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Facts
The assessee declared total income at Rs.26,930/- for AY 2008-09, which was processed and later completed under section 143(3) at Rs.60,310/-. The case was re-opened under section 147, and a notice under section 148 was issued. The Assessing Officer made an addition of Rs.2,66,83,697/- on account of alleged non-genuine purchases.
Held
The Tribunal observed that the CIT(A) issued several notices during the Covid-19 period and a subsequent notice after a gap of three years. It was unclear if the last notice was served. Considering these circumstances and for the ends of justice, the Tribunal decided to remand the case back to the CIT(A) for a decision on merits, affording a reasonable opportunity to the assessee.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for non-prosecution without properly serving notices, and whether the case should be remanded for a decision on merits.
Sections Cited
143(1), 143(3), 147, 148, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the assessee against the order dated 15.05.2023 impugned herein passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2008-09.
2 M/s. Manthan Gems 2. In this case, the assessee had declared its total income at Rs.26,930/- by filing its return of income dated 25.09.2008 which was processed under section 143(1) of the Act and later on was completed under section 143(3) of the Act, whereby the total income of the assessee was assessed at Rs.60,310/-. Subsequently, the case of the assessee was re-opened under section 147 of the Act and consequently notice dated 23.03.2015 under section 148 of the Act was issued to the assessee. Other statutory notices were also issued, whereby the assessee was asked “as to why the purchases made were not treated as accommodation entries and accordingly the income of the assessee during the year under consideration”.
The assessee in response to the said notices preferred not to provide any details or explanation and therefore on the basis of search and seizure action carried out at Bhanwarlal Jain and its group concerns on 3rd October, 2013 by the DGIT (Investigation), Mumbai, wherein it was established that the group concerns are all paper companies/ firms/ partnership concerns with no real business activities, operating solely with the purpose of facilitation of fraudulent financial transactions which includes, among others, providing of accommodation entries in the form of unsecured loans and bogus sales bills to the interested parties. On going through the documents forwarded by the DGIT (Inv.), Mumbai it was found that the above-mentioned assessee has also obtained accommodation entries for the unsecured loans from the concerns of Bhanwarlal Jain during the Sr. Name of the Financial Amount No. entry issuer Year 1. Jewel Diam 2007-08 96,93,316 2. Kothari & Co. 2007-08 74,93,506 3. Little diam 2007-08 94,96,875 Total 2,66,83,697
The Assessing Officer vide assessment order dated 23.03.2016 under section 144 read with section 147 of the Act ultimately made the addition of Rs.2,66,83,697/- on account of alleged non-genuine purchases.
The assessee being aggrieved, challenged the said addition before the Ld. Commissioner who, as it appears in Para 2 of the impugned order, fixed the case of the assessee during the Corona period Covid-19 many times, however, after 31st December, 2020 issued the notice dated 04.05.2023 for the date of hearing/ compliance on 11.05.2023. The assessee made no compliance, therefore the Ld. Commissioner by considering the peculiar facts and circumstances of the case and by observing “that in spite of granting the reasonable opportunities the assessee has not made any compliance and not filed any document/ submission, which appears that the assessee is not keen to pursue the appeal”, ultimately dismissed the appeal of the assessee for non- prosecution.
The assessee being aggrieved, preferred the instant appeal. Though, today the assessee, by filing an 4 M/s. Manthan Gems application for adjournment, has sought an adjournment, however, as we have observed above that the Ld. Commissioner decided the case as ex-parte and dismissed the appeal on non- prosecution, hence by considering the peculiar facts and circumstances, we are inclined to decide the appeal by dismissing the adjournment application filed by the assessee.
Coming to the merits of the case, we observe that the Ld. Commissioner issued various notices to the assessee for the appellate proceedings during the year 2020 which was admittedly the Covid-19 period and thereafter only one notice was issued on 04.05.2023 i.e. after a gap of three years from the last notice issued on 24.12.2020. Even otherwise it is not apparent from the impugned order, as to whether the notice dated 04.05.2023 has ever been served upon the assessee or not? Considering the peculiar facts and circumstances in totality and for the just decision of the case and for the ends of justice, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision on merits, suffice to say by affording reasonable opportunity to the assessee. The assessee is also directed to comply with the notices and cooperate with the appellate proceedings before the Ld. Commissioner and file the relevant reply/submission/ documents as would be essential/required for proper adjudication of the appeal of the assessee by the Ld. Commissioner. In case of further default, the assessee shall not be entitled for any leniency.
In the result, the appeal filed by the assessee stands allowed for statistical purposes.
Order pronounced in the open court on 30.04.2024.