Loading judgment…
Facts
The assessee, Friends Corporation, a partnership firm engaged in trading, filed its return for AY 2017-18. The Assessing Officer (AO) initiated scrutiny and proposed an addition of unsecured loans amounting to INR 8,11,13,339/- under Section 68 of the Income Tax Act. The assessee failed to provide satisfactory details regarding the genuineness of these loans.
Held
The CIT(A) confirmed the addition made by the AO and dismissed the assessee's appeal ex-parte due to non-compliance and non-appearance. The Tribunal noted that while the CIT(A) dismissed the appeal ex-parte, there could be valid reasons for the assessee's non-appearance.
Key Issues
Whether the addition of unsecured loans of INR 8,11,13,339/- by the AO under Section 68, confirmed by the CIT(A), is justified, especially considering the ex-parte dismissal of the appeal.
Sections Cited
143(3), 250, 142(1), 133(6), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI GIRISH AGRAWAL
सुनवाई क� तार�ख/Date of Hearing 21.05.2024 घोषणा क� तार�ख/Date of Pronouncement 28.05.2024 ORDER PER PAVAN KUMAR GADALE, JM:
The assessee has filed the appeal against the order of the National Faceless Appeal Centre, Delhi /CIT(A) passed u/sec 143(3) and u/sec 250 of the Act. The Assessee has raised the fallowing grounds of appeal:-
1) The Ld. CIT(A) has erred in confirming the addition of unsecured loan from borrowers of INR 8,11,13,339/- as income n ex parte basis.
(A.Y.: 2017-18) Friends Corporation, Mumbai . The Ld. CIT(A) ought to have held that the addition of unsecured loan by AO to the book profit of the assessee are unsustainable and deserves to be deleted.
The appellant craves leaves to add, alter or delete all or any of the grounds of appeal.
2. The Brief facts of the case are that, the assessee is a partnership firm and is engaged in trading of Agro commodities, Cattle/poultry feeds, Animal feeds, freight forwarding & Logistics and ancillary activities. The assessee has filed the return of income for the A.Y 2017-18 on 12.10.2017 disclosing a total income of Rs.20,39,340/- Subsequently the case was selected for scrutiny and notice u/sec 143(2) and U/sec 142(1) of the Act along with questionnaire was issued. In compliance to the notice the assessee has submitted the details electronically from time to time. The Assessing Officer (AO) on perusal of the information and the details submitted in assessment proceedings found that the assessee has disclosed the unsecured loans received during the F.Y 2016-17 and the assessee was asked to furnish the details. Further the AO in order to verify the genuineness of the loans transactions has issued notice u/s 133(6) of the Act and no reply was received. The AO considering the facts has issued show cause notice dated 22.12.2019 referred at Para 5 of the assessment order. The AO was not satisfied with the explanations and information and since only one unsecured loan creditor has responded to the notice u/s (A.Y.: 2017-18) Friends Corporation, Mumbai . 133(6) of the Act and others have not replied. Further the assessee has not substantiated the identity, genuineness and creditworthiness of the loan transactions. Finally the AO has made addition of unexplained credits U/sec68 of the Act of Rs. 8,11,13,339/- and assessed the total income of Rs. 8,31,52,680/- and passed the order u/sec 143(3) of the Act dated 27.12.2019.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.
4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer overlooking the information of the assessment proceedings. Further the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities. Per Contra, the Ld.DR supported the order of the CIT(A).
(A.Y.: 2017-18) Friends Corporation, Mumbai .
We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no compliance nor appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld. CIT(A) has issued the notices of hearing on 03.03.2020, 30.01.2021 & 08.12.2023 referred at Page 5 Para 5 of the order but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the addition u/sec 68 of the Act by the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the facts and principles of natural justice, we shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the (A.Y.: 2017-18) Friends Corporation, Mumbai . Appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by assessee is allowed for statistical purposes.
Order pronounced in the open court on 28.05.2024.