, Delhi dated 08.11.2024 [hereinafter referred as “CIT(A)/NFAC”] for the assessment year 2020- 21, which in turn arise from the order dated 20.09.2022 passed under section 143(3) r.w.s. 144B of the Income Tax Act, [In short “Act” ] by the AO.
Ajay Kumar vs. NFAC 2. The assessee has raised following grounds:- “
1. Under the facts and circumstances of the case the ld. CIT(A) is not justified in rejecting the application of the assessee u/r 46A of IT Rules, 1962 and in not admitting the additional evidence.
2. Under the facts and circumstances of the case the Ld. CIT(A) is not justified in confirming the addition of Rs. 12460701/- made by the AO to returned income by passing ex party assessment order and disallowing the commission expenses claimed by the assessee in Audited profit & loss account.”
3. The brief facts of the case are that the assessee individual in engaged in the business of consultancy services. The assessee filed his return of income on 20/01/2021 declaring income of Rs.35,07,650/-. The case was selected for scrutiny to verify the "large commission expenses and low net profit. Further, the commission expenses are significantly high as compared to the turnover. There is a possibility that assessee has shown excess/bogus commission payments in order to increase expenditure and reduce the profit/taxable income. Therefore, the genuineness of large commission expenses claimed may be verified." Notices were issued to the assessee calling for information. However, No response was received till date. On 12/08/2022, the assessee was issued letter to comply with the notices issued. In response, the assessee sought adjournment till next month and no information was submitted by the assessee.
Ajay Kumar vs. NFAC 3.1 The assessee did not furnish any information in response to the notices issued till date The assessee sought adjournment till next month vide response dated 17/08/2022. As per the ITR, the assessee claimed commission expenses of Rs. 1,24,60,701/- The assessee was asked to submit bills/vouchers, TDS returns, GST returns etc vide show-cause notice dated 02/09/2022. However, the assessee sought adjournment twice and did not submit any information/evidences in support the commission expenses claimed in the P&L account.
3.2 As per the ITR, the assessee claimed large commission expenses of Rs. 1,24,60,701/-. The assessee did not submit any information/evidences in support the large commission expenses claimed in the P&L account. In the absence of the bills/vouchers, GST Returns, TDS returns etc, it is difficult to arrive at the conclusion that the expenditure is genuine or not. Further, it was also mentioned in the show-cause notice that, in case no response is received by the given time and date, the assessment shall be finalized taking into account variation(s) above. The assessee on 08/09/2022 did not furnish any information, however sought adjournment for one more month. No information was collected after issue of show cause notice. The assessee did not furnish any information except seeking adjournment for one month.
Ajay Kumar vs. NFAC 3.3 The ld. AO noted that the assessee had been given enough opportunities for submission of information. However, the assessee sought adjournment for notices issued and did not furnish any information. The assessee also did not furnish any information which was called for vide show cause notice issued on 08/09/2022 except seeking adjournment for one month. In the absence of the requisite information and due to time constraints, I am left with no alternative but to complete the assessment proceedings. Accordingly, the variations proposed in the show-cause notice are incorporated in the Assessment Order. Therefore, the assessment is completed by adding an amount of Rs. 1,24,60,701/- to the returned income. Penalty proceedings u/s 270A is initiated separately for under reporting of income.
Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:-
“4.2 The submission of the appellant for the additional evidence has been carefully examined, on perusal of assessment order it has been noted that appellant has been provided sufficient opportunities of being heard in addition to show cause notice. Thus, there is no default as the Assessing Officer has followed principle of natural justice. 4.3.1 However, in respect of new evidence under Rule 46A of the Income Tax Rules no explanation has been submitted by the appellant. 4.3.2 It is a fact that during the assessment proceedings the assessee did not participated.
Ajay Kumar vs. NFAC 4.3.3. During the course of appellate proceeding, the appellant has appellant has submitted its written submission. 4.3.4 However, since during the assessment proceedings the appellant does not participated however, during the appellate proceedings he has submitted the evidence to justify the claim. However, for submission of additional as well as new evidence the appellant failed to submit the reasons. Rule 46A of the IT Rules, prescribes the circumstances/exceptions under which the assessee can file additional evidences before the CIT (A), which are as under- (a) Where the AO has refused to admit evidence which ought to have been admitted; or (b) Where the assessee was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO; or (c) Where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal
; or (d) Where the AO has made the order appealed against without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal.
5. No such circumstances exist in the case of the assessee. The order u/s 144 of the Act, dated 20.09.2022 was passed after giving sufficient opportunities to the assessee. It is pertinent to mention here that the appellant, who was much vigil to prefer the appeal but, did not bother to attend the assessment proceedings conducted by the Assessing Officer. Further regarding its claim no evidence has been submitted to justify the same.
6. The appellant has, during the assessment proceedings before AO has not participated nor in its application has stated that it was prevented by sufficient cause from producing before the AO the details being submitted by it as "additional evidence". Since the appellant was not prevented by any sufficient reasons. Further, it would also be not out of context to mention here that the laws aid those who are vigilant, not those who sleep upon their rights. This principle is embodied in well know dictum IGILANTIBUS ET NON DORMIENTIBUS JURA SUB VENIUNT." Therefore, submission of the additional evidence at this stage is not acceptable and is rejected.
7. Since, none of the exceptions/circumstances mentioned in Rule 46A of the IT Rules is present in assessee case; I am not inclined to admit the additional evidence submitted by the assessee.
Ajay Kumar vs. NFAC 8. Therefore, addition made by the AO in assessment order olds good. Thus, the addition made by the AO is hereby confirmed. Since the additional evidence filed by the appellant have not been taken into consideration. The grounds of appeal raised in the appeal needs not to be adjudicated. In effect the appeal in dismissed.”
5. As the assessee did not receive any favour from the appeal filed before Ld. CIT(A). The present appeal filed against the said order of the Ld. CIT(A) before us on the grounds as reiterated here in above. During the course of hearing, the ld. AR for the assessee prayed that the Ld. CIT(A) and the AO has passed the ex-parte order and the assessee was not provided adequate opportunity of being heard. The ld. AR of the assessee further submitted that the additional evidences as raised by him before the ld. CIT(A) was not taken into consideration and thus the assessee was deprived off to submit his arguments as to the case mentioned hereinabove and the same should also be taken into consideration by the lower authorities while disposing of the appeal of the assessee. The Bench noted that the additional evidence as raised by the assessee before Ld. CIT(E) should also be taken into consideration to give justice to the assessee and these additional evidences are mentioned as under:-
(1) Commission Paid Ledger as per Books of Accounts of the assessee.
Ajay Kumar vs. NFAC (2) (2) The extract of commission Register containing date, Name and Amount Wise details of Commission paid and TDS thereon. (3) Party wise details of Commission Paid containing their name, PAN address and Amount paid during the relevant previous year. (4) The TDS on Commission payable/paid Ledger as per Books of Accounts of the assessee. Conclusively, the assessee may be provided one more opportunity to advance his arguments/submissions/additional evidences before the ld. AO in the interest of equity and justice.
Per contra, Ld. DR objected to the prayer of the assessee and submitted that even the assessee did not represent case before the ld. AO and therefore, in that case the Bench feels the matter may be restored to the file of the Assessing Officer.
We have heard both the parties and perused the materials available on record. The bench noted from the order of ld. CIT(A) that the appeal of the assessee was dismissed by the ld. CIT (A) for want of non- prosecution of the appeal. The assessee neither appeared nor filed any reply to the notices which were issued by the ld. AO during the assessment proceedings, finally the assessee completed ex- parte assessment. However, the Bench feels that the assessee because of any reasons could not advance his arguments/submissions to contest the case before the lower authorities and the ld. AR for the assessee also prayed to give one more opportunity to submit the additional evidences Ajay Kumar vs. NFAC concerning the issue in question, with grounds so raised by the assessee and also take into consideration the additional evidences, to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before the ld. AO.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 03/04/2025.
Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (Rathod Kamlesh Jayantbhai) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 03/04/2025 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Ajay Kumar, Jaipur. 2. izR;FkhZ@ The Respondent- Assessment Unit ITD (NFAC), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A)
सहायक पंजीकार@Aेेज. त्महपेजतंत