ITO, NEW DELHI vs. M/S. RAVI JEM & JEWELLERY EXPORTS PVT. LTD., NEW DELHI

This appeal is filed by the Revenue against the order dated 12/08/2014 passed by CIT(A)- XVIII, New Delhi for Assessment Year 2010-11.

The grounds of appeal are as under:- “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in:- (i) Reducing the NP ratio to 3.5% as against the 10% of total turnover taken by the AO. (ii) Deleting the addition of Rs. 4,51,080/- as rightly made by the AO on account of income from other sources declared by the assessee in the P&L Account as the net profit of the assessee has been redrawn. (iii) Deleting the addition of Rs. 1,58,62,170/- made by the AO on account of unexplained cash deposited U/s 68 of the I.T. Act, 1961, as the assessee company failed to submit plausible explanation in support of nature and sources of cash deposit. The additional evidences admitted by the Ld CIT(A) is also in contravention of Rule 46A. (iv) Deleting the addition of 100% of Rs. 2,80,01,753/- as bogus sundry creditor u/s 68 as the assessee could not established the credit worthiness of its creditors.”

At the time of hearing, none appeared for the assessee, despite serving the notice through mode of e-mail, speed post as well as handing over the notice of hearing to the caretaker of the assessee Company. Hence, all the modes of service given u/s 282 of the Income Tax Act, 1961 & Rule 127 as well as 127A of the Income Tax Act Rules, 1962 was complied with by the Revenue. We are taking up the matter for hearing, as the service is completed.

The assessee company was incorporated on 12.04.1994. During the financial year 2009-10 relevant to A.Y. 2010-11, the assessee company earned income from export of gems and jewellery. The return of income declaring an income of Rs. 3,28,840 was filed by the assessee company on 14.10.2010 and the same was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny and Notice u/s 143(2) of the Act was issued on 22.09.2011 which was duly served on the assessee company. Subsequently, notices u/s 142(1) of the Act alongwith the questionnaire were issued. In response, Authorized Representative and CA of the assessee company initially attended the assessment proceedings. But from 18.12.2012 none appeared before the Assessing Officer on behalf of the assessee. Vide questionnaires dated 21.09.2012 and 17.12.2012 along with notice u/s 142(1) and also statutory notice dated 18.01.2013, the assessee company was informed that in the event of non-compliance it would be presumed that they had no explanation to offer and assessment order u/s 144 of the Act would be finalized on merit. The notices were not complied with, therefore, the Assessing Officer vide order dated 01.03.2013 u/s 144 of the Act made various additions. Being aggrieved by the said Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. The Revenue is in appeal before us.

The Ld. DR submitted that the CIT(A) has granted the relief without considering the fact that the documents produced before the CIT(A) was not before the Assessing Officer. In fact, the CIT(A) has not given any categorical finding as to why the documents were not produced before the Assessing Officer. Therefore, it will be appropriate remand back the issues contested herein to the file of the Assessing Officer.

We have heard the Ld. DR and perused the material available on record. There is delay of 6 days in filing the present appeal by the Revenue. The same is explained and hence, the delay is condoned. The CIT(A) has not given any finding as to why the details were not produced before the Assessing Officer and has also not given detailed plausible reason as to why the said details/documents of the assessee are admitted by the CIT(A) despite having opportunity to file the same before the Assessing Officer. After going through the records, we are of the considered opinion that it will be appropriate to remand back this issue to the file of the Assessing Officer for taking into account all the relevant details/documents produced by the assessee before the CIT(A) and after considering these documents the Assessing Officer should pass appropriate order. Needless to say, the assessee be given full opportunity of hearing by following principals of natural justice.