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Facts
The assessee filed its return of income for AY 2014-15 declaring Nil income. The Assessing Officer (AO) made several additions and disallowances, including suppression of yield, disallowance of depreciation, transport expenses, cane development expenses, and interest income, totaling Rs. 16,84,48,981/-. The CIT(A) dismissed the appeal, citing the assessee's non-response and non-cooperation.
Held
The Tribunal noted the assessee's consistent non-cooperation during appellate proceedings. However, considering the principles of natural justice and the appellant's plea for another opportunity, the Tribunal decided to set aside the CIT(A)'s order.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without providing adequate opportunity of hearing, violating principles of natural justice? Whether the additions and disallowances made by the AO and confirmed by the CIT(A) were justified on facts and in law?
Sections Cited
143(2), 142(1), 143(3), 250(6)
AI-generated summary — verify with the full judgment below
Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 20.02.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2014-15.
The grounds of appeal
raised by the assessee are as under: “LEGAL:
1. The orders of the authorities below in so far as they are against the appellant-society are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case
2. On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, Delhi (for the sake of brevity "CIT (Appeals)") passed ex parte order in violation of principles of natural justice and hence, the CIT (Appeals)'s order being not passed as per mandate of provisions of section 250(6) of the Act is liable to be struck down.
3. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals), NFAC, Delhi has erred both on facts and in law in deciding the /AY.2014-15 M/s Coper Co-op. Sugar Ltd. appeal ex parte in violation of the principle of natural justice and without granting to the appellant a fair, proper and meaningful opportunity and the findings of the CIT (Appeals) that the appellant-society has not responded to the notice of hearing, is wholly incorrect, misleading and in disregard of the records of appeal proceedings demonstrating that the appellant-society had duly complied with the notice of hearing served on the registered email address and hence, liable to be set aside. MERITS: 4. Without prejudice to the above, On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC, Delhi has erred in confirming the AO's order without any adjudication of the grounds raised in the appeal making - i) Addition of Rs. 15,83,47,480/- on account of alleged suppression of yield ii) Disallowance of additional depreciation claimed of Rs. 52,41,227/- iii) Disallowance of transportation expenses to the extent of Rs. 18,55,856/- iv) Disallowance of cane development expenses claimed of Rs. 29,34,014/- v) Addition of interest income to the extent of Rs. 89,041/- vi) Addition of Rs. 21,046/ on account of alleged unexplained income EVIDENCES IGNORED:
5. On the facts and in the circumstances of the case as well in law, the authorities below have erred in overlooking and summarily rejecting the detailed various submissions made during the course of assessment proceedings including the Statutory Audit reports of the Govt. Auditors, the Statement of Accounts, audited Balance Sheet and Manufacturing reports, book records, audited books of accounts and hence, the order passed by the CIT (Appeals) confirming the AO's order making various additions/disallowances for the aggregate amount of Rs. 16,84,89,164/- arbitrarily, capriciously and based on lopsided, imaginary and factually incorrect inferences, deserves to be annulled or nullified. GENERAL:
6. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. PRAYER It is therefore, respectfully submitted that taking into account various submissions written as well as oral made in the course of assessment proceedings and/or appeal proceedings before the CIT (Appeals), NFAC, the entire addition/disallowances to the extent of Rs. 16,84,89,164/- be deleted in toto especially in view of the appellant's various submissions filed with the AO and CIT (Appeals), which form part of statement of facts, along with submissions to be filed before the Hon'ble ITAT, Surat and the appeal of the appellant be allowed in full as prayed for.”
/AY.2014-15 M/s Coper Co-op. Sugar Ltd.
Brief facts of the case are that assessee filed its return of income for AY 2014-15 on 26.09.2014, declaring total income at Rs. Nil (Loss of Rs.40,183/-). The case was selected for scrutiny under CASS. Various notices u/s 143(2) and 142(1) of the Act along with questionnaires were issued and served on the assessee. The assessee was asked to submit details and explanation on various issues. The assessee submitted its details/explanation through its Managing Director on 27.06.2016, 03.11.2016 and 16.12.2016. The AO found that the assessee had shown purchase of sugarcane of 32,59,360 quintal whereas he claimed total purchase of sugarcane of 32,60,015.15 quintal in the audit report and profit and loss account. The assessee was asked as to clarify the discrepancy in the purchase quantity of sugarcane. The AO raised query on suppression of yield, claim of additional depreciation, additional transport expenses and claim of cane development expenses. After hearing the assessee, the AO passed order u/s 143(3) of the Act on 23.12.2016 by making the following additions: (i) suppression of yield Rs.15,83,47,980/-, (ii) disallowance of additional depreciation Rs.54,41,227/-, (iii) disallowance of additional transport expenses Rs.18,55,856/-, (iv) disallowance of cane development expenses Rs.29,34,014/-, (v) interest income of Rs.89,041/- and (vi) difference in creditor of Rs.21,046/-. The total income was determined at Rs.16,84,48,981/-. After set off of brought forward unabsorbed depreciation, total income was determined at Rs.16,38,15,260/- as against returned loss of Rs.40,183/-.
/AY.2014-15 M/s Coper Co-op. Sugar Ltd.
Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) has issued three notices dated 23.12.2020, 24.08.2022 and 21.10.2022, requesting assessee to furnish written submission in support of the grounds of appeal on or before 07.01.2021, 01.09.2022 and 07.11.2022 respectively. The assessee responded only on 22.11.2022 and requested for adjournment. The request was accepted and final opportunity of hearing vide notice dated 19.04.2023 was given, requesting the assessee to file submission on or before 04.05.2023. However, the appellant did not file any reply. The CIT(A) observed that despite multiple opportunities, assessee did not file any submission or documentary evidence against the observation of the AO or in support of the grounds of appeal. In absence of documentary evidence, the appeal could not be decided. Thereafter, the CIT(A) relied upon the decisions of Hon’ble Supreme Court in case of CIT vs. B. N. Banerjee & Ors, (1977) 118 ITR 461 (SC) and the decision of Hon’ble Madhya Pradesh High Court in case of Estate of Late Tukojirao Holkar vs. CWT, 223 ITR 480 (MP) where the Hon’ble Court dismissed the reference file at the instance of the assessee for default and not taking necessary steps. The CIT(A) has also referred to the decision of the ITAT, Ahmedabad in case of Amitkumar H. Shah vs. ACIT, in dated 31.12.2013 and the ITAT, Delhi in case of CIT vs. Multiplan India Pvt. Ltd., 38 ITD 320 and dismissed the appeal of the assessee. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a /AY.2014-15 M/s Coper Co-op. Sugar Ltd. small paper book containing copy of notices issued by CIT(A) and request for adjournment by the assessee. He also filed a copy of the profile of the appellant on the portal of the Income-tax Department. He submitted that the assessee could not appear before the CIT(A) due to circumstances beyond its control. He also submitted that adequate opportunity of hearing was not given to the assessee; therefore, one more opportunity should be given to the assessee to plead its case before the CIT(A).
6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that during the appellate proceedings, the assessee was negligent and non- cooperative, due to which the additions were confirmed by CIT(A). However, he did not have any objection if the matter is restored to the file of CIT(A).
We have heard both the parties and perused the materials available on record. It is an undisputed fact that assessee has been totally non-cooperative during the appellate proceedings. The ld. AR submitted that adequate opportunity was not provided by the CIT(A). He submitted that appellant is ready with all details and, therefore, he requested one more opportunity to plead its case on merit. The ld. CIT-DR also did not object if the matter is set aside for fresh adjudication. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we set aside the order of CIT(A) and remit the matter to the file of CIT(A) for fresh adjudication in accordance with law after granting adequate /AY.2014-15 M/s Coper Co-op. Sugar Ltd. opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(A) by not seeking adjournment without valid reasons. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced in terms of provision of Rule 34 of ITAT Rules, 1963 on 03/11/2025.