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Facts
The assessee filed its return of income for AY 2015-16 and was selected for scrutiny. Despite notices, the assessee failed to comply. The Assessing Officer observed that import transactions were made using the assessee's IEC code, but purchases in the profit and loss account were significantly lower. This led to an addition of Rs. 3,49,50,853/- as unexplained expenditure.
Held
The tribunal noted that the assessee did not comply with notices from the Assessing Officer and the Ld. CIT(A). The Ld. CIT(A) upheld the disallowance ex-parte. The tribunal acknowledged that the assessee's counsel argued that import transactions related to another concern, 'Priyansh Fashion', which used the assessee's IEC code.
Key Issues
Whether the addition of Rs. 3,49,50,853/- as unexplained expenditure was justified when the assessee claimed the transactions related to another entity using its IEC code and failed to provide explanations despite notices.
Sections Cited
69C, 143(2), 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the assessee is directed against order dated 16.02.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:
Ground - 1 On the facts and circumstances of the case and in law, the 1 On the facts and circumstances of the case and in law, the 1 On the facts and circumstances of the case and in law, the learned learned learned assessing assessing assessing officer officer officer erred erred erred in in in making making making the the the addition addition addition of of of Rs.3,49,50,853/ Rs.3,49,50,853/- under section 69C as unexplained expenditure under section 69C as unexplained expenditure without appreciating that the assessee had not claimed the said without appreciating that the assessee had not claimed the said without appreciating that the assessee had not claimed the said expenses in books of accounts. expenses in books of accounts. Ground - 2 On the facts and circumstances 2 On the facts and circumstances of the case and in law, the of the case and in law, the learned learned learned assessing assessing assessing officer officer officer erred erred erred in in in making making making the the the addition addition addition of of of Rs.3,49,50,853/ Rs.3,49,50,853/- on account of difference in ITS details and financials on account of difference in ITS details and financials without appreciating that the ITS details are related to the import made without appreciating that the ITS details are related to the import made without appreciating that the ITS details are related to the import made by the Priyansh fashion by the Priyansh fashion using the import and export code of appellant. the import and export code of appellant.
Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income on 27.07.2010 declaring total income at Rs. Nil. return of income on 27.07.2010 declaring total income at Rs. Nil. return of income on 27.07.2010 declaring total income at Rs. Nil. The return of income filed by the assessee The return of income filed by the assessee was selected for scrutiny was selected for scrutiny and notice u/s 143(2) of the Income u/s 143(2) of the Income-tax Act, 1961 (in short ‘the tax Act, 1961 (in short ‘the Act’) was issued and served upon the assessee. Subsequently, Act’) was issued and served upon the assessee. Subsequently, Act’) was issued and served upon the assessee. Subsequently, various notices were issued were issued u/s 142(1) of the Act u/s 142(1) of the Act but same remained non-complied. During the assessment proceedings, the complied. During the assessment proceedings, the complied. During the assessment proceedings, the Assessing Officer noted that on the basis of the information cer noted that on the basis of the information cer noted that on the basis of the information available on record that import amounting to Rs.2,81,50,872/- was available on record that import amounting to Rs.2,81,50,872/ available on record that import amounting to Rs.2,81,50,872/ made citing Import E made citing Import Export Code (IEC) No. 308035658) No. 308035658) of the assessee but in its profit and loss account in its profit and loss account, only purchases of only purchases of Rs.8,87,500/- was ap was appearing. The Assessing Officer issued show pearing. The Assessing Officer issued show cause notice to assessee to explain the less amount shown in profit to assessee to explain the less amount shown in profit to assessee to explain the less amount shown in profit and loss account but same was also not replied and therefore, the but same was also not replied and therefore, the but same was also not replied and therefore, the Assessing Officer treated the same as unexplained expenditure u/s Assessing Officer treated the same as unexplained expenditure u/s Assessing Officer treated the same as unexplained expenditure u/s 69C of the Act amounting to Rs.3,49,50,853/ t amounting to Rs.3,49,50,853/- which included import value of Rs.2,81,50,872/ import value of Rs.2,81,50,872/- and corresponding corresponding custom duty paid of Rs.76,87,481/ paid of Rs.76,87,481/-.
On further appeal also no compliance was made by the On further appeal also no compliance was made by the On further appeal also no compliance was made by the assessee before the Ld. CIT(A) of the various notices issued and assessee before the Ld. CIT(A) of the various notices issued and assessee before the Ld. CIT(A) of the various notices issued and therefore, the Ld. CIT(A) upheld the disallowance observing as therefore, the Ld. CIT(A) upheld the disallowance observing as therefore, the Ld. CIT(A) upheld the disallowance observing as under:
“4. During the course of appellate proceedings various notice were issued During the course of appellate proceedings various notice were issued During the course of appellate proceedings various notice were issued from time to time viz. on 26.02.2016, 01.02.2021, 09.02.2022, from time to time viz. on 26.02.2016, 01.02.2021, 09.02.2022, from time to time viz. on 26.02.2016, 01.02.2021, 09.02.2022, 02.06.2023 and finally on 29.01.2024. Through all 02.06.2023 and finally on 29.01.2024. Through all these notices, the these notices, the appellant was requested to file reply alongwith supporting documents. appellant was requested to file reply alongwith supporting documents. appellant was requested to file reply alongwith supporting documents. However, no submissions were made during the entire appellate However, no submissions were made during the entire appellate However, no submissions were made during the entire appellate proceedings. Finally, on 29.01.2024, a final notice was issued fixing the proceedings. Finally, on 29.01.2024, a final notice was issued fixing the proceedings. Finally, on 29.01.2024, a final notice was issued fixing the date of response on 05.02.2024. date of response on 05.02.2024. Details of opportunity accorded and Details of opportunity accorded and communicated to the appellant is furnished in the following table: communicated to the appellant is furnished in the following table: communicated to the appellant is furnished in the following table: Details of notices issued are as under: Details of notices issued are as under: S. No. Date of notice Date of notice Date of compliance Remarks 1. 20.02.2020 20.02.2020 20.02.2020 No response 2. 01.02.2021 01.02.2021 16.02.2021 No response 3. 12.01.2024 12.01.2024 19.01.2024 No response Now the final notice is being issued. Please note that in the absence of Now the final notice is being issued. Please note that in the absence of Now the final notice is being issued. Please note that in the absence of this notice by the stipulated date, appeal would be adjudicated based on this notice by the stipulated date, appeal would be adjudicated based on this notice by the stipulated date, appeal would be adjudicated based on materials available on record. materials available on record.
However, the final notice However, the final notice also remained non-responded. As it is responded. As it is clear that the appellant during the entire appellate proceedings did not comply that the appellant during the entire appellate proceedings did not comply that the appellant during the entire appellate proceedings did not comply with the notices, it shows that the appellant is not interested to pursue with the notices, it shows that the appellant is not interested to pursue with the notices, it shows that the appellant is not interested to pursue this appeal. In the absence of any reply from the appellant, the this appeal. In the absence of any reply from the appellant, the this appeal. In the absence of any reply from the appellant, the matter is being decided ex being decided ex-parte based on material on record. The maxim parte based on material on record. The maxim 'Vigilantbus, non dormientibus, jurasubveniuntie. the law assists those 'Vigilantbus, non dormientibus, jurasubveniuntie. the law assists those 'Vigilantbus, non dormientibus, jurasubveniuntie. the law assists those who are vigilant and not those who sleep over their rights' is applicable in who are vigilant and not those who sleep over their rights' is applicable in who are vigilant and not those who sleep over their rights' is applicable in this case. 5.1 It has been held by 5.1 It has been held by the Hon'ble Supreme Court in the case of B.N. the Hon'ble Supreme Court in the case of B.N. Bhattacharjee and Another (118 ITR 461) that appeal does not mean Bhattacharjee and Another (118 ITR 461) that appeal does not mean Bhattacharjee and Another (118 ITR 461) that appeal does not mean merely filing of memo of appeal but also pursuing it effectively. In cases merely filing of memo of appeal but also pursuing it effectively. In cases merely filing of memo of appeal but also pursuing it effectively. In cases where the appellant does not want to pursue the appeal, appellate where the appellant does not want to pursue the appeal, appellate where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non thorities have inherent power to dismiss the appeal for non-prosecution thorities have inherent power to dismiss the appeal for non as held by the Hon'ble Bombay High Court in the case of M/s Chemipol as held by the Hon'ble Bombay High Court in the case of M/s Chemipol as held by the Hon'ble Bombay High Court in the case of M/s Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the vs. Union of India in Excise Appeal No. 62 of 2009. While deciding the issue, the Hon'ble High Court of Bombay has issue, the Hon'ble High Court of Bombay has referred to the observations referred to the observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was observed: - "Now the Act does not give any power of dismissal. But it is "Now the Act does not give any power of dismissal. But it is "Now the Act does not give any power of dismissal. But it is axiomatic that no axiomatic that no court or tribunal is supposed to continue a proceeding court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to before it when the party who has moved it has not appeared nor cared to before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which remain present. The dismissal, therefore, is an inherent power which remain present. The dismissal, therefore, is an inherent power which every tribunal possesses..." every tribunal possesses..." 5.2 The Hon'belTAT in 5.2 The Hon'belTAT in ITA No. 1025-1027/Chandi/2005 for the A.Y. 1027/Chandi/2005 for the A.Y. 2002-03 in the case of M/s Chhabra Land and Housing Ltd. after 03 in the case of M/s Chhabra Land and Housing Ltd. after 03 in the case of M/s Chhabra Land and Housing Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. following the decision of Hon'ble Supreme Court in the case of B.N. following the decision of Hon'ble Supreme Court in the case of B.N. Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean merely filing of the app merely filing of the appeal but effectively pursuing it. Keeping in view of eal but effectively pursuing it. Keeping in view of the aforesaid factual position, the appeal filed by the appellant is, the aforesaid factual position, the appeal filed by the appellant is, the aforesaid factual position, the appeal filed by the appellant is, therefore, decided on merits. therefore, decided on merits. 5.3 Hon. ITAT in IT APPEAL NO. 323 (AGRA) OF 2012 IN THE CASE OF Hon. ITAT in IT APPEAL NO. 323 (AGRA) OF 2012 IN THE CASE OF Hon. ITAT in IT APPEAL NO. 323 (AGRA) OF 2012 IN THE CASE OF Shivangi Steel (P.) Ltd. v. Assistant Shivangi Steel (P.) Ltd. v. Assistant Commissioner of Income Commissioner of Income-tax, Central Circle* has held that Where assessee inspite of large number of Circle* has held that Where assessee inspite of large number of Circle* has held that Where assessee inspite of large number of adjournments granted by Commissioner (Appeals) did not produce any adjournments granted by Commissioner (Appeals) did not produce any adjournments granted by Commissioner (Appeals) did not produce any document in respect of grounds of appeal
, nor made written or oral document in respect of grounds of appeal, nor made written or oral document in respect of grounds of appeal, nor made written or oral submissions, Commissio submissions, Commissioner (Appeals) was justified in proceeding exparte ner (Appeals) was justified in proceeding exparte against assessee. against assessee. 5.4 Hon. ITAT (Cochin Bench), in M.P. NOS. 71 TO 79 (COCH.) OF 5.4 Hon. ITAT (Cochin Bench), in M.P. NOS. 71 TO 79 (COCH.) OF 5.4 Hon. ITAT (Cochin Bench), in M.P. NOS. 71 TO 79 (COCH.) OF 2013 IN THE CASE OF Tourist Resorts Kerala Ltd. v. Assistant Commissioner of THE CASE OF Tourist Resorts Kerala Ltd. v. Assistant Commissioner of THE CASE OF Tourist Resorts Kerala Ltd. v. Assistant Commissioner of Income-tax, Circle tax, Circle -1(1), Thiruvananthupuram* has held that Where s held that Where assessee had failed to show that there was a reasonable cause for non assessee had failed to show that there was a reasonable cause for non assessee had failed to show that there was a reasonable cause for non- appearance on date of hearing of appeal, applications filed by assessee appearance on date of hearing of appeal, applications filed by assessee appearance on date of hearing of appeal, applications filed by assessee for setting aside exparte order and restoring appeal were to be for setting aside exparte order and restoring appeal were to be for setting aside exparte order and restoring appeal were to be dismissed. 5.5 Reliance is also 5.5 Reliance is also placed in the Supreme Court judgment in placed in the Supreme Court judgment in CIVIL APPEAL NO. 2463 OF APPEAL NO. 2463 OF 2019† IN THE CASE OF Principal Commissioner of IN THE CASE OF Principal Commissioner of Income-tax (Central) tax (Central)-1 v. NRA Iron & Steel (P.) Ltd. 5.6 Reliance is also placed upon the decision of Hon'ble Supreme Court in Reliance is also placed upon the decision of Hon'ble Supreme Court in Reliance is also placed upon the decision of Hon'ble Supreme Court in the case of Ashok the case of Ashokji Chanduji Thakor Vs PCIT, [2021] 130 taxmann.com ji Chanduji Thakor Vs PCIT, [2021] 130 taxmann.com 131 (SC).
6. As noted from the facts of the case and material available on record, it
6. As noted from the facts of the case and material available on record, it
6. As noted from the facts of the case and material available on record, it is seen that the Assessing Officer made the above additions, based on is seen that the Assessing Officer made the above additions, based on is seen that the Assessing Officer made the above additions, based on materials available on record, after according pr materials available on record, after according proper and adequate oper and adequate opportunity to the appellant and after marshalling the facts. opportunity to the appellant and after marshalling the facts. opportunity to the appellant and after marshalling the facts. The appellant did not produce any evidence in support of his claim or made appellant did not produce any evidence in support of his claim or made appellant did not produce any evidence in support of his claim or made any response against the various notices issued from time to time during any response against the various notices issued from time to time during any response against the various notices issued from time to time during the entire appellate proceed the entire appellate proceedings. There is no materials before me to ings. There is no materials before me to deviate from the order of the Assessing Officer. Hence, it is held that the deviate from the order of the Assessing Officer. Hence, it is held that the deviate from the order of the Assessing Officer. Hence, it is held that the assessment order passed by the Assessing Officer u/s 143(3) of the Act, assessment order passed by the Assessing Officer u/s 143(3) of the Act, assessment order passed by the Assessing Officer u/s 143(3) of the Act, resulting into the assessed income amounting to Rs. 3,49,50,853/ resulting into the assessed income amounting to Rs. 3,49,50,853/ resulting into the assessed income amounting to Rs. 3,49,50,853/-, based on his findings and proper adjudication, is quite in order, and the based on his findings and proper adjudication, is quite in order, and the based on his findings and proper adjudication, is quite in order, and the same is hereby confirmed. Accordingly, Grounds of appeal of the same is hereby confirmed. Accordingly, Grounds of appeal of the same is hereby confirmed. Accordingly, Grounds of appeal of the appellant are dismissed. appellant are dismissed.”
4. Before us, the Ld. counsel for the assessee submitted that the Before us, the Ld. counsel for the assessee submitted that the Before us, the Ld. counsel for the assessee submitted that the Ld. CIT(A) has passed the Ld. CIT(A) has passed the order without considering the submission order without considering the submission of the assessee and therefore, the matter might be restored back to of the assessee and therefore, the matter might be restored back to of the assessee and therefore, the matter might be restored back to the Assessing Officer for deciding afresh. the Assessing Officer for deciding afresh.
Ld. Departmental Representative (DR) on the other hand, 5. The Ld. Departmental Representative (DR) on the other hand, Ld. Departmental Representative (DR) on the other hand, objected and submitted that assessee rem objected and submitted that assessee remain non- -complied before the Assessing Officer as well as Ld. CIT(A). the Assessing Officer as well as Ld. CIT(A).
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. Before us, the Ld. counsel for the relevant material on record. Before us, the Ld. counsel for the relevant material on record. Before us, the Ld. counsel for the assessee submitted that the import transactions relates to another assessee submitted that the import transactions relates t assessee submitted that the import transactions relates t concern namely ‘Priyansh Fashion Priyansh Fashion’ which had used IEC ’ which had used IEC Code of the assessee and therefore, the matter need to be sent back for assessee and therefore, the matter need to be sent back for assessee and therefore, the matter need to be sent back for verification. We are of the view that sufficient opportunity was verification. We are of the view that sufficient opportunity was verification. We are of the view that sufficient opportunity was provided both by the Asses the Assessing Officer and the Ld. CIT(A sing Officer and the Ld. CIT(A). The Assessing Officer in the impugned order has recorded that notices Assessing Officer in the impugned order has recorded that notice Assessing Officer in the impugned order has recorded that notice u/s 142(1) of the Act u/s 142(1) of the Act were issued on 26.10.2017, 10.11.2017, issued on 26.10.2017, 10.11.2017, 17.11.2017 and 27.11.2017 and thereafter a final opportunity was 17.11.2017 and 27.11.2017 and thereafter a final opportunity was 17.11.2017 and 27.11.2017 and thereafter a final opportunity was issued on 06.12.2017 issued on 06.12.2017 as the assessment was getting barred assessment was getting barred by the limitation. The Assessing Officer passed limitation. The Assessing Officer passed the order on 12/12/2017 the order on 12/12/2017 as the limitation for passing the order was expiring on 31st for passing the order was expiring on 31st for passing the order was expiring on 31st December, 2017. The assessee filed appeal against the said order 2017. The assessee filed appeal against the said order 2017. The assessee filed appeal against the said order however did not comply to the notice issued by the Ld. CIT(A) dated however did not comply to the notice issued by the Ld. CI however did not comply to the notice issued by the Ld. CI 24.01.2024. In view of 24.01.2024. In view of facts and circumstances of the case and in facts and circumstances of the case and in the interest of justice that let the matter be decided on merit, we the interest of justice that let the matter be decided on merit, the interest of justice that let the matter be decided on merit, feel it appropriate to restore the matter to the file of the Ld. CIT(A) feel it appropriate to restore the matter to the file of the Ld. CIT(A) feel it appropriate to restore the matter to the file of the Ld. CIT(A) for deciding afresh subject to subject to a cost of Rs.25,000/- on the assessee on the assessee, which shall be deposited in Prime Minister Relief Fund within one which shall be deposited in Prime Minister Relief F which shall be deposited in Prime Minister Relief F month of receipt of this order. of this order. The ld CIT(A) shall verify that cost The ld CIT(A) shall verify that cost imposed is paid by the assessee. imposed is paid by the assessee. The grounds raised by the The grounds raised by the assessee are accordingly allowed for statistical purposes. assessee are accordingly allowed for statistical purposes. assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for 7. In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.