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Facts
The assessee is challenging an order from the NFAC which sustained additions made by the AO regarding donations received and utilized in capital work in progress. The AO had considered the donors bogus as only one out of many responded to a query.
Held
The Tribunal found that the CIT(A) had rejected the appeal ex-parte, violating principles of natural justice. The court noted that the assessee's delay in filing the appeal was due to genuine reasons and condoned it.
Key Issues
Whether the CIT(A) erred in sustaining the AO's addition based on ex-parte assessment and violation of natural justice principles.
Sections Cited
133(6), 143(3), 144B, 250
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Income Tax Appellate Tribunal, JODHPUR BENCH (Virtual
Before: SHRI LALIET KUMAR, HONBLE & DR. MITHA LAL MEENA, HONBLE
This appeal by Assessee is directed against the order of the National Faceless Appeal Centre, Delhi (in short, the NFAC/CIT appeal) dated 29.12.2023 respect to assessment year 2018-19. 2. The Appellant has raised the following grounds appeal:
The order sustained by CIT(A) is bad in law and bad on facts, and the order passed by Id. AO was not justified and the additions made were outside the scope of limited scrutiny assessment.
The Id. CIT(A) has erred in sustaining the action of Id. AO that the donations of Rs. 1,63,41,090/- received and utilized in capital work in progress was not acceptable and the addition made in this regard is bad in law and bad on facts.
The Id. CIT(A) has erred in sustaining the action ofld. AO in assessing the income at Rs. 1,63,41,090/- which is bad in law and bad on facts.
There was a delay of 23 days in filing this appeal before the Tribunal. The appellate order, passed by Id. Commissioner of Income Tax/NFAC on 29.12.2023, online mode, came to the notice only in the month of March, when online verification of 26AS was being made to verify the TDS deduction that certain orders had been made by Id. CIT(A), for the year under consideration where no further action had been filed in the matter. The time limit for submission of appeal from the date of appeal order had already expired, as the assesses CA was not aware about the order, being preoccupied in marriage of his daughter and was not able to file the appeal on time before the ITAT. The Ld. AR submitted that on becoming aware about the appeal order being passed, the approval for appointment of consultant was sought and the papers were handed over to the Counsel, for the preparation of appeal, and soon the appeal had been submitted before the Hon'ble Tribunal. It is therefore submitted with a request for condonation of the delay so occurred which was on account of genuine and bonafide reasons. In support of the reasons for delay, an affidavit certified by Govt. Approved Notary filed. The Ld. DR has no objection to the request of the assessee.
1 Having considered the reason of delay in filing appeal, we find that there was genuine and bonafide reasons for the short delay of 23 days where the contents are supported with an affidavit that remained uncontroverted by the Ld. DR. According, we hold that the appellant has prima facie reasonable cause for the delay of 23 days in filing the appeal and we therefore condone the said delay and admit the appeal for hearing.
The facts of the case are that during assessment proceedings, the AO noted that the appellant had incurred capital expenditure of Rs. 6, 13,41 ,090/ during the year under consideration and revenue expenditure of Rs.46,83,684 /-, although total income was shown Rs. 69,21,924/-. The appellant had furnished the details of donor and from these details, the A.O. has seen that it has received donation of Rs. 6,13,41,090/- for Financial Year -2016-17 and 2017-18, and that the appellant had not shown donation of Rs.6,13,41,090/in its Return of income for the year under consideration and Rs 3 crore in its return of income for Assessment Year 2017-18.
1 The AO required the appellant to furnish the details of donation received during the year under consideration with letter of confirmation from donors. In response, the appellant furnished the names & addresses of donors, and letters of confirmations prepared and signed by these donors in the month of February 2021. On perusal of these details, the AO observed that the office address of all donor are same as 21, Stand Road, Kolkata where amount was transferred out of mutual funds in their SBI Account in same patter for making disputed donations except Shree Cement Ltd. Thus, the AO being not satisfied with the reply of the assessee and that the assessment being getting time barred passed the order based on material available on record by holding that it is apparent that the entire donors are bogus as in to query letters issued u/s 133(6) of the I T Act was issued to all donor on the given address and e-mail for verification of genuineness of donation, only Shree Cement Ltd. has replied to the said notice u/s 133(6) of the Act.
Aggrieved with the Assessment Order the appellant has preferred appeal before the Ld. NFAC/CIT appeal who has rejected the appeal of the assessee exparte qua the assessee and confirmed the addition made by the AO in his order passed u/s 143(3) r.w.s. 144B of the Act by observing that "5.4 Though the appellant did admittedly receive the order passed u/s143(3) r.w.s. 144B of the Act and duly filed the present appeal, it, however, after filing the appeal, chose not to respond to any of the notices listed above issued by this office. It has been held by several courts that the law assists those who are vigilant and not those who sleep over their rights as found in the Maxim "Vigilantibus Non Dormientibus Jura Subveniuntn. The maxim refers to the obligation of individuals to not only be aware of their rights under the law, but also to be vigilant while exercising or using the same. Hence, as an aware citizen, it was incumbent upon the appellant to be aware of the statutory provisions, to simultaneously comply with the requirements of law, and that it should pursue the legal remedies available diligently."
1 The CIT appeal concluded that the appellant could not controvert the findings given by the AO on merits of the issue and that the Assessing Officer was justified in making addition of Rs. 1,63,41,090/- in his order passed u/s 143(3) r.w.s. 144B of the Act.
The Ld. AR for the assesee submitted that the Id. CIT(A)'s order is bad in law and bad on facts as it is contrary to facts being out of the scope of limited scrutiny, but he failed to demonstrate. He contended that the Id. CIT(A) has not properly appreciating the facts and circumstances while upholding additions of the donations of Rs. 1,63,41,090/- received and utilized in capital work in progress. The Ld. AR argued that the Id. CIT(A) has erred in sustaining the finding of Id. AO that the donations of Rs. 1,63,41,090/- received and utilized in capital work in progress was not acceptable. He contended that the appellant could have complied to the notices issued and filed written submission provided given due opportunity of being heard by the Ld. CIT Appeal. The council requested that the matter may be restored back to the file of the AO to adjudicate the matter afresh after granting adequate opportunity of being heard to the appellant to enable him to file the required explanation with documentary evidence in support to justify the claims made in the grounds of appeal to the satisfaction of the AO in examination and verification of the amount disputed against donation and expenditure claimed.
The Ld. Addl. CIT (DR) on the other hand supported the impugned order, but he has no objection to the request of the assessee.
We have heard both the sides and perused the material available on record. We find that Id. CIT(A) has rejected the appeal ex parte qua the assessee while confirming the addition made by the AO in the assessment order passed u/s 143(3) r.w.s. 144B of the Act in violation of principles of natural justice. The Ld. CIT appeal though stated that there was non- compliance of notices issue du/s 250 of the act but he did not discuss the facts regarding the service of these notices on the assessee in the face less proceeding. In our view, if the notices were issued and served on the assessee u/s 250 of the Act, it would certainly enable the assessee to present his explanation and submissions in defence of the claims made in the grounds of appeal.
The Hon'ble Supreme Court of India in the case of Tin Box Company vs. CIT reported in 249 ITR 216 has observed as under: "Assessment - Opportunity of being heard - Setting aside of assessment Assessment order must be made after the assessee has been given reasonable opportunity of setting out his case - Same not done - Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts order set aside and matter remanded to assessing authority for fresh consideration." Assessment
In view of the principles of natural justice, it would be appropriate to restore the matter back to the file of the AO to pass de novo assessment after granting adequate opportunity of being heard to the assessee and considering the written submissions and documentary evidence filed on record and may be filed in the fresh assessment proceedings. In the case, the AO is not satisfied with the reply of the assessee, and he intends to take any adverse view against the appellant assessee, he shall issue a show cause notice before taking such view.
Respectfully following the Hon'ble Apex Court (Supra), the impugned order is set aside and the matter is remanded back to the file of the Id. AO/NFAC to pass the Assessment Order de novo in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. (LALIET KUMAR) JUDICIAL MEMBER (DR. MITHA LAL MEENA) ACCOUNTANT MEMBER Dated: 07/05/2025 Copies to: (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By Oder