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Facts
The assessee, proprietor of M/s. Karsan Enterprise, engaged in petrol/diesel distribution, was issued notices under Section 142(1) during scrutiny assessment. The assessee did not respond, leading to an ex-parte assessment order under Section 144, estimating net profit at 1% of turnover and making an addition of Rs. 54,11,698/-.
Held
The CIT(A) dismissed the assessee's appeal, holding that though some details were filed, they were not verifiable due to lack of supporting documentary evidence. The Tribunal observed that the assessee was given very short hearing dates during assessment and did not get adequate opportunity to present its case.
Key Issues
Whether the assessee was provided adequate opportunity to present its case before the Assessing Officer and whether the additions made were justified.
Sections Cited
142(1), 144
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH
(Assessment Year: 2017-18) Kuldeep Rajendra Singh, Vs. Income Tax Officer, 406, E-10 Green City, Pal Bhata, Ward-1(3)(7), LP Savani Road, Bhatha, Surat Gujarat-394510 [PAN No.BCCPS6435A] (Appellant) .. (Respondent) Appellant by : Shri Rasesh Shah, C.A. Respondent by: Shri Mukesh Jain, Sr. DR 24.03.2025 Date of Hearing Date of Pronouncement 25.03.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 13.06.2024 passed for A.Y. 2017-18.
The brief facts of the case are that the assessee is the proprietor of M/s. Karsan Enterprise, which is engaged in the distribution of petrol / diesel. During the course of scrutiny assessment, the Assessing Officer issued notices under Section 142(1) of the Act proposing certain additions to the returned income. However, the assessee did not respond to the notices issued by the Assessing Officer. As a result, the Assessing Officer estimated net profit of the assessee @ 1% of the turnover of Rs. Kuldeep Rajendra Singh vs. ITO Asst.Year –2017-18 - 2– 61,82,13,252/- i.e. at Rs. 61,82,132/-. Accordingly, an addition of Rs. 54,11,698/- was made to the returned income of the assessee, by rejecting the books of accounts of the assessee and an ex-parte order was passed under Section 144 of the Act.
In appeal, Ld. CIT(A) dismissed the appeal of the assessee by holding that though certain details had been filed by the assessee, but such details are not verifiable since no documentary evidences were filed by the assessee to substantiate the claims filed by the assessee. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:
3.1. During the appellate proceedings in response to notice issued u/s 250 of the Act, the appellant has submitted its written submissions dated 21.01.24 and 24.05.24 which are being considered for adjudicating the appeal. The appellant has furnished agreement with Shell India Market Pvt. Ltd as proof of running a petrol pump. It has submitted a Month- wise Annexure for Quantitative details. However, the same is not verifiable as no supporting documentary evidences are filed to substantiate the claims and figures. I have carefully perused the facts of the case, submissions on record and the assessment order. The instant case was selected for complete scrutiny under CASS. The assessment was completed/s 144 of the Act, on exparte basis as there was no compliance by the appellant during the assessment proceedings. The appellant runs a petrol pump and declared turnover of Rs. 61.82 crores for the F.Y 2016-17. Book results were rejected by the AO considering absence of quantitative details in the audit report and the business income was estimated by the AO @1 % of the sales in the absence of any response from the appellant. During the appellate proceedings, the appellant has not furnished any corroborative evidence to negate the observation made by the AO as regards the declaration of cash deposits during the demonetization period. No bank statements are submitted nor any confirmation/ledger account of Shell Ltd filed to justify the business income. The authenticity of the monthwise quantitative statement is not verifiable at this stage without relevant additional evidences. No application is made under Rule 46A. In this view, the action of the AO is upheld and the addition of Rs.54,11,698/- confirmed. In the result, the appeal is treated as dismissed.
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A).
Kuldeep Rajendra Singh vs. ITO Asst.Year –2017-18 - 3– 5. Before us, the Counsel for the assessee submitted that though the assessee had filed certain details before CIT(A), but inadvertently these details were filed by the assessee in another penalty matter, which was pending adjudication before the same Ld. CIT(A). Accordingly, due to inadvertent error on the part of the assessee, the details which were available by the assessee, could not be appreciated / considered by Ld. CIT(A), while passing the order, and the additions were confirmed. Further, the Counsel for the assessee also pointed out that during the assessment proceedings, the Assessing Officer had given very short dates of hearing and since the assessee was an uneducated person, running a small business, he did not get adequate time to consult his Advocate / Chartered Accountant and accordingly, could not file appropriate details before the Assessing Officer.
In response Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A), in their respective orders.
On going through the facts of the instant case, we observe from Page 2 of the Assessment Order that the Assessing Officer had issued four notices of hearing, in which a very small time of a few days was given to the assessee to file response to the notices issued by the Assessing Officer. The details of notices issued by the Ld. Assessing Officer is reproduced below for ready reference:
Date Notice u/s. Date of hearing/reply Reply received on 19/10/2019 142(1) of the Act with questionnaire 25/10/2019 Non compliance 18/11/2019 142(1) of the Act with questionnaire 22/11/2019 Non compliance 06/12/2019 Show cause notice 11/12/2019 Non compliance 14/12/2019 Shaw cause notice 17/12/2019 Non compliance Kuldeep Rajendra Singh vs. ITO Asst.Year –2017-18 - 4– 8. We observe that the entire assessment proceedings were initiated on 19.10.2019 and concluded on 17.12.2019 wherein a very short span of time was given to the assessee to file it’s reply on merits. In our considered view, looking into the above set of facts, the assessee did not get adequate opportunity to present it’s case on merits before the Assessing Officer. Accordingly, looking into the quantum of additions, in the interest of justice, the matter is hereby restored to the file of Assessing Officer for de- novo consideration after giving due opportunity of hearing to the assessee to present it’s case.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 25/03/2025
Sd/- Sd/- (BIJAYANANDA PRUSETH) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 25/03/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��थ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, सूरत / DR, ITAT, Surat 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,