SRI. K.NANDA KUMAR,BANGALORE vs. INCOME TAX OFFICER, BANGALORE

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ITA 26/BANG/2017Status: DisposedITAT Bangalore07 June 2017AY 2007-20084 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, acknowledging gross negligence but also the lack of merit-based examination by the CIT(A), granted the assessee one more opportunity. This was subject to a cost of Rs. 10,000/- to present the case before the AO.

What were the facts?

The assessee failed to appear before the AO and CIT(A) due to temporary business closure and vacating premises, leading to ex-parte assessment and dismissal of appeal. The assessee claimed an inadvertent mistake in providing the old address in the appeal form.

What were the issues?

Whether the assessee's failure to appear before tax authorities due to a change of address warrants a fresh opportunity for adjudication, despite gross negligence.

Which sections of the Income-tax Act were involved?

Section 144,Section 143(2),Section 142(1),Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE

Before: SHRI VIJAY PAL RAO

For Appellant: Shri Prathik P., CA
For Respondent: Shri M.K. Biju, JCIT
Hearing: 22.05.2017Pronounced: 07.06.2017

Per Vijay Pal Rao, Judicial Member

1.

This appeal by the assessee is directed against the order dated 16.09.2016 of CIT(A) for the assessment year 2007-08. The assessee filed his return of income on 26.02.2009 declaring total income of Rs. 6,55,404/-. The AO issued notice u/s. 143(2) on 11.08.2009 which was received back unserved and subsequently a substituted service was effected through the Page 2 of 4 inspector affixing a notice at the office address of the assessee. Thereafter the AO also issued notice u/s. 142(1) through affixing on the last known address. Since there was no response from the assessee the AO completed the assessment u/s. 144 whereby the AO made the addition on account of commission payment of Rs. 10,05,000/- u/s. 40(a)(ia) and disallowance of expenditure to the extent of 15% amounting to Rs. 7,81,522/-. The assessee challenged the order of the AO before the CIT(A). The CIT(A) has recorded in the impugned order that despite the notices issued on various occasions at the address provided in form no. 35 assessee has not responded. Accordingly the appeal of the assessee was dismissed in limine due to non-compliance on the part of the assessee.

2.

Before the Tribunal the ld. AR of the assessee has submitted that the assessee closed its business activity temporarily during the period under consideration for couple of years. Therefore the assessee did not receive the notice issued by the AO as well as CIT(A). He has further submitted that though the assessee challenged the order of the AO passed u/s. 144 however, in the form no. 35 inadvertently the same address was given which was available with the AO. Therefore there is an inadvertent and bonafide mistake of not giving the current address of the assessee in the form no. 35 before the CIT(A). Hence the ld. AR has submitted that the assessee may be given one more opportunity to present its case before the Page 3 of 4 authorities below. On the other hand, the ld. DR has submitted that despite the opportunities given by the AO as well as CIT(A) the assessee did not comply with the notices and even not appeared before the authorities below. Therefore the conduct of the assessee clearly shows that the assessee was avoiding proceedings even after filing the appeal before the CIT(A).

3.

Having heard the rival submissions as well as considered the relevant material on record it is noted that there is a gross negligence on the part of the assessee in not appearing before the AO as well as before the CIT(A). The assessee’s explanation before the Tribunal is that in the year 2009 the assessee cease to carry on business at the premises in question which was taken on rent and as it was demolished the assessee vacated the said premises. Consequently the assessee could not receive the notice of hearing issued from time to time by the AO as well as CIT(A). Thus the assessee is seeking one more opportunity to represent its case and file the relevant record. It is pertinent to note that despite the assessment order framed u/s. 144 and an appeal filed before the CIT(A) the assessee did not furnish his the changed / new address even before the CIT(A). It shows that the assessee was not sincere about the proceedings before the CIT(A) as well as before the Assessing Officer. It is a clear case of gross negligence on the part of the assessee in not furnishing the correct address Page 4 of 4 before the AO as well as CIT(A). However since the CIT(A) has not examined the appeal of the assessee on merits and further the relevant material and books of accounts were not available before the authorities below therefore, in the facts and circumstances of the case and in the interest of justice subject to cost of Rs. 10,000/- the assessee is granted one more opportunity to present his case before the AO. Accordingly this matter is set aside to the record of the AO for fresh adjudication after giving an opportunity of hearing to the assessee subject to payment of cost of Rs. 10,000/-.

4.

In the result the appeal of the assessee is allowed for statistical purposes.

5.

Pronounced in the open court on this 07th day of June, 2017.

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