PANKAJ AUTOMOBILES PRIVATE LIMITED ,G.T ROAD, MOGA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, FEROZEPUR
Facts
The assessee company filed a return declaring a loss of Rs. 23.24 crores for AY 2016-17, but the AO, under section 143(3), assessed the income at a reduced loss of Rs. 5.86 crores, making various disallowances including bad debts, unexplained sundry creditors, loss by fire, and unestablished trade discount. The CIT(A) dismissed the assessee's appeal ex-parte without adjudicating on merits, citing non-compliance. The assessee subsequently filed an appeal before the Tribunal with a 127-day delay, which was condoned due to the death of a director and the company's temporary suspension.
Held
The Tribunal observed that notices from the CIT(A) were likely not received by the assessee through the provided email ID, leading to the ex-parte dismissal without merits. Consequently, the Tribunal remanded the entire matter back to the CIT(A) with directions to provide the assessee a reasonable opportunity of hearing and for the assessee to furnish all necessary documentary evidence and explanations for a fresh adjudication on merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte without adjudicating on merits and ensuring proper service of notices, and whether the disallowances made by the AO regarding bad debts, unexplained sundry creditors, loss by fire, and unestablished trade discount are justified.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 143(3) of the Income Tax Act, 1961, Section 68 of the Income Tax Act, 1961, Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
Per Udayan Dasgupta, J.M.:
This appeal is filed by the assessee against the order of the ld. CIT(A) NFAC, Delhi dated 16.10.2023 passed u/s 250 of the Income Tax Act, 1961 which has
emanated from the order of the AO, Circle, Ferozepur passed u/s 143(3) of the Act,
dated 31.12.2018.
2 I.T.A. No. 238/Asr/2024 Assessment Year: 2016-17
Grounds of appeal taken by the assessee in Form No. 36 are as under:
“1. That, the orders passed by the Ld. Commissioner of Income Tax (Appeal) vide orders dated 16.10.2023 is illegal, uncalled for and against the law & facts.
That, the Ld. Commissioner of Income Tax (Appeal) has sustained the additions merely on conjectures and surmises without any legal basis.
That, the grounds of appeal raised with Ld. Commissioner of Income Tax (Appeal) is as follows: -
(i) That, order passed by the Assessing Officer vide order dated 31.12.2018 is illegal, uncalled for and against the Law.
4 (ii) That, Assessing Officer has made disallowance of expenses and made addition merely on conjectures and surmises without any legal basis
5 (iii) That, the Assessing Officer has wrongly disallowed the business expenses i.e. Bad Debts, loss claimed on account of Fire and Trade Discount while calculating the business loss without any legal basis which should be allowed as per law.
(iv) That, the Assessing Officer has failed to appreciate the copy of account of both the persons from whom credit transactions of Rs. 80,00,000.00 has been made and which has been duly repaid in the succeeding year and is not unexplained cash credit as per section 68 of Income Tax Act, 1961. So, the additions of Rs. 80,00,000.00 made by the Assessing Officer is bad in law and must be deleted.
7 (v) The assessee craves leave to argue on any other question of law and/or facts at the time of hearing of this appeal.”
Condonation of delay: It is pointed out by the registry that the appeal is filed
belatedly by 127 (one hundred twenty-seven) days. The assessee has filed an affidavit
3 I.T.A. No. 238/Asr/2024 Assessment Year: 2016-17 through one of its Director Mr. Rajat Bansal explaining the reasons for delay in filing
of this appeal. It is submitted that the late Dwarka Nath Bansal one of the Directors of the Company expired on 14th November, 2019 and the other Director of the Company
was totally unaware of the various ongoing proceedings of the assessee company
before the Income Tax Authorities, and since the assessee company business was
temporarily suspended since more than last 8 (eight) years and office of the company
was physically closed after the death of Mr. Dwarka Nath Bansal, the papers and
documents were also not traceable, and the order of the ld. CIT(A) has been passed ex-
parte in absence of any compliance on the part of the assessee and subsequently, when
the Director was informed regarding the dismissal of the appeal by the ld. first appellate
authority, they have managed to appoint a new counsel by the help of whom this appeal
has been filed before the Tribunal which is belated by 127 days.
Considering the above facts, the Director Mr. Rajat Bansal prayed for
condonation of delay and for admitting the appeal for hearing on merits.
The ld. DR has no objection considering the factual aspect.
We have heard the counsel of the assessee and considered the affidavit filed by
the Director and considering the reasons, we condone the delay and admit the appeal
for hearing on merits.
4 I.T.A. No. 238/Asr/2024 Assessment Year: 2016-17 7. Brief facts emerging from records are that the assessee company has filed a
return declaring loss of Rs.23.24 crores which was selected for scrutiny under CASS
and in absence of proper explanation by the assessee regarding (i) allowability of bad
debts of Rs.14.60 crores debited to profit and loss account (ii) on account of
unexplained sundry creditors amounting to Rs.3.03 crores (iii) on account of claim of
loss of Rs.1.44 crores by fire and (iv) claim of unestablished trade discount of Rs.1.33
crores, the income has been assessed at reduced loss figures of Rs.5.86 crores.
The ld. first appellate authority has dismissed the appeal in limine without
adjudicating the grounds of appeal on merits of the case in absence of any response or
explanations to various notices issued in course of appellate proceedings.
Now, the assessee is before the Tribunal on the grounds contained in the
memorandum of appeal contained in Form No. 36.
The ld. AR of the assessee submitted that the notices of hearing have not been
received from the office of the ld. first appellate authority and it is evident from the
appellate order that notices has been issued only on two occasions both in the
department portal and the same has not been received by the assessee because no notice
has been issued as per mail id stated in Form No. 35 gdsinghal_1974@yahoo.co.in.
5 I.T.A. No. 238/Asr/2024 Assessment Year: 2016-17 11. As such, he has prayed for an opportunity of hearing for furnishing of
documentary evidences and for furnishing of explanations in respect of this appeal.
The ld. DR relied on the order of the ld. CIT(A) but has no objection if the
matter is remanded back to the ld. first appellate authority for consideration afresh.
We have heard the rival submissions and considered the materials on record and
we find that even though notices has been issued in the department’s portal, there is no
evidence whether notices has been issued in the mail as per provided in Form No. 35.
Moreover, the ld. CIT(A) has not adjudicated the grounds of appeal on merits of the
case and has dismissed the appeal in limine in absence of documentary evidences filed
before him.
As such, in the interest of justice, we remand the matter back to the files of the
ld. first appellate authority to consider all the submissions made by the assessee which
are on record and we also direct the assessee to furnish all documentary evidences and
submissions and to properly explain the issues raised in the grounds of appeal to the
satisfaction of the ld. first appellate authority.
6 I.T.A. No. 238/Asr/2024 Assessment Year: 2016-17 15. The assessee shall be allowed reasonable opportunity of being heard.
We have not expressed any opinion on merits of the case and all legal issues are
left open.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 27.11.2025
Sd/- Sd/- (Manoj Kumar Aggarwal) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
