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Facts
The assessee's return for AY 2012-13 was processed u/s 143(1) and later scrutinized u/s 143(3), leading to additions of Rs. 33,00,420/- (foreign travel) and Rs. 23,73,000/- (personal expenses), recomputing the total income to Rs. 1,40,70,940/-. The assessee's appeal before NFAC was dismissed ex-parte on 09.11.2023 for failure to file submissions, despite alleged opportunities.
Held
The Income Tax Appellate Tribunal (ITAT) observed that the CIT(A) (NFAC) disposed of the appeal ex-parte. Considering the overall circumstances, including the assessee's claims of not receiving physical notices and business challenges due to Covid, the ITAT decided to remit the matter back to the CIT(A) for fresh adjudication. The CIT(A) is directed to provide a reasonable and sufficient opportunity of being heard to the assessee, who is also directed to cooperate for expeditious disposal.
Key Issues
Whether the CIT(A)/NFAC was justified in dismissing the appeal ex-parte without providing adequate opportunity of being heard, and consequently, whether the additions made for foreign travel and personal expenses were valid.
Sections Cited
143(1), 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR PAREEK
This appeal by Assessee is directed against the order of National Faceless Appeal Centre , Delhi [for short hereinafter referred to as the “(NFAC)”] dated 09.11.2023 for Assessment Year 2012-13.
ITA No.- 21/Del/2024 Kasa Technologies Ltd.
Facts of this appeal may be summarized as that the assessee has filed its return of income of Rs.83,43,770/- for the assessment year 2012-13 and, then the return of the assessee was processed u/s. 143 (1) of the Income Tax Act. The case was also selected for scrutiny assessment U/s.143 (3) of the Act for the year under consideration and subsequently order U/s.143(3) of the Income Tax Act was passed on 16.02.2015 at an assessed income of Rs.83,97,520/- vide assessment order dated 11.12.2019, foreign tax and travel expenses amounting to Rs.33,00,420/- and expenditure of Rs.23,73,000/- disallowed and added to its returned income and the income of the assessee is recomputed as total income of Rs.1,40,70,940/-. Being aggrieved of this order dated 11.12.2019, assessee preferred an appeal before National Faceless Appeal Centre (NFAC), Delhi and appeal was dismissed vide order dated 09.11.2023 by stating that assessee/ appellant failed to avail the opportunity to file/ furnish the submissions/ documents in support of the grounds of appeal though the appellant was afforded sufficient opportunity of being heard. Aggrieved as so, present appeal filed.
ITA No.- 21/Del/2024 Kasa Technologies Ltd. 3. Aggrieved by the order of the CIT(A) the assessee has raised the following grounds of appeal :-
“1. The order u/s 147/143(3) of the IT Act passed by the Ld. ACIT- Circle 14(1), New Delhi is bad in law and wrong on the facts and is therefore unstainable in Law.
2. That the Ld. CIT(A) has erred in sustaining the addition of foreign tour and travelling expenses of Rs. 33,00,420 made by the Ld. ACIT- Circle 14(1), New Delhi in order u/s 147/143(3) of the IT Act.
That the Ld. CIT(A) has erred in sustaining the addition of expenses of personal nature of Rs. 23,73,000 made by the Ld. ACIT-Circle 14(1), New Delhi in order u/s 147/143(3) of the IT Act.
The company never received any physical notices sent by the department.
The company is law abiding entity and regular tax payer. In the past never any income tax notices have been missed by the company.
Due to Covid the business of the company has been fell down and the appellant company was not much active. The staff strength of the company has also been reduced.
7. The company has no in house accountant till date. Hence no one is there who could check the online notices sent by the NFAC regularly.
The counsel of the appellant company to whom appointed counsel for CIT(A) case, he was very old age person and he has been not keeping well since long time because of his age- related issues.
Online notices inadvertently skipped by the company, otherwise notices would have been replied and required compliance would have been done.
That the appellant craves leave to reserve itself the right to add, alter, amend, or withdraw any of the grounds of appeal at / or before time of hearing.”
ITA No.- 21/Del/2024 Kasa Technologies Ltd.
4. Heard rival submissions and carefully perused the relevant material available on record. From the perusal it reveals that Learned CIT(A) disposed of the appeal ex-parte. In this regard, the assessee/ appellant submitted that assessee’s company never received any physical notices sent by department. The assessee also submitted that company never been missed any income tax notice and due to Covid, business had been fell down and staff strength had also been reduced.
5. The Learned DR while placing emphasis on the both orders of Lower authorities, submitted that Learned CIT(A) had provided sufficient opportunities vide notice dated 28.01.2021, 04.11.2022, 29.09.2023, 16.10.2023 and 26.10.2023 of being heard to the assessee but in vain and in such facts and circumstances the present appeal is liable to be dismissed.
6. The Learned CIT(A) disposed of the appeal ex-parte and in our humble opinion substantive disposal of appeal is required by law. So looking to over all circumstances mentioned hereinabove and in the ITA No.- 21/Del/2024 Kasa Technologies Ltd. interest of justice, without going into the merits of the case it is a fit case to remit back the matter for adjudication to the files of the CIT(A) to decide the appeal afresh after affording a reasonable and sufficient opportunity of being heard to the assessee. At the same time assessee has also been directed to co-operate in proceedings before CIT(A) and avoid unnecessary adjournments for ensuring expeditious disposal.
Consequently, the appeal of the assessee is allowed as indicated above.
Order pronounced in the open court on 31.05.2024.