M/S. I NOVATE TECHNOLOGIES LTD.,INDORE vs. THE DCIT 1(1), INDORE

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ITA 3/IND/2017Status: DisposedITAT Indore27 March 2017AY 2011-125 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessment was made in violation of the principles of natural justice as the assessee was not given a proper opportunity to be heard. Therefore, the case was restored to the AO for fresh assessment.

What were the facts?

The assessee failed to respond to notices issued by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) (CIT(A)). The AO made an ex-parte assessment under Section 144, disallowing 20% of 'other expenses' due to lack of details. The CIT(A) confirmed this disallowance.

What were the issues?

Whether the assessment proceedings and the order passed were in violation of the principles of natural justice due to lack of opportunity of being heard to the assessee.

Which sections of the Income-tax Act were involved?

Section 144,Section 143(3),Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI C. M. GARG & SHRI O.P. MEENA

I Novate Technologies ITA No. 3/Ind/2017 आयकरअपील�यअ�धकरण ,इ�दौर�यायपीठ ,इ�दौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE �ी सी.एम.गग� ,�या�यकसद�य तथा �ीओ.पी.मीना ,लेखासद�यकेसम� BEFORE SHRI C. M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER आ.अ.सं /.I.T.A. No.3/Ind/2017 �नधा�रणवष� / Assessment Year: 2011-12 M/s I Novate Technologies Ltd. vs. Dy. Commissioner of Income 80, Kalindi Mid Town tax Officer 1(1) Indore Indore

अपीलाथ� अपीलाथ� /Appellant अपीलाथ� अपीलाथ� ��यथ� ��यथ� /Respondent ��यथ� ��यथ� �था.ले.सं./PAN: AACCI – 1276M अपीलाथ� क� ओर से/Appellant by अपीलाथ� क� ओर से अपीलाथ� क� ओर से अपीलाथ� क� ओर से Shri S.N. Agrawal and Shri Pankaj Mogra ��यथ� क� ओर से ��यथ� क� ओर से/Respondent by ��यथ� क� ओर से ��यथ� क� ओर से Shri Mohd. Javed सुनवाई क� तारीख सुनवाई क� तारीख/Date of hearing सुनवाई क� तारीख सुनवाई क� तारीख 21.03.2017 उ�ोषणा क� तारीख उ�ोषणा क� तारीख/Date of pronouncement उ�ोषणा क� तारीख उ�ोषणा क� तारीख 27.03.2017 आदेश आदेश /O R D E R आदेश आदेश PER O.P. MEENA, ACCOUTANT MEMEBR. This appeal is filed by the assessee against the order of ld. Commissioner of Income tax (Appeals)-I, Indore [hereinafter referred to as the CIT (A)] dated 19.8.2016. This appeal pertains to Assessment Year 2011-12 as against appeal decided in respect of 1

I Novate Technologies ITA No. 3/Ind/2017 assessment order dated 21.3.2014 passed u/s. 144 r.w.s. 143(3) of

the Income Tax Act, 1961(herein after referred to as "the Act) by the

DCIT 2(3), Indore [hereinafter referred to as the AO].

1.

The assessee has taken the following grounds of appeal before

the Tribunal :-

1.

That under the facts & circumstances of the case,

(i) The ld. CIT(A) has erred in interpreting that assessee had

shifted its address from the place to another to avoid any

verification of its claim made in the return of income of the

appellant.

(ii) The ld. CIT(A) has erred in not giving proper opportunity of

being heard. So we request you to set aside the case to

A.O.

1.1 Succinctly, the facts as culled out from the orders of lower

authorities are that the assessee had filed its e-return of income

declaring total income at Rs. 30,27,470/-. The return of income was

selected for scrutiny and notice u/s 143(2) of the Act was issued in

response to which the Director of the company filed reply on

28.8.2012 and sought adjournment. A notice u/s 142(1) of the Act

along with questionnaire was issued to the assessee on 17.10.2013 2

I Novate Technologies ITA No. 3/Ind/2017 and thereafter on 9.12.2013. However, the assessee did not

respond. Another notice u/s 142(1) of the Act and a letter dated

14.3.2014 were also issued to the assessee but the assessee did not

respond to the same. On enquiry it was revealed that at the given

address, the assessee company did not exist. The Assessing Officer,

therefore, had no alternate but to frame the assessment u/s 144 of

the Act. During the course of assessment proceedings, the

Assessing Officer found that in the profit and loss account the

assessee had debited Rs.1,58,46,923/- under the head ‘other

expenses’. Since the assessee did not furnish any detail in support

of its claim, the Assessing Officer disallowed 20% of the expenses

on estimate basis and accordingly disallowed expenditure of

Rs.31,69,385/- being 20% of the amount of Rs.1,58,46,923/-.

1.2 Being aggrieved with the above disallowance, the assessee

preferred first appeal before the learned CIT(A). Before the learned

CIT(A) also the assessee did not remain present. The learned CIT(A),

therefore, considering the facts of the case, confirmed the

disallowance made by the Assessing Officer.

I Novate Technologies ITA No. 3/Ind/2017 1.3 Against the above findings of the lower authorities, the

assessee has filed the present appeal on the grounds mentioned

above.

1.4 Before us, the learned counsel for the assessee submitted that

it is in dispute between the management, hence books of accounts

could not be obtained. The learned counsel for the assessee further

submitted that the assessee is ready and willing to put-forth its

claim before the Assessing Officer if the matter is set aside to his

file. To this proposition, the learned DR has no objection.

1.5 We have considered the submissions of both the sides. After

careful consideration of the submissions of the parties in view of the

facts of the case, we find that in this case the Assessing Officer has

made the assessment u/s 144 of the IT Act. It is a well settled

principle of natural justice that no-body should be condemned

unheard. Principle of natural requires that sufficient opportunity of

being heard should be provided to the assessee before deciding the

issue against him. We are of the view that since the Assessing

Officer and the learned CIT(A) have decided the matter without

hearing the assessees in violation of the principles of natural justice

and fair play, this appeal needs to be restored to the file of the 4

I Novate Technologies ITA No. 3/Ind/2017 Assessing Officer for deciding the same after providing due opportunity of being heard to the assessees. We, therefore, following the principle of natural justice, restore this appeal to the file of the Assessing Officer with the direction to frame fresh assessment after providing the assessees due opportunity of being heard. Needless to mention that the assessee is at liberty to file evidence, if any, in support of its claim before the Assessing Officer. 2. In the result, the appeal of the assessees is allowed for statistical purposes. 3. Order pronounced in the open Court on 27th March, 2017.

Sd/- Sd/- (सी.एम.गग�) (ओ.पी.मीना) �याियक सद�य लेखा सद�य (C.M.GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER �दनांक /Dated : 27th March , 2017 Dn/-

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