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Facts
The assessee, a partnership firm engaged in wholesale paddy trading, declared an income of Rs. 2,99,630 in its return. During the assessment, the Assessing Officer noted large expenditure claims and, due to non-compliance with notices for supporting documents, assessed the taxable income at Rs. 82,75,877. The assessee appealed to the CIT(Appeals) but failed to provide submissions or representation, leading to the dismissal of the appeal.
Held
The Tribunal noted that the CIT(Appeals) had not considered the case on merit and merely upheld the Assessing Officer's order. To meet the principle of natural justice, the Tribunal decided to set aside the CIT(Appeals)'s order and remit the matter back, granting one more opportunity to the assessee to be heard.
Key Issues
Whether the CIT(Appeals) erred by not considering the appeal on merits, and if the assessee should be granted another opportunity to present its case due to procedural lapses.
Sections Cited
143(2), 142(1), 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Sanjay Awasthi
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 5th June, 2024 passed for Assessment Year 2018-19.
(A.Y. 2018-2019) Digga Enterprises 2. Brief facts of the case are that the appellant-assessee is a partnership firm, which is engaged in wholesale trading of paddy. It filed its return of income on 21.02.2019 declaring income of Rs.2,99,630/-. Statutory notice under section 143(2) was issued on 23.09.2019. On verification of return of income, it is seen that the assessee has reported sales to the tune of Rs.105,56,36,335/- and claimed large expenditure. Notices under section 142(1) of the Income Tax Act dated 17.12.2020 and 22.01.2021 were issued calling for certain details, i.e. computation of income, nature of business activity carried out during the year, business expenses claimed, details of TDS deducted, GP ratio, NP ratio for the last three years. The assessee furnished the details on 28.01.2021. However, the assessee claimed huge expenditure on account of interest on loan, travelling expenses, warehouse charges etc. Accordingly notice under section 142(1) was issued calling for evidences in support of expenditure claimed but no compliance was made from the end of the assessee. Show-cause notice dated 27.09.2021 was issued calling to produce written submissions alongwith supporting evidences. In absence of any documentary evidence in support of its claim, the ld. Assessing Officer assessed the total taxable income at Rs.82,75,877/- under section 143(3) read with 144B of the Income Tax Act, 1961. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) has given several opportunities to the assesese to substantiate its claim, but the appellant did not file the written submissions and did not represent the case before the ld. CIT(Appeals). Thereafter the ld. CIT(Appeals) dismissed the appeal
At the time of hearing, it was the submission of the ld. Counsel for the assessee that ld. CIT(Appeals) did not consider the case on merit, rather he just upheld the order passed by the ld. Assessing Officer. Therefore, he pleaded to delete the addition made by the ld. Assessing Officer as confirmed by the ld. CIT(Appeals).
At the outset, ld. D.R. brought to my notice that the assessee did not produce the relevant documents as asked by the ld. Assessing Officer during the assessment proceedings. Therefore, the ld. Assessing Officer passed the assessment order assessing the taxable income at Rs.82,75,877/-. Thereafter the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) has given many opportunities to the assessee and the assessee neither filed written submission nor any evidence before the ld. CIT(Appeals). He further submitted that before the ITAT, the assessee did not substantiate its claim. Therefore, he pleaded to uphold the orders passed by the revenue authorities.
We have heard the ld. Departmental Representative and perused the material available on record. Considering the facts and circumstances of the case, we are inclined to set aside the order passed by the ld. CIT(Appeals) in order to meet the principle of natural justice, and remit the matter back to the file of ld. CIT(Appeals) with a direction to provide one more opportunity of (A.Y. 2018-2019) Digga Enterprises being heard to the assessee. At the same breath, we also hereby caution the assessee to promptly co-operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 13/02/2025.