M/S ARHAMM JEWELLERY PVT LTD,MUMBAI vs. INCOME TAX OFFICE-WARD 14(1)(2), MUMBAI

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ITA 3328/MUM/2023Status: DisposedITAT Mumbai31 January 2024AY 2014-155 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that while the Ld. CIT(A) had provided opportunities, the assessee failed to appear or comply with notices. However, considering the totality of facts and the additions/disallowances made by the Assessing Officer, the Tribunal was of the opinion that the assessee should be given one more opportunity of being heard. Consequently, the Tribunal imposed a cost of Rs. 10,000/- for each appeal, payable to the Prime Minister Relief Fund. The appeals were restored to the file of the Ld. CIT(A) in the interest of justice, with a direction that the Ld. CIT(A) shall provide an adequate opportunity of being heard to the assessee, and the assessee shall cooperate without seeking unnecessary adjournments. The specific grounds concerning the merits of the additions and disallowances (grounds 3 to 9) were not decided on their merits, as the matter was remanded.

What were the facts?

The assessee, M/s. Arhamm Jewellery Pvt. Ltd., filed appeals before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench 'A', against orders passed by the Learned Commissioner of Income Tax (Appeals)-47, Mumbai. These appeals pertained to Assessment Years 2014-15 and 2016-17. The appeals were consolidated for hearing due to identical issues. The assessee's representative was absent, but an employee sought adjournment. The Tribunal noted that the assessee had not appeared before the Assessing Officer or the Ld. CIT(A) during previous hearings. The Departmental Representative relied on the Ld. CIT(A)'s orders, stating the assessee had not utilized opportunities provided.

What were the issues?

1. Whether, on the facts and circumstances and in law, the learned CIT(A) erred in dismissing the appeal by passing an ex-parte order without providing a proper and sufficient opportunity to the assessee? 2. Whether, on the facts and circumstances and in law, the learned CIT(A) erred in passing an ex-parte order, disregarding the assessee's requests for adjournment on two specific dates (22/06/2023 and 24/07/2023) due to genuine reasons? 3. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs.12,82,14,722/- under Section 68 of the Income Tax Act, 1961, on account of alleged stock discrepancies found during a survey under Section 133A on 18/10/2013? 4. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs.4,05,07,329/- as Gross Profit at 20% on alleged entries totaling Rs.20,25,36,646/-, which were not recorded in the regular books of account, without disclosing a relevant basis or details for the estimation? 5. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs.2,79,29,050/- under Section 68 of the Act, alleging failure to establish creditworthiness and genuineness of transactions? 6. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the disallowance of interest of Rs.17,15,000/- under Section 36(1)(iii) on the alleged addition of Rs.2,79,29,050/- under Section 68? 7. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the disallowance of various expenses amounting to Rs.9,34,805/-? 8. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the disallowance of interest of Rs.2,67,000/- on account of late payment of Income Tax and TDS? 9. Whether, on the facts and circumstances, the learned CIT(A) erred in confirming the disallowance of Rs.1,43,811/- under Section 36(1)(va) of the Act? Assessee's Contention: The primary contention revolves around the ex-parte nature of the orders passed by the Ld. CIT(A) without affording proper and sufficient opportunity, and despite requests for adjournment due to genuine reasons. The assessee also disputes the merits of the additions and disallowances made by the lower authorities concerning stock discrepancies, unrecorded entries, creditworthiness of transactions, and various disallowances of expenses and interest. Revenue's Contention: The Ld. DR relied on the Ld. CIT(A)'s order and submitted that the assessee had not utilized the opportunities provided by the Ld. CIT(A) and AO, leading to ex-parte orders.

Which sections of the Income-tax Act were involved?

Section 68,Section 133A,Section 36(1)(iii),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI NARENDRA KUMAR CHOUDHRY, HONBLEAND

For Respondent: Shri Ajay Chandra

O R D E R PER BENCH

1.

These appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals)-47, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 07.08.2023 and 22.06.2023 for the A.Ys. 2014-15 and 2016-17 respectively. & 3328/MUM/2023 M/s. Arhamm Jewellery Pvt. Ltd., 2. Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order.

3.

Assessee has raised following identical grounds in its appeals except for change in figures. Grounds raised in A.Y. 2014-15 are reproduced below: - “(1) On the facts and circumstances & in law, the learned CIT(A) -47, Mumbai [CIT(A)] erred in dismissing the appeal by passing ex-parte order without giving proper & sufficient opportunity. (2) On the facts and circumstances and in law, the learned CIT(A) erred in passing ex-parte order disregarding the fact that the Appellant had categorically for the genuine reasons had asked for adjournment on two occasions - (i). on 22/06/2023 [i.r.t. DIN & Notice no. ITBA/APL/F/APL_1/2023- 24/1053164795(1)] vide Acknowledgement no. 275120181220623, dated 22/06/2023, and (ii). on 24/07/2023 [i.r.t. DIN & Notice no. ITBA/APL/M/17/2023- 24/1054091095(1)] vide Acknowledgement no. 663295801240723, dated 24/07/2023, (3) On the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs.12,82,14,722/-under the provisions of section 68 on account of the alleged discrepancy of stock as on the date of Survey u/s. 133A on 18/10/2013 vis-à-vis alleged physical stock (4) On the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs.4,05,07,329/- as G.P. @20% on the alleging various entries in the nature of salary, train ticket, interest, office expenses, metal sale, loan, loose sale RTGS payments etc. [as mentioned in para 8.2 of the impugned Assessment Order] to extent of Rs.20,25,36,646/- merely alleging that they were not recorded in the regular books of A/c., and thus, without prejudice, the estimation and working of alleged amount of Rs.20,25,36,646/- was made without disclosing any relevant basis and any details.

Page No. 2 & 3328/MUM/2023 M/s. Arhamm Jewellery Pvt. Ltd., (5) On the facts and circumstances the learned CIT(A) erred in confirming the addition of Rs.2,79,29,050 u/s. 68 of the Act merely alleging that the Appellant has failed to establish the creditworthiness and genuineness of the transactions. 6) On the facts and circumstances the learned CIT(A) erred in confirming disallowance of interest of Rs.17,15,000/- u/s. 36(1)(iii) on the alleged addition of Rs.2,79,29,050/- under the provisions of section 68 of the Act. (7) On the facts and circumstances the learned CIT(A) erred in confirming disallowance of various expenses (mentioned at para 13.1. of the impugned Assessment Order] of Rs.9,34,805/- (8) On the facts and circumstances the learned CIT(A) erred in confirming disallowance of interest of Rs.2,67,000/- on the late payment of Income Tax and TDS. (9) On the facts and circumstances the learned CIT(A) erred in confirming disallowance of Rs.1,43,811/- u/s. 36(1)(va) of the Act. (10) Your Appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal.”

4. An employee of the assessee company appeared with the adjournment letter dated 23.01.2024 seeking adjournment seeking time. On verification of the case records shows that the assessee has not appeared before Assessing Officer / Ld. CIT(A) during respective hearings. The bench decided to proceed to hear the case with the assistance of Ld.DR.

5. Ld. DR relied on the order of the Ld.CIT(A) and submitted that assessee has not utilized the opportunity provided by Ld.CIT(A)/AO. Therefore, the orders passed by lower authorities are exparte orders.

Page No. 3 & 3328/MUM/2023 M/s. Arhamm Jewellery Pvt. Ltd., 6. Considered the submissions of Ld. DR and material placed on record. On a perusal of the Ld.CIT(A) order, we find that even though Ld.CIT(A) provided opportunity on several occasions, assessee could not appear nor complied to the notices issued. Considering the totality of facts and keeping in view the additions / disallowance made by the Assessing Officer, we are of the opinion that assessee should be given one more opportunity of being heard alongwith certain cost. Therefore, we impose cost of ₹.10,000/- (Rupees Ten Thousand Only) for each appeal, to be payable to the account of Prime Minister Relief Fund. Accordingly, in the interest of justice we are of the view that this matter should go back to the file of the Ld. CIT(A). Assessee shall cooperate with the proceedings before the Ld. CIT(A) without taking unnecessary adjournments. Needless to say that the Ld. CIT(A) shall give adequate opportunity of being heard to the assessee. Thus, these appeal are restored to the file of the Ld. CIT(A).

7.

In the result, appeals filed by the assessee is allowed for statistical purpose as per above directions.

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