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Facts
The assessee, a partnership firm, filed a return of income for AY 2012-13 declaring 'Nil' income. The assessment was reopened based on information regarding a bogus purchase of Rs. 2,93,41,118/- from M/s Kriya. The assessee was alleged to be the beneficiary of this bogus purchase.
Held
The Tribunal found that both the AO and CIT(A) passed ex parte orders due to alleged non-compliance by the assessee. The Tribunal observed that the assessee had made partial compliance, but these details were not considered by the AO. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh adjudication.
Key Issues
Whether the CIT(A) rightly dismissed the appeal for non-prosecution and confirmed the addition without considering the submissions made by the assessee? Whether the AO and CIT(A) correctly passed ex-parte orders without properly considering the assessee's partial compliance?
Sections Cited
147, 148, 69C, 10AA, 250, 253(3), 144, 132(4)
AI-generated summary — verify with the full judgment below
Before: SHRI PAWAN SINGH & 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 21.03.2023 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2015-16.
The grounds of appeal
raised by the assessee are as under: "1. The Ld CIT, NFAC has erred and was not just and proper on the facts of the case and in law in not adjudicating the ground No. 1 regarding proceedings u/s 148 of the Act.
2. The Ld CIT, NFAC has erred and was not just and proper on the facts of the case and in law in not allowing deduction u/s 10AA.
3. The Ld CIT, NFAC has erred and was not just and proper on the fact of the case and in law in confirming the addition of Rs.2,93,41,118/-.
/AY.2012-13 Euro Jewels 4. The Ld CIT, NFAC has erred and was not just and proper on the facts of the case and in law in confirming the application of section 69C of the addition.
5. PRAYER 5.1 The proceedings u/s 148 being bad in low may be kindly quashed. 5.2 The deduction u/s 10AA may be kindly allowed. 5.3 The application u/s 69C may be kindly deleted. 5.4 The application of section 69C to the addition may be kindly set aside. 5.5 Personal hearing may be granted. 5.6 Any other relief that your honours may deem fit may be granted.
6. The assessee craves leave to add, amend, modify, alter or delete any of the grounds at the time of hearing."
The appeal filed by assessee is barred by 1 day in terms of provisions of section 253(3) of the Act. The learned Authorized Representative (Id. AR) submitted that the CIT(A) has passed order u/s 250 of the Act on 28.12.2023. The appeal before this Tribunal was required to be filed within 60 days, i.e. on or before 28.02.2024. However, the assessee filed the appeal on 29.02.2024. Therefore, there is a delay of 1 day. The Id. AR requested to condone the delay in the interest of justice.
On the other hand, learned Senior Departmental Representative (Id. Sr. DR) for the revenue submitted that the Bench may decide the matter as deemed proper.
We have heard both the parties on this preliminary issue of delay of 1 day. We find that assessee was neither negligent nor the delay was deliberate. Hence, we condone the delay of 1 day and admit the appeal for hearing.
Brief facts of the case are that the assessee is a partnership firm and it filed the return of income for AY.2012-13 on 28.09.2012, declaring total income of Rs. Nil. Original assessment was completed on 16.02.2015 accepting /AY.2012-13 Euro Jewels the returned income. The case was reopened u/s 147 of the Act on the basis of information received from the ACIT, CC4, Surat. The assessee had made purchase of Rs.2,93,41,118/- from M/s Kriya which was a bogus concern managed by Rajendra Jain and Bhanwarlal Jain Group. The assessee was beneficiary of the above bogus purchase. Notice u/s 148 was issued on 30.03.2019 but assessee did not file any return in response to the said notice. The Assessing Officer (in short, 'AO') granted various opportunities which is tabulated in para 5 of the assessment order. There was non-compliance to all notices and only an unsigned undated xerox copy of audit report and 10A/10AA report was uploaded on 18.09.2019. Therefore, AO passed order u/s 144 r.w.s. 147 on 06.11.2019 by adding Rs.2,93,41,118/-u/s 69C of the Act.
Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) issued 5 notices of hearing to the assessee on 28.01.2021, 10.07.2023, 01.08.2023, 09.08.2023 and 14.09.2023. However, neither any adjournment letter nor any written submission was filed by the appellant. The CIT(A) has relied upon the decisions in cases of CIT vs. B. N. Bhattarjee & Others, (1979) 10 CTR 354 (SC), Estate of Late Tukojirao Holkar vs. CWT, (1979) 223 ITR 480 (MP), Dr. P. Nalla Thampy vs. Shankar, (1984 (Supp) SCC 63, New India Assurance vs. Srinivasan, (2000) 3 SCC 242, CIT vs. Gold Leaf Corporation Ltd., in of 2009, dated 02.09.2011 and observed that appeal of the assessee is liable to be dismissed for non-prosecution. Thereafter, he has observed that due to non-compliance by assessee, AO had to passed order u/s /AY.2012-13 Euro Jewels 144 r.w.s. 147 of the Act, which was a speaking order. In absence of any submission or evidence in support of grounds of appeal
as well as Statement of Facts, the CITIA) confirmed the addition made by AD and dismissed the appeal of assessee.
8. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (Id. AR) of the assessee submitted a paper book including the return of income filed in response to notice u/s 148 for AY 2012-13, submission dated 18.09.2019, copy of ledger a/c of Kriya Impex Pvt. Ltd. for FY 2011-12, copy of invoices issued by Kriya Impex for purchase of rough diamonds, copy of bank statement reflecting the payment made to Kriya Impex Pvt. Ltd. and copy of audit report in Form 3CD along with stock details. The Id. AR submitted that these details and documents were submitted before the AO and CIT(A) but the said authorities passed the orders without considering these details. The Id. AR also relied on various decisions and Circular issues by the CBDT.
9. On the other hand, the learned Senior Departmental Representative (Id. Sr. DR) of the revenue supported the order of lower authorities. He relied upon the decision of Rajasthan High Court in case of Goenka Jewellers vs. CIT, (2018) 100 taxmann.com 517 (Raj.) wherein it was held that where AO issued re-assessment notice and disallowed deduction u/s 10AA on basis of statements recorded u/s 132(4) of the Act wherein it was established that assessee was beneficiary of accommodation entries from two concerns by /AY.2012-13 Euro Jewels obtaining bogus purchase bills and, further assessee also failed to prove genuineness of such purchases, the impugned disallowance was justified. The Id. Sr. DR also relied on the decisions of Sun Pharmaceutical Industries Ltd. vs DCIT, 29 taxmann.com 262 (Gujarat) and Liberty India vs. CIT, 317 ITR 218 (SC).
We have heard both the parties and perused the materials available on record. We have deliberated on the case laws relied upon by both sides. We find that both AO and CIT(A) have passed ex parte orders by observing that assessee was non-compliant and did not furnish requisite details requisitioned in various statutory and show cause notices issued by AO and the notices issued u/s 250 of the Act by the CIT(A). In fact, AO has passed the order u/s 144 r.w.s. 147 of the Act due to non-compliance by the assessee. The CIT(A) had also observed at para 6.6 that the appeal of assessee was liable to be dismissed due to non-prosecution. Subsequently, he confirmed the addition on merit because the assessee did not file any written submission or evidence in support of the grounds of appeal
. On the other hand, Id. AR of the assessee has filed paper book and submitted that details in respect of seven items were submitted before the AO and CIT(A). He has filed screenshot of e-filing portal of Department in support of filing of some details during the assessment proceedings u/s 147 of the Act. After considering the facts discussed above, we are of the view that the assessee had made partial compliance of the details called for by the AO. However, even these part details were not considered by AO. The AO should have verified these details and thereafter /AY.2012
13. Euro Jewels called for further details, if he needed any clarification or further evidence. The CIT(A) has also passed an ex parte order without considering the facts discussed above. Therefore, without delving further into the merits of the case, in the interests of justice, we set aside the order of CIT(A) and restore the matter back to the file of AO for fresh adjudication and to pass a speaking order after affording sufficient opportunity of being heard to the assessee. The assessee is also directed to furnish explanation and submit the relevant details and documents before the AO without seeking adjournment bereft of valid reason. For statistical purposes, the appeal of the assessee is treated as allowed.
In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced in the open court on 08/01/2025.