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Income Tax Appellate Tribunal, JABALPUR BENCH “DB”, JABALPUR
Before: SHRI KUL BHARAT & SHRI, NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 12.02.2024 pertaining to the assessment year 2014-15. The assessee has raised the following grounds of appeal: -
1. The learned Commissioner of Income tax (Appeal) NFAC was not justified in passing ex-parte order without appreciating that non appearance before the learned Commissioner of Income tax (Appeal) NFAC was not intentional as on the date when the case is fixed appellant tried to file the reply/adjournment but due to technical glitches the portal is not accepting the reply and therefore appellant have immediately raised the grievance and further click the screen shot of the portal on 08.02.2024 with regard to earlier notices it was not in the knowledge of appellant.
The learned Commissioner of Income tax (Appeal) NFAC was not justified in confirming the action of AO with regard to the additions made in the assessment order without appreciating the facts that appellant have duty explained all the issues but addition was made without application of mind and even without considering the reply with proper mind.
Page 2 of 5 3. The learned Commissioner of Income tax (Appeal) NFAC was not justified in confirming the action of AO with regard to the addition of Rs.22,68,087/- on account of sum received from HPCL whereas the sum of Rs.22,68,087/- was received as transport contractor and income of Rs. 1,45,505.00/- was already mentioned as other income.
The learned Commissioner of Income tax (Appeal) NFAC was not justified in confirming the addition of Rs.7,82,264/- without appreciating that in view of settled legal position the expenses cannot be disallowed when no income from exempt income was disclosed.
5. The learned Commissioner of Income tax (Appeal) NFAC was not justified in confirming the addition of Rs.15,00,000/- on account of credit appearing in the books of account of Ms. Khanna Polyware Pvt. Ltd., without appreciating that complete details were filed before the AO and addition was made without considering the reply.
6. The order passed under section 143(3) r.w.s 147 is bad in law as the reopening of assessment is without any basis as all the information was duly available before the AO during the original proceedings and the reopening is the change of opinion.
The order passed under section 143(3) r.w.s 147 is bad in law as the reopening of assessment was without any new information and no tangible material was gathered by the AO and reason was based on the basis of available record and it appears that it was on the basis of audit objection and it is settled position that proceeding initiated under section 148 is bad in law if it was based on audit objection and hence it is prayed that record may be called from the department.”
2. The facts giving rise to the present appeal are that in this case the assessee filed his return of income on 20.09.2014 declaring total income of Rs.64,720/-. The assessee is a partnership firm and derives its income from retail trading of petroleum products. The case of the assessee was selected for scrutiny through Computer Assisted Scrutiny System (CASS). A notice u/s 143(2) of the Income Tax Act, 1961 (“the Act”, for short) was issued and served upon the assessee and the assessment was completed on 26.09.2016 at Rs.1,90,600/-. Thereafter, the assessment was re-opened u/s 147 of the Act and a notice u/s 148 of the Act was issued on 28.03.2019 after recording the reasons and taking necessary approval of the Addl. Commissioner of Income Tax, Range-Satna. The basis of re- opening of assessment was on three issues viz. (a) The amount paid on account of transportation by Hindustan Petroleum Corporation amounting to Rs.22,68,087/- was not reflected into Page 3 of 5 profit & loss account (b) The assessee firm made investment of Rs.25,00,000/- which would fetch exempt income and no disallowance as per Rule 8D of Income Tax Rules, 1962 (“Rules”, for short) was made by the assessee and (c) It was noticed that total investment into the shares of M/s. Khanna Polyware Pvt Ltd as on 31.03.2013 was at Rs.45,00,000/- whereas the investment was disclosed at Rs.30,00,000/-. Thus, difference of Rs.15,00,000/- remained unexplained. In response to the notice, the assessee requested to treat his Income Tax Return (ITR) dated 20.09.2014 as his return of income filed in response to the notice u/s 148 of the Act. After assessment proceedings was conducted the Assessing Officer noticed that the assessee was required to disallow expenditure in terms of Section 14A of the Act as it had paid interest of Rs.2,04,615/- to partners and Rs.12,47,308/- to the bank. The assessee firm had earned exempt income, therefore, as per the Assessing Officer the expenses related to such income was required to be disallowed in terms of Rule 8D of the Rules. Further, the AO made an addition of Rs.15,00,000/- on account of unexplained investment. Thus, the Assessing Officer assessed income at Rs.47,40,951/- against the returned income of Rs.1,90,600/- u/s 143(3) of the Act. Aggrieved by this order, the assessee preferred appeal before the Ld. CIT(A) who dismissed the appeal exparte to the assessee. Now the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that no proper and effective opportunity was granted by the lower authorities to the assessee. Therefore, he prayed that the impugned order may be set aside an opportunity be granted to the assessee for representing his case before the lower authorities.
Page 4 of 5 4. On the other hand, the Ld. Departmental Representative (DR) opposed the submission and supported the orders of the lower authorities. He drew our attention to the impugned order to buttress the contention that opportunity was granted by the Ld. CIT(A). However, he fairly submitted that there was no decision on merits by the First Appellate Authority.
We have heard the Ld. Representatives of the parties and perused the material available on record. It is seen that the Ld. CIT(A) has dismissed the appeal on account of non-prosecution by the assessee without adverting to the grounds on merits of the case. It is well settled that the First Appellate Authority is required to adjudicate on the matter related to the impugned additions made by the Assessing Officer. Under these facts, we deem it fit and proper and to sub-serve the interest of principles of natural justice to set aside the impugned order and restore the grounds of the appeal to the Ld. CIT(A) for deciding the grounds afresh and by giving clear finding on the grounds raised by the assessee by way of speaking order. Needless to say that the assessee would provide all the information which is relevant and necessary for adjudication of grounds of appeal. Grounds raised in this appeal are allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 30/06/2025.