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Facts
The assessee, Krishna Developers, filed an appeal against the order of the Commissioner of Income-tax (Appeal) for Assessment Year 2012-13. The appeal arose from an order passed by the Assessing Officer under section 143(3) of the Income Tax Act. The assessee's return declared a total income of Rs. 90,10,620/-, which was processed under section 143(1). The case was selected for scrutiny, and the Assessing Officer invoked provisions of section 145(3) to estimate income.
Held
The Tribunal noted that the appeal was filed late by 437 days and accepted the assessee's explanation for the delay due to a discontinued firm and unreceipt of online notices from the NFAC. The Tribunal also observed that the CIT(A) had disposed of the appeal ex-parte without adjudicating on merit. Therefore, in the interest of justice, the matter was remanded back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte, and whether a fresh adjudication on merit is required after condoning the delay.
Sections Cited
143(3), 250, 145(3), 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
(�नधा�रणवष� / Assessment Year: (2012-13) (Hybrid Hearing) Krishna Developers Vs. The Joint Commissioner of Income 1st Floor, Business Centre, Bud Stand, Tax Junagadh Range, L.B.S. Society, Income Tax Office, Junagadh – 362210 Junagadh �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAEFK0952H (Appellant) (Respondent) Appellant by : ShriMehul Ranpura, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Date of Hearing : 04/06/2025 Date of Pronouncement : 01/08/2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM:
Captioned appeal filed by the assessee, pertaining to Assessment Year 2012-13, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”),Commissioner of Income-tax (Appeal), dated 01.02.2023, which in turn arises out of an order passed by the Assessing Officer, u/s. 143(3)of the Act, on 23.02.2015.
Grounds of appeal
raised by the assessee are as follows:
1. Ld. Assessing officer has erred on facts and in law in rejecting book results and invoking provisions of section 145(3) of the Income Tax Act, 1961 and The Commissioner of Income Tax (Appeals) NFAC has erred on facts and in law in confirming the same.
(AY 2012-13) Krishna Developers v. ITO 2. Ld. Assessing officer has erred on facts and in law in making addition of Rs.1,25,37,824/- by estimating income @ 8% on self-executed work and The Commissioner of Income Tax (Appeals) NFAC has erred on facts and in law in confirming the same.
Ld. Assessing officer has erred on facts and in law in making addition of Rs.40,51,554/- by estimating income @ 3% on work done on sub let basis and The Commissioner of Income Tax (Appeals) NFAC has erred on facts and in law in confirming the same.
Ld. Assessing officer has erred on facts and in law in making addition of Rs.9,92,956/- by estimating income @ 5.4% on work done through sub contractors and The Commissioner of Income Tax (Appeals) - NFAC has erred on facts and in law in confirming the same.
The order passed by Ld. Assessing officer u/s 143(3) is bad in law as well as on facts and The Commissioner of Income Tax (Appeals) NFAC has erred on facts and in law in confirming the same.
Brief facts of the case that the Return of income filed by the assessee on 30.09.2012 electronically declaring therein total income at Rs. 90,10,620/-. The same has been processed u/s. 143(1) of the Act. The assessee firm is engaged in the business of Civil Construction work. The case is selected for scrutiny under CASS, thereafter, notice u/s. 143(2) was issued on 08.08.2013 which is served upon the assessee. The assessee from time to time and furnished the details as called for. The Audit Report in prescribed form alongwith Audited Account is filed. The case was heard, discussed, examined thoroughly on the basis of various explanation, clarification/submission filed and kept on record. Provisions of section 145(3) of the Act are applicable in the case of assessee and therefore a fare estimate of the income is required to be made though section 44AD of the Act is not statutorily applicable in the case of assessee, none the less, it does provide a very fare estimate of income in the case of contractors engaged in the business of civil construction. The net profit rate of 8% mentioned in the section is not arbitrary and it is not without basis, Thus, out of contract work of Rs. 31,01,73,972/-, self executed contract work is for Rs. 15,67,22,798/-.
(AY 2012-13) Krishna Developers v. ITO Net profit from this work is estimated @ 8% of the receipts. As regards contract work sub-let to other contractors Rs. 13,50,64,949/- fair estimate of profit is made @3% of such receipts after excluding the share of sub- contractors' profit in this work and work done on sub-contract basis Rs. 1,83,86,225/- fair estimate of profit is made @5.4%. The total profit so estimated is subject to further deduction on account of interest and remunerations to partners. In view of the above mentioned facts net profit from the business of the assessee is as under;
Assessed income... Rs. 1,45,40,153/- i.e. Rs. 1,45,40,150/-
That the assessee filed an appeal against the order of the Ld. AO, vide order dated 23.02.2015, in the office of the Ld. CIT(A), Rajkot. The Ld. CIT(A) has dismissed the appeal with following remarks: “Looking to the facts and circumstances of the case and material available on record. I do not find any reason to interfere with the findings of the AO. Accordingly, the addition made by AO is hereby confirmed. Therefore, ground no. 3 is decided in negative and against the appellant. Hence, this ground of appeal is dismissed.” 4.1 That the assessee filed an appeal against the impugned order dated 01.02.2023 before the Tribunal.
5. At the outset, that the appeal filed late by 437 days. The Ld. AR of the assessee has filed an application for condonation of delay, supported by Affidavit. The crux of the application for delay is as under; “Our firm is discontinued w.e.f. 26/08/2023 With the discontinue of firm, our contact details, particularly our e mail id kd_rajkot@yahoo.com was also discontinued. Moreover, 1st appeal before the Hon'ble CIT(A) for the A.Y. 2012-13 was filed vide manually vide appeal no. 3/10621/15-16. After filling of the appeal, we had received notice u/s 250 of the Income Tax Act, 1961 and our case was fixed for hearing. During the course of appellate proceeding, our authorized (AY 2012-13) Krishna Developers v. ITO representative filled paper book on the date of hearing and case was discussed and heard. Government of India introduced new scheme for appeal and all the appeals were transferred to National Faceless Appeal Centre (NFAC) as per new appeal mechanism. The NFAC has issued on line notices for hearing u/s 250 to our old e mail id which we had discontinued. We have not received any notice physically and therefore, we were not aware about various notices issued by NFAC on line. Therefore, we were totally unaware about issue of notice of hearing.” 5.1 That the Ld. AR prayed for one more opportunity may kindly be given to the assessee to explain the case. 5.2 On the contrary, the Ld. Sr. DR for the revenue relied on the order of the lower authority, and the Ld. Sr. DR has not objected to the prayer of the Ld. AR. 5.3 We have heard both the parties. We note that delay of filing before this Tribunal due to e-mail address, contact details, discontinued. That the assessee has unaware about the online proceedings going on before the Ld. CIT(A) the assessee came to know about the appellate order when penalty proceedings by department. That in the also come of contrary fact of material on record, the assessee have a sufficient cause for delay in filing the appeal, after considering the reason explained by the Ld. AR. In the interest of justice, we take a judicious view that we condoned the delay in filing appeal by 437 days.
During the course of hearing, the Ld. AR of the assessee submitted that the assessee has discontinued w.e.f. 26.08.2023 the email address and contact details. The assessee has no knowledge of online proceedings. That the Ld. AR prayed for one more opportunity may kindly be given to the assessee to explain the case.
We have heard both the parties and perused the documents available on record, and also perused the order of Ld. CIT(A) and paper books submitted Page | 4 (AY 2012-13) Krishna Developers v. ITO by Ld. AR. We note that four notices dated 23.12.2020, 08.10.2021, 10.11.2021, 07.12.2021 have been issued by the Ld. CIT(A), but there was no compliance to the notice by the assessee. The order is silent on service of the notice upon the assessee. However, the assessee has submitted the paper book during the course of hearing, and the same was not __ by the Ld. CIT(A). The Ld. CIT(A) disposed off the appeal by an ex-parte order without adjudication on merit. Thereafter, we are of the view that in the interest of justice, and considered the fact and circumstances of the case, we consider that an opportunity should be given to the assessee to present his case before the Lower Authority. We remand the matter back to the file of Ld. CIT(A) for fresh adjudication on merit after giving due opportunity to the assessee of being heard.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 01-08-2025.