RAHUL GANGARAM KANAGANDULA,MAHARASTRA vs. INCOME TAX OFFICER, WARD-20(3)(1), MAHARASTRA

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ITA 3797/MUM/2023Status: DisposedITAT Mumbai12 June 2024AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee did not respond to the notices issued by the learned CIT(A) after filing the appeal, leading the CIT(A) to dismiss the appeal ex-parte without a reasoned decision on merits. However, in the interest of justice and fair play, the Tribunal found it appropriate to remit the matter back to the file of the learned CIT(A) for de novo adjudication on merit. The Tribunal directed the assessee to be diligent and cooperative in attending hearings and making submissions, and to refrain from seeking adjournments except for compelling reasons. The CIT(A) was directed to ensure observance of principles of natural justice. The Tribunal explicitly stated that no observations were made on the merits of the case. The impugned order of the CIT(A) was set aside, and the appeal was restored to the file of the CIT(A) for statistical purposes.

What were the facts?

The assessee, Rahul Gangaram Kanagandula, an individual engaged in importing and hiring used cranes, filed his return of income for Assessment Year 2017-18. Initially declaring Rs. 37,57,960/-, he later revised it to Rs. 9,25,960/-. The Assessing Officer (AO) selected the case for scrutiny. During assessment, the AO noted discrepancies, which the assessee attributed to a new office assistant mistakenly typing an extra zero in the Self Assessment Tax payment, leading to Rs. 10,30,000/- paid instead of Rs. 1,03,000/-. The AO assessed the turnover at Rs. 34,72,89,599/- (against Rs. 1,15,66,582/- claimed) and estimated business income at 8% of this turnover, resulting in an addition of Rs. 2,77,83,168/-. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who dismissed the appeal ex-parte. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the learned CIT(A) erred in not giving the assessee sufficient opportunity to be heard before deciding the appeal, thereby violating principles of natural justice? 2. Whether the learned CIT(A) erred in upholding the assessment order where the turnover considered by the Assessing Officer for estimating income was incorrect? 3. Whether the learned CIT(A) erred in concluding that the assessee did not respond to notices before deciding the appeal, without ensuring proper service of hearing notices? Assessee's Contentions: The assessee argued that the CIT(A) passed an ex-parte order in violation of natural justice by not providing a sufficient opportunity for hearing. The assessee also contended that the CIT(A) wrongly confirmed the additions made by the AO, and that the turnover considered by the AO was incorrect. The assessee prayed for the setting aside of the impugned order. Revenue's Contentions: The learned DR supported the impugned order passed by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 250,Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH

Before: SHRI PRASHANT MAHARISHI, ACCOUNTANT & SHRI SUNIL KUMAR SINGH

For Respondent: Smt. Mahita Nair (SR-DR) |

आदेश / O R D E R PER SUNIL KUMAR SINGH (J.M): 1. This appeal has been preferred against the impugned order dated 21.08.2023 passed in Appeal no. CIT(A) 32, Mumbai/10808/2019–20 by the Ld. Commissioner of Income–tax(Appeals), National Faceless Appeal Centre(NFAC) [hereinafter referred to as the “CIT(A)”] u/s.

1.

Rahul Gangaram Kanagandula 250 of the Income–tax Act, 1961 [hereinafter referred to as “Act”] for the relevant Assessment year [A.Y.] 2017–18, wherein learned CIT(A) has dismissed assessee’s appeal ex– parte against assessment order dated 24.12.2019.

2.

The brief fact related to the appeal state that assessee is an individual and engaged in the business of import of used cranes and hiring it to the parties at high seas. Assessee e– filed return of income on 27.03.2018 declaring total income of Rs. 37,57,960/–. Subsequently, the revised return of income was filed on 23.02.2019, declaring total income of Rs. 9,25,960/–. The said return was processed u/s. 143(1) of the Act. The case was selected for scrutiny under CASS. Statutory notices u/s. 143(2) and section 142(1) of the Act were issued and served upon the assessee. The appellant assessee was asked to explain discrepancies in the books of assessee and data/income shown in the ITR. Subsequently, after issue of notice for addition, assessee filed his response through e–proceedings on the ITBA portal and explained that such discrepancies were due to fault of new office assistant clerk. Assessee further explained that assessee’s claim that he has worked out tax for Rs. 1,03,000/– but his assistant, wrongly typed one Rahul Gangaram Kanagandula extra zero while making the payment and the Self Assessment Tax of Rs. 10,30,000/- had been wrongly paid. The Assessing Officer assessed the turnover of the assessee for the A.Y. 2017–18 as Rs. 34,72,89,599/– as against Rs. 1,15,66,582/– claimed by the assessee in revised return and took the profit @8% of Rs. 34,72,89,599/– as Rs. 2,77,83,168/– as income from business and profession of the assessee for A.Y. 2017–18. Aggrieved by the assessment order, assessee preferred an appeal before leaned CIT(A), who upheld the assessment and dismissed assessee’s appeal.

3.

The appellant assessee has approached this tribunal on the following grounds: “

1.The order of the learned Assessing Officer, in the facts and circumstances of the case, is not justifiable both on facts and in law. 2.The Ld. CIT(A) erred in not giving sufficient opportunity to the assessee before deciding the appeal. 3.The Ld. CIT(A) ought to have seen that the turnover considered by the AO for estimating the income is not correct. 4.The Ld. CIT(A) ought to have ensured that the notices for hearing was properly served before concluding that the assessee not responded to the notices…….”

4. In response to the notice issued by the tribunal, learned DR appeared and participated in the proceedings.

5. We have perused the records and heard learned representatives for both the parties.

Rahul Gangaram Kanagandula 6. Learned representative for the assessee has submitted that learned CIT(A) has passed ex-parte order in violation of the principles of natural justice without affording sufficient opportunity of hearing to assessee. Further stating that learned CIT(A) has wrongly confirmed the addition made by the Assessing Officer. Prayed to set aside the impugned order.

7.

Learned DR has supported the impugned order.

8.

It appears from the perusal record that the assessee did not respond to the notices issued by learned CIT(A) after filing the appeal. learned CIT(A) has dismissed assessee’s appeal ex- parte without reasoned decision on merit. However, in the interest of justice and fair play, we find it appropriate to remit the matter back to the file of learned CIT(A) for denovo adjudication on merit. We further direct the assessee to be diligent and cooperative in attending the hearings and making submissions before the first appellate authority for the expeditious and effective disposal of the appeal. Assessee should refrain from seeking any adjournment but for compelling and unavoidable reasons. Needless to say that learned CIT(A) shall ensure the observance of the principles of natural justice. It is made clear that we have not made any observation on the merits of the case.

Rahul Gangaram Kanagandula 9. In the result, the appeal is allowed. The impugned order dated 21.08.2023 is set aside. The appeal is restored back to the file of the learned CIT(A) for statistical purposes.

Order pronounced on 12.06.2024.

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