JBN IMPEX PVT. LTD.,NEW DELHI vs. ITO, WARD 13(3), NEW DELHI, NEW DELHI

These appeals are filed by the assessee against the separate orders of ld. Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 20.02.2023 & 04.10.2023 for Assessment Years 2012-13 & 2017-18. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take ITA No.500/Del/2024 for AY 2012-13 as lead case. 3. Brief facts of the case are, the assessee filed its return of income for Assessment Year 2012- 13 on 11.09.2012 declaring total income of Rs.4950/-. The Assessing Officer had received information from ADIT Investigation (HQ)-2, New Delhi. On the basis of above information, AO issued notice under section 148 of the Income Tax Act 1961(in short’ the Act’) and served on the assessee. Subsequently the assessment order under section 143(3) read with section 147 was passed on 17.12.2019 determining the total income at Rs.50,54,950/-. The additions made by the Assessing Officer relating to addition under section 68 on account of unexplained credit and 1% on the same as Commission. 4. Aggrieved, the assessee preferred an appeal before NFAC, Delhi. The ld. CIT (A) issued several notices for hearing and assessee has not filed any submissions in response to the above said notices. Based on the above, ld. CIT(A) came to the conclusion that assessee is not really interested in pursuing the appeal preferred by them. The details of issue of various notices are listed at page 5 of the order and accordingly, ld. CIT(A) dismissed the appeal for statistical purpose. 5. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal. “1. That under the facts and circumstances of the case, the impugned order dated 20.02.2023 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), dismissing the grounds of appeal and sustaining the assessed income at Rs.50,54,950/- in place of returned income as returned by the assessee is bad in law on account of several grounds and assessee/appellant denies its liability to be assessed for any income other than the income already returned by the assessee and the consequential demand of Rs.30,13,110/-.

That under the facts and circumstances of the case the Ld. CIT(A) has erred in law as much as in fact while passing the impugned' order as the Ld. CIT(A), has dismissed the grounds of the appeal on account of absence of appellant despite several opportunities provided to the latter, but it is imperative to note that the absence of the appellant was not deliberate or intentional but due to the unavailability, because of sufficient reasons, of the appellant during the course of appeal proceedings.

That under the facts and circumstances of the case the Ld. CIT(A) has erred in law as much as in fact while passing the impugned order, as the Ld. CIT(A) has upheld the addition made by the Ld. AO in the assessment order dt. 17.12.2019 passed by the Ld. AO without following the due provisions of law and without having proper juri iction.

That under the facts and circumstances of the case the Ld. CIT(A) has erred in law as much as in fact while sustaining the impugned assessment order, as the Ld. AO have made addition of Rs.50,00,000/- by stating "there is enough material on record to reach a reasonable conclusion that amount received by the assessee company through its bank account in the form of share application money during the year under consideration are merely accommodation entries for which the assessee company has paid cash from its coffer and commission thereon. Therefore, the total share application money amounting to Rs.50,00,000/- received by the assessee company through its bank accounts is added back to the total income of the assessee u/s 68 of the IT Act, 1961 as unexplained credits". However, the Ld. AO have failed to appreciate that the assessee has already provided the details of the share-holders and their account statements, but the Ld. AO have made the addition only because the share holders have failed to file replies to the notices issued u/s 133(6) of the Act issued to them and has treated all of the share application money as unaccounted money of the assessee.

That under the facts and circumstances of the case the Ld. CIT(A) has erred in law as much as in fact while sustaining the impugned assessment order, as the Ld. AO have made addition of Rs.50,00,000/- (being 1% of total share application money) by stating "for getting the accommodation entry of the said amount of Rs.50,00,000/- the assessee has taken the services of the entry operator. For routing the money, the assessee has to pay commission to the entry operators. As per the prevalent rate known at the time which these entries are taken is @1 %. This expenditure is also made out of the books of accounts. Therefore, the commission paid to the entry operators @1% of Rs.50,00,000/- which comes to Rs.50,000/- is also added to the total income of the assessee". However, the Ld. CIT(A) has failed to appreciate that the said addition has been done by the Ld. AO based only on conjectures, surmises and presumptions and no concrete explanation for such addition has been produced by the Ld. AO while passing the impugned assessment order.

That under the facts and circumstances of the case learned AO has erred in law as much as in facts in initiating penalty proceedings u/s 271(1)(c) of the Act, the issuance of penalty notice may be held invalid.”

At the time of hearing, ld. AR of the assessee submitted that assessee has filed an affidavit with the reasons that the case of the assessee was represented by earlier counsel but, due to some reasons, he failed to respond to the various notices issued during the course of hearing by the ld. CIT(A). The assessee agrees that due to the unprofessional behaviour of the previous counsel, the appeal of the assessee was dismissed and it was submitted that the assessee also equally responsible and prays for condonation of delay of 287 days. It was also submitted that new counsel is appointed and they will follow the appeal proceedings seriously. 7. On the other hand, ld. DR of the Revenue objected for the reason that the assessee is not serious in resolving the issue considering the inordinate delay in responding to the various notices. However, he agreed that the ld. CIT(A) has not decided the issue on merit. 8. Considered the rival submissions and material placed on record. We observed from the record that the assessee was represented by earlier counsel before the first appellate authority and due to his personal reasons and reasons best known to him, he failed to represent the case and no doubt there are inordinate delay and absolutely no professionalism shown by him. The unprofessional conduct of the counsel cannot be the reason to penalise the assessee. For the sake of complete justice, we notice that ld. CIT(A) dismissed the appeal on the failure on the part of assessee for not filing written submissions and not deciding the issue on merits. At the same time, we direct the assessee to represent the case before the first appellate authority without taking any adjournment. Accordingly, we remit this issue back to the file of ld. CIT(A) to decide the issue on merits after giving proper opportunity of being heard to the assessee. In the result, the appeal filed by the assessee for AY 2012-13 is allowed for statistical purpose. 9. With regard to appeal for AY 2017-18, since the facts are exactly similar to AY 2012-13 our above findings in AY 2012-13 are applicable mutatis mutandis in AY 2017-18. Accordingly, the appeal being ITA No.501/Del/2024 for AY 2017-18 filed by the assessee is allowed for statistical purposes.. 10. In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on this 3rd day of January, 2025. (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER